What is Ripple (XRP)? | Complete Guide
Ripple (XRP) is a cryptocurrency created by San Francisco-based fintech company Ripple Labs.
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Ripple (XRP) is the native token of the Ripple payment protocol created by Ripple Labs. The idea behind Ripple (XRP) was originally developed in mid-2000’s and then ‘tokenized’ and popularized by Ripple Labs (formerly OpenCoin).
Ripple’s claim to fame is the network’s ability to help banks manage international liquidity constraints while saving tons of money. In other words, Ripple’s technology will allow banks globally to transfer and settle payments with other banks anywhere in the world instantly, ultimately benefiting the end user.
The traditional payment systems are very slow with cross borders transactions taking up to 5 days to complete. They are also very expensive and unreliable due to their frequent failures. For those who have used some of the traditional payment options to transfer money, they can confirm that it is quite expensive to send money.
What is Ripple Labs?
Ripple Labs is a private company that develops financial system infrastructure products for banks and other financial institutions. Through its RippleNet enterprise-grade blockchain, Ripple Labs operates a blockchain-based global payment network used to facilitate digital payments around the world while leveraging the XRP cryptocurrency token for some of its products.
It is important to note, in the spirit of decentralization, that the XRP project is very centralized within Ripple Labs. The private company and its team control the vast majority of all the XRP tokens and the nodes are ‘hand-picked’ meaning the network is not open.
History of Ripple
Ripple Labs (formerly OpenCoin) created the Ripple payment protocol, which was co-founded by Jed McCaleb and Chris Larsen and launched in 2012.
At the time of its launch, all of the 100 billion XRP coins were pre-mined and distributed as follows:
- Ripple founding team: 20%
- Ripple Labs: 80%
In 2013, the Ripple Lab had a giveaway of 200 million XRP. Some of the XRP tokens were given to charities like the Computing for Good which in return started giving out the XRP coins in exchange for the time researchers used researching on projects.
In May 2017, Ripple decided to place 88% of its XRP (~55 billion XRP) into an escrow account that was cryptographically secured. From then onwards, the escrow allowed them to use a maximum of 1 billion XRP every month. If there are any unused XRP crypto coins that remain at the end of the month, these are to be returned to the escrow account.
Ripple (XRP) token distribution*
|Ripple Labs (Escrow)||53,500,000,000|
|Ripple Team & Founders**||20,000,000,000|
|Ripple Labs Released||7,300,000,000|
|Public and partners (estimated)||19,200,000,000|
The team of experts behind the success of Ripple includes:
- Brad Garlinghous (CEO of Ripple and a member of the Board of Directors),
- Asheesh Birla (SVP of Product)
- Patrick Griffin (SVP of Strategic Growth)
- Cory Johnson (Chief Market Strategist)
- Kanaan (SVP of Engineering)
- Sandi Kochhar (VP of People at Ripple)
- Ron Will (Chief Financial Officer)
- Eric van Miltenburg (SVP of Business Operations)
- Marcus Treacher (SVP of Customer Success)
- Stefan Thomas (CTO)
- David Schwartz (Chief Cryptographer)
- Antoinette O’Gorman (Chief Compliance Officer)
- John Mitchell (SVP of Global Sales)
From the time of its launch, a number of payment providers, banks, and digital asset exchange companies have partnered with Ripple so as to help improve their services.
Some of the banks that Ripple has partnered with include MUFG Bank, Santander, Standard Chartered Bank, Westpac, Axis Bank, RankBank, YesBank, First Abu Dhabi Bank, and Induslnd Bank.
Some of the payment providers that Ripple has partnered with are LianLian Pay, MoneyGram, UniPAY, SBI Remit, transferGo, American Express, EarthPort Payment network, Cambridge Global Payments, and MoneyMatch.
Some of the digital asset exchange companies that Ripple has partnered with are International Foreign Exchange (IFX), Currencies Direct, and eZforex.
As an enterprise-grade digital payment blockchain-based network, Ripple has extraordinary features.
Stability: Ripple Network has not experienced any failures or delays over the time it has been operational. As a result of its stability, it has proved to be a reliable blockchain for transferring money around the globe.
Fast Transaction Speed: Transactions in Ripple are carried out instant and on-demand. Transactions are carried out in microseconds.
Scalability: As a result of its fast transaction speed, Ripple can handle up to 50,000 transactions per second and compete with payment networks like Visa and Mastercard.
Designed for institutions: Ripple’s was designed with the current financial system architecture in mind from the ground up. This allowed Ripple to penetrate a SWIFT-entrenched industry by proposing a significantly more advanced technology and massive cost savings.
Easily accessible: Ripple software is easily accessible from the different payment networks. Ripple software is compatible with most of the payment networks across the globe.
Cast-iron certainty: Users are guaranteed of real-time traceability of their funds. The money can be traced to whichever location.
Low operational cost: the charges of transferring money through RippleNet are low although they vary depending on the service provider.
