What Is Ripple XRP? Everything You Need To Know

Ripple (XRP) Cryptocurrency Review Article Cover

Ripple’s XRP is a peer-to-peer private centralized cryptocurrency based on a distributed consensus ledger. The Ripple platform facilitates money transfers, focusing on low operation fees and lightning-like transaction speed. 

Ripple is the only corporate crypto solution in the world for global payments. Some argue that Ripple can not even be called a cryptocurrency, while others are confident that this is the most promising digital asset as of today. This platform aims to become the next big thing in the payment systems industry and is already widely used by banks worldwide.

What is the Ripple consensus protocol like? How was the idea of such a platform conceived? How did this digital coin come close to the market leaders, Ethereum and Bitcoin, and its scope of application? Let’s dive into the Ripple (XRP) cryptocurrency world with this review by Changelly!

What is RippleNet?

It is necessary to distinguish between the RippleNet system and Ripple tokens. Most banks work with the payment system, and the cryptocurrency is tied to the On-Demand Liquidity project. Therefore, the development of RippleNet does not always lead to an increase in the value of XRP.

RippleNet is a global payment system that makes it possible to carry out payments and exchange processes (transfers) in more than 40 currencies. It serves over 300 financial institutions around the world. Earlier (until the fall of 2019), RippleNet included three products: xVia, xCurrent, and xRapid.

  • xCurrent is the software aimed to provide interoperation between different ledgers and payments networks using Interledger Protocol. Basically, it allows banks to communicate with each other and easily confirm payment details. 
  • xRapid is the source of liquidity for the network: it enables XRP to be a bridge currency and facilitates fast exchange with a stable rate. 
  • xVia is a payment interface that is simply used to send payments between users.

In October 2019, Ripple rebranded and split its products into two separate projects. Now the name RippleNet covers two existing products: xVia, xCurrent. The xRapid product, tied to the promotion of the XRP cryptocurrency, has been dubbed “Liquidity on Demand”.

“Instead of buying xCurrent or xVia, customers will connect to RippleNet on-premises or in the cloud, and instead of buying xRapid, they will use On-Demand Liquidity. These are not new products, but a rebranding of existing products. This is a small change that will not affect our customers in any way,” – the company representatives said.

What is XRP?

XRP is the Ripple platform’s native cryptocurrency. Its primary function is to serve as a bridge currency for cross-border transfers when there is a need to trade one currency for another. Ripple quickly attracted the attention of large banks as investors. Today, more than 300 financial companies around the world use this coin. The main advantages of XRP are the speed and cost of transactions. 

To put it simply, Ripple works as a medium currency. Say you want to trade some JPY for USD. If you do it through the Ripple protocol, the network turns your JPY into XRP and then XRP into USD. Intuitively this arrangement seems more complicated than a simple JPY to USD exchange, but it is much faster and much cheaper. It takes only five to ten seconds to complete this particular transaction, compared to three to five days in the case of a traditional procedure. As for the fee, the Ripple users enjoy an almost non-existent commission of 0.00001 XRP per transaction.

how ripple works scheme
Source: Justin Cata

Who Created Ripple (XRP)

In 2004, Canadian programmer Ryan Fugger and Jed McCaleb founded Ripplepay, a payment system based on a trusted peer-to-peer financial network.

In 2012, the team was joined by the famous programmer Chris Larsen, the founder of the loan companies Prosper and E-Loan, who later became the director of Ripple Labs. He approached Fugger with the idea of creating his own cryptographic currency inside the Ripple platform, although initially, there was no talk of his own virtual currency.

In 2012, the development team founded the OpenCoin corporation and launched a new cryptocurrency platform Ripple, with the same name internal currency (XRP).

How Did the Ripple Labs Start?

In the fall of 2013, a rebranding took place, and the OpenCoin company became known as Ripple Labs. In 2014-2019, Ripple Labs Inc. focused on the banking market. The first bank to use Ripple was Fidor Bank in Munich. 

Then the technology was used by the American banks Cross River Bank, CBW Bank, the Earthport payment service (works in 65 countries, including with banks). In 2017, the Ripple protocol began to be used for international payments between the US and the UK (American Express and Santander), as well as between Japan and South Korea. In 2018, the system was integrated into one of the largest eastern banks NKB in Saudi Arabia.

Who Are Ripple Labs Founders

Officially, Ripple Labs founders are Chris Larsen and Jed McCaleb.

Who Are Ripple Labs Investors

The first investors in the project were Google Ventures, Jed McCaleb is the founder of the MtGox exchange, Andreessen Horowitz.

What Is the Ripple Protocol Consensus Algorithm (RPCA)?

The Ripple network is powered by the Ripple Protocol Consensus Algorithm. It doesn’t work like the popular Proof of Work or Proof of Stake protocols. Instead, it provides a consensus validation for the ecosystem’s accounts and transactions by a number of independent nodes. For an operation to be validated, all nodes have to agree on it, and that’s the only way the operation will be executed. This protocol allows the system to prevent double-spending, primarily by taking a poll to determine the majority vote. 

Ripple won’t allow you to spend the same amount of money twice or multiple times because the system determines which transaction was the first to be requested and deletes all the following ones. This consensus protocol takes mere seconds to complete the validation process, so the transaction time is minimal: it takes around four seconds on average to complete an operation.

Ripple protocol works through gateways. Gateway is an intermediary used as a link in the trust chain between two parties that want to complete a transaction. Usually, banks are those getaways. Ripple architecture is similar to that of SWIFT, a global fast payment system. 

What Is Ripple Used for and How Is XRP Used?

First of all, Ripple is a money transfer and payment ecosystem. It has a broad scope of application. Ripple is used as:

  • A means of low fee currency exchange. Ripple significantly reduces transaction costs because of the low commission it charges.
  • A way to transfer funds cross-border at high speed. Money transfers through Ripple are nearly instant and take four seconds on average, which is much faster than those of other payment systems.
  • It can also be used for P2P purchases, online voting, escrow, and so on. 

What Are Ripple’s Benefits?

The XRP currency has a legal entity, representative office, and headquarters in the United States. This moment is attractive to investors in terms of the reliability of capital investment. At the same time, this point can be considered as a drawback because the network is centralized. 

Ripple cannot be mined. The developers abandoned the idea of mining coins and released 100 billion coins at once. Each coin is divided into a million parts, called drops. At the same time, coins are no longer issued. 

High transaction speed. For comparison: 600 seconds for transactions with Bitcoin versus 4 seconds for transactions with Ripple.

Which Banks Support Ripple?

The company is developing in the banking sector. Since the beginning of 2018, several large organizations and payment systems have entered into cooperation agreements with Ripple. However, this did not affect the value of XRP in any way. In the first quarter of 2018, it showed the worst result among the largest cryptocurrencies. The company is focused on developing technologies for the banking system, while the scope of the altcoin remains controversial.

The Ripple network processes payments much faster and builds numerous partnerships with global companies:

  • 60 institutions around the world, including renowned firms such as UBS, RBC, UniCredit and Santander.
  • 40% of Japanese banks will be connected to Ripple.
  • RBS and BAML plan to use Ripple for retail and commercial payment services.
  • Abu Dhabi National Bank uses Ripple for international transactions.

Is Ripple a Good Investment?

ripple's cryptocurrency xrp price chart

At the end of November, altcoins showed rapid growth and updated highs from 2018-2019. XRP token has risen in price by more than 50%, to $0.6. The last time the cryptocurrency rate was at this level in June 2019. The rapid growth of the XRP rate by 50% was due to the so-called FOMO effect – traders bought the asset, fearing to miss its rally.

The last cryptocurrency rally has shown that almost any fundamental cryptocurrency can be a good and profitable investment. Remember that the crypto market is very volatile so one should consider all the pros and cons before investing in any coin. By the way, Changelly gives an opportunity to buy almost any crypto asset, including XRP. Check out our cross-rates and get the cryptocurrency at the best price. 

Why Is Ripple Criticized?

XRP cryptocurrency cannot be mined. The developers immediately released 100 billion XRP. Many users are unhappy with the fact that 95% of all coins are in the hands of several people, and the head of Ripple, Chris Larsen, owns 5.19 billion XRP. According to Forbes magazine, he has already made it to the list of the richest people in the world.

Blockstream CEO Adam Back believes that Brad Garlinghouse does not believe in his own product. According to him, Brad Garlinghouse is selling XRP tokens in order to accumulate Bitcoin.

Ripple was also criticized by Larry Cermak, an analyst at The Block. He called Garlinghouse’s words a lie because the company could not control the price of XRP.

Moreover, the XRP cryptocurrency has been criticized by former Bitcoin developer Peter Todd. He stated that the altcoin does not give its holders any real rights, and its purpose is to enrich the issuing company.

Ripple’s Future. What Are the Experts Saying?

Ripple CEO Brad Garlinghouse has repeatedly stated that the organization has begun work on XRP development. The company is investing in startups that will use the coin in their products. Several major exchanges announced the addition of the coin this year, which could positively impact its value in the long term.

US trading platforms avoid working with Ripple, as the local financial regulator may consider the altcoin to be a security, and cryptocurrency exchanges are prohibited from working with such assets.

Ripple representatives promised to focus on the development of cryptocurrency, increasing its liquidity. According to experts, if an altcoin has a real application, it will be convenient to use the cryptocurrency due to its low commissions and fast transactions. This could have a positive effect on the value of XRP in the long run. Read more about Ripple cryptocurrency future in our XRP price prediction