What is XRP?
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What is XRP?

XRP, boasting a market cap over $30 billion, ranks among the top cryptocurrencies. Let's explore its role within Ripple's mission to enhance global payment settlement systems and its distinct value proposition.

XRP stands tall among the giants in the crypto realm, boasting a hefty market cap exceeding $30 billion. As of now, it clinches the seventh spot among all crypto projects based on market capitalization.

But what exactly is XRP, and what sets it apart? Let's delve into the intricacies of Ripple, uncovering its raison d'être and dissecting the value proposition of its currency, XRP.


Established in 2004, Ripple (originally Ripplepay) is a fintech powerhouse headquartered in San Francisco. Even before venturing into the realm of crypto in 2012, its primary mission remained steadfast: enhancing existing payment settlement systems for global transactions.

With the inception of its native token, XRP, Ripple made significant strides in the crypto space. It birthed RippleNet, a sprawling global payments network offering real-time gross settlements for financial institutions. This network revolutionizes cross-border banking, offering simplicity and affordability.

Crafted with the aim of supplanting SWIFT, one of the largest money transfer networks, RippleNet is versatile. It facilitates currency exchange spanning fiat, cryptocurrencies like Bitcoin, and commodities such as gold. Ripple levies a nominal transaction fee (in XRP) for network usage.


Since its inception in 2012, XRP has been a driving force in revolutionizing financial payments. Serving as the native token on the XRP Ledger (XRPL), a distributed, open-source blockchain, it operates without centralized control, thanks to a network of peer-to-peer servers known as unique nodes.

XRP serves as a seamless exchange mechanism between different currencies or networks, facilitating direct transactions sans intermediaries. This translates to bridging currencies in mere seconds, streamlining international transactions and slashing processing times from days to moments. Notably, banks worldwide have embraced XRP for routine hawala transfers.

As of now, XRP holds a coveted spot among the top 10 largest crypto assets, boasting a market cap exceeding $30 billion.

How Are XRP and Ripple Different?

When diving into discussions about XRP, you might notice it's often mentioned alongside Ripple. However, these two entities have distinct identities.

Ripple operates as a company offering a blockchain-based digital payment network to its user base. On the other hand, XRP serves as the crypto asset facilitating transactions within this network. Transactions involving XRP are recorded on the XRPL software ledger.

Over time, Ripple has undergone several rebranding’s, aligning with changes in ownership or project direction. In 2023, Ripple made significant moves by acquiring crypto businesses Metaco and Fortress Trust, aiming to enhance the customer experience within its existing lines of business. Amidst these transformations, the ticker symbol XRP has remained a constant.

Exploring XRP and the XRP Ledger

The XRP Ledger

Let's dive into the XRP Ledger (XRPL), where trust forms the backbone of its consensus model.

Unlike Bitcoin's Proof of Work or Ethereum's Proof of Stake, XRPL doesn't rely on mining or staking for transaction validation. Instead, it operates on the premise of trust, allowing designated, permissioned servers to establish consensus on the network. These servers, known as unique nodes, maintain a "unique node list"—a roster of nodes considered trustworthy by the network.

When 80% of nodes collectively agree on a transaction's validity, a unique node can proceed with its validation.

However, XRPL has encountered challenges in the past, such as out-of-sync issues that have caused network downtime. Compromise of one node on the trusted list can trigger ripple effects, slowing down the entire network.

The Token XRP

Let's delve into the native token of XRP and its role within the Ripple ecosystem.

At its inception, 100 billion XRP tokens were created and distributed to individuals and companies. Unlike other consensus mechanisms, nodes in the XRPL network don't receive rewards for maintaining the ledger's accuracy.

Within Ripple's Digital Payment Network, RippleNet, some users seek to transfer funds without the need for a pre-funded account. Ripple facilitates this through its on-demand liquidity service. Here, XRP, alongside a pool of other digital assets like Bitcoin, Ether, and Litecoin, provides liquidity for transactions.

When parties involved in a transaction have differing preferred methods or currencies, RippleNet acts as an intermediary. Since different currencies are involved, no physical money changes hands during the process. Instead, the transaction is executed in XRP equivalent to the value being transferred. While the network charges a small fee (in XRP) for the transaction, it pales in comparison to fees charged by traditional international payment networks like SWIFT.

XRP vs. Bitcoin

Let's unpack the key distinctions between XRP and Bitcoin.

First off, while Bitcoin relies on a Proof of Work (PoW) model for transaction validation, XRP opts for a consensus protocol among participating nodes, which vote to validate transactions. This approach is notably less energy-intensive, leading some to argue that XRP boasts greater environmental sustainability than Bitcoin.

Moreover, the distribution methods differ. While Bitcoins are gradually released into the network through mining, XRP was pre-mined upon launch. Control over the release of future tokens on the XRP network lies with a smart contract, rather than miner activity.

Lastly, though both projects are open source, their origins diverge. XRP was created and distributed by a privately-owned company, while Bitcoin remains independent of any singular individual or organization.

XRP Pros and Cons

Let's delve into what sets XRP apart from other digital assets, as well as some of the challenges it faces in its quest to revolutionize cross-border transactions.


  • Low Fees: Utilizing XRP for cross-border transactions cuts out the need for intermediaries like banks, thus sidestepping hefty currency conversion fees that can soar as high as US$60 in certain instances.

  • Fast Transaction Times: Unlike traditional cross-border transactions, which often undergo rigorous scrutiny and delays, Ripple's network ensures swift and liquid transactions, bypassing the need for institutional intermediaries.

  • Partnerships With Leading Banks: With over 100 financial institutions onboard, including heavyweights like Santander, AMEX, and PNC, Ripple is poised to overhaul the outdated cross-border payment landscape. While not all institutions utilize XRP, some leverage RippleNet's on-demand liquidity service, which incorporates XRP.

  • Staying Power: XRP's decade-long tenure in the crypto space underscores its resilience, weathering market fluctuations and establishing a formidable presence. This longevity, reminiscent of Bitcoin's endurance, suggests a promising future despite market turbulence.

  • Eco-Friendly: XRP's consensus protocol demands minimal computational power from its nodes, rendering it an environmentally sustainable mode of exchange. Ripple's commitment to achieving carbon neutrality by 2030 further underscores its eco-conscious approach.


  • Circulating Supply Control: Ripple exercises significant influence over XRP's value, dictating the timing and manner of coin releases. With Ripple controlling over 55% of the total XRP supply, concerns arise regarding its market-making role and potential impact on XRP's market dynamics.

  • Technically Centralized: Originating from the privately-owned Ripple, XRP's network governance and validator count raise questions about centralization. Ripple's authority in determining validator trustworthiness and network operations contradicts the decentralized ethos of blockchain technology, fueling debates over XRP's true decentralization status.

XRP Origins

Let's journey back to the origins of XRP and uncover the minds behind its creation.

In the early days of cryptocurrency, before Satoshi Nakamoto and the emergence of Bitcoin, Ryan Fugger laid the groundwork with Ripplepay in 2004. Ripplepay, a precursor to Ripple, envisioned a network facilitating cross-border transactions, albeit without the blockchain technology we know today.

Following Bitcoin's launch, three visionary developers—David Schwartz, Jed McCaleb, and Arthur Britto—saw potential in expanding upon Bitcoin's concept. Their vision? A borderless cryptocurrency that didn't rely on extensive computing power for node validation. Acquiring Ripplepay from Fugger, they repurposed its source code to birth the XRP Ledger and subsequently, XRP in 2012.

At launch, 80% of XRP tokens found their way to a nascent company, which would evolve into Ripple. The remaining supply was distributed among investors and financial institutions to fuel the project's ongoing development.

Ripple vs. SEC Legal Battle

The legal showdown between Ripple Labs Inc and the SEC has made waves in the crypto world, culminating in a significant victory for Ripple.

A U.S. judge's ruling deemed that Ripple didn't violate federal securities law by selling XRP on public exchanges. This favorable outcome sent XRP's value soaring by 75% and provided a glimmer of hope for other crypto firms embroiled in battles against the SEC's jurisdiction. However, the ruling wasn't an outright win for Ripple. The judge also concluded that Ripple's substantial XRP sales to hedge funds and sophisticated buyers amounted to unregistered securities sales.

While the SEC secured a partial victory with the ruling, which implicated Ripple's marketing tactics aimed at institutional investors as speculative and subject to securities regulations, it faced setbacks in subsequent legal maneuvers. An appeal against the decision fell short, followed by the dismissal of charges against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen.

This legal saga holds broader implications beyond Ripple. It could influence Coinbase's own SEC case and has prompted calls for congressional action to establish clear legislation governing digital assets.

Bottom Line

Wrapping up our exploration of XRP, we've uncovered its pivotal role in revolutionizing cross-border transactions, spearheaded by Ripple's innovative solutions. As you navigate the crypto landscape, understanding the nuances of XRP versus Ripple is key; XRP serves as the fuel powering Ripple's ambitious mission to streamline global payments.

With its swift transaction times, low fees, and eco-friendly consensus protocol, XRP stands out among its peers. However, challenges such as concerns over centralization and regulatory battles remind us of the complexities inherent in the crypto sphere.

The legal showdown between Ripple and the SEC exemplifies the broader regulatory uncertainties facing the industry. Despite setbacks, Ripple's recent legal victories underscore its resilience and potential to shape the future of finance.

As you continue your journey through the world of cryptocurrencies, armed with knowledge about XRP's origins, functionalities, and challenges, may you navigate this ever-evolving landscape with confidence and insight.

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