Payment tracking: funds are easily tracked throughout the transaction. The payment providers of banks on both ends can confirm if the payment has been delivered using bi-directional messaging on the RippleNet.
Ripple currently offers three products on its RippleNetwork, each targeting a specific vertical.
xCurrent – for banks (instant international settlement solution)
xCurrent is Ripple’s flagship product. This is the enterprise software that enables banks and other payment providers to settle cross-border payments instantly.
In simple terms, this is what enables banks and other financial institutions using Ripple to settle payments which take place across the boundaries of two countries. Money can be sent from one country and received in another country instantly. The payments also have end-to-end tracking, and the users can communicate via messages across the RippleNet during the transaction.
In addition to the extra high speed with which the transactions are completed in RippleNet, there is also a rulebook which standardizes the transactions that take place across the network.
xCurrent makes it easier for banks to confirm details of the transactions before initializing transactions by messaging each other. They can also contact each other to confirm the delivery of funds.
xRapid – for payment providers (foreign exchange liquidity management solution)
xRapid is used as a source of liquidity to payment providers and financial institutions. These corporations must currently hold and fund (Nostro) accounts in each foreign market they operate in. Not only does this tie up capital, it’s slow and expensive to manage.
xRapid uses Ripple’s digital asset XRP as a cross pair in foreign markets to provide on-demand liquidity. This lowers the costs of real-time payments by virtually eliminating the need to have a so-called presence in each foreign market.
xVia – for businesses (centralized cross-network payment solution)
xVia taps into the fiat currency world by offering a centralized place to make payments to any and every stakeholder an organization needs to deal with. It almost appears to be a banking solution of some sort.
Payment providers can send payments from one network to another through a standard interface without the need to install any software. Using xVia, corporations, banks, and payment providers can send payments together with transparent payment status.
As a digital payment blockchain network, Ripple facilitates the transfer of monies from one bank or money transfer service provider to another across borders. To do that, it uses RippleNet, the enterprise-grade blockchain created by Ripple Labs.
RippleNet requires a gateway so as to establish some trust between the users. A gateway is simply a business/or institution that acts as a link between the Ripple XRP Ledger and the rest of the world. Users can transact using fiat currencies and cryptocurrencies.
During the transactions, XRP acts as the bridge currency. This enables members to transfer their local money through the RippleNet by first converting the local currencies into XRP coins. The XRP coins can then be converted to any other fiat currency upon reception. This reduces costs, time and liquidity requirements tremendously.
Ripple consensus and transaction verification
RippleNet uses consensus mechanism instead of Proof-of-Work or Proof-of-Stakes. If a user sends a certain amount of funds to one gateway and then decides to send the same amount of funds to other gateways, the transactions sent to the other gateways are canceled, and only one transaction will be allowed to go through.
The distributed nodes on the system come to a consensus of which was the first transaction and cancels all the other transactions. The consensus takes roughly 5 seconds and although quick, comes at the expense of decentralization.
Ripple keeps a record of all the transactions carried out between different Ripple wallets and put the data public on the Ripple consensus ledger. However, the ID of the accounts of the persons who were involved in the transactions is never revealed.
Ripple Use Cases
Ripple has a number of uses in solving real-life problems. Some of its use cases are:
Banks are turning to RippleNet to improve their payment services, improve transaction speed and reduce costs. Through RippleNet, banks:
- Easily meet customer demands globally;
- Save on transaction costs;
- Low liquidity requirement;
- Provide a consistent experience to their customers. The Rulebook of RippleNet contains rules and standards which helps govern the services offered.
Payment providers like Western Union or Moneygram can now rely on RippleNet to provide their customers with faster and more transparent transactions across the world.
In addition, RippleNet has made it possible for the payment providers to handle any amount of payment volumes for its customers.
RippleNet helps business connect with financial institutions and liquidity providers thus making payments across the world available on-demand and also reliable. The transactions are also very cost effective.
Corporates can also be able to track their payments. Also, the transactions are followed by very rich data information like KYC information and invoices.
The role of XRP as a digital asset for global payments makes it possible for exchanges to access new volume and liquidity.
Ripple Token Ticker
Where to purchase Ripple (XRP)
Ripple (XRP) is the third largest cryptocurrency in terms of market capitalization with a market cap of $18 billion USD. You can buy XRP tokens at any of the following exchanges:
Buy XRP with USD, EUR, CAD and more
If you are looking to exchange your local currency (fiat) for Ripple (XRP), we recommend the following trusted exchanges:
- CEX.IO (global)
- BitPanda (Europe)
- Changelly (global – wallet required)
- Coinmama (global – wallet required)
Buy XRP with Bitcoin and other cryptocurrencies
Buying XRP is not limited to your local currency. In fact, it’s easier, quicker and cheaper to do so with other currencies.
The following are trusted exchanges and services to buy XRP with other virtual currencies like Bitcoin, Ethereum and Litecoin: