What is Ripple XRP? A Definitive Guide for Beginners

Ripple is a decentralized peer-to-peer network that offers financial institutions a digital payment protocol.

Ripple allows for frictionless digital money transfers, facilitating payments in both fiat (say, the US Dollar) and cryptocurrencies (e.g Bitcoin).

The Ripple Company also operates a Real-Time Gross Settlement System (RTGS), an FX market, and a remittance network. XRP is the network’s designated token and Ripple (XRP) is now the 6th-largest cryptocurrency by market capitalization.

Read on to learn about Ripple and its native coin XRP.

About Ripple

RippleNet is the name of Ripple’s blockchain ecosystem and was designed by Ripple Labs. It is powered by a network of servers and is an open-source platform that has been designed and scaled to enable more affordable and faster financial transactions.

The XRP token is used for value transfer across the RippleNet network, acting as a means of exchange allowing users to buy and sell both fiat currencies and cryptocurrencies. 

  • Name of cryptocurrency: Ripple
  • Acronym: XRP
  • Ripple Price: $1.28
  • Current market cap: $51,294,771,418 as of September 8, 2021 (CoinmarketCap)
  • Where to buy Ripple: Coinbase, eToro, Binance, BitBuy, Gemini, Kraken, and many major exchanges around the world

When was Ripple created?

The company Ripple Labs was born in 2012, taking advantage of the previous work of Ryan Fugger, who had created RipplePay in 2004 and has also once pursued a peer-to-peer (p2p) payment network. However, it was the distributed consensus technology created by Jed McCaleb in 2011 that started the XRP technology.

In 2012, the team added Chris Larsen, David Schwartz, and Arthur Britto to the project. The project was initially dubbed “Opencoin” but was renamed Ripple Labs the following year. By 2013,  XRP coin was officially launched, with the company raising $7.5 million from renowned investors and venture capital firms.

Ripple Labs remains the lead developer of the verification system behind XRP, which can integrate into banks’ existing networks. In December 2014, Ripple Labs partnered with global payments service Earthport, which was present in 60 countries.

What is Ripple (XRP) for?

While you can purchase and maintain XRP in your digital wallet, it is not designed for direct use by consumers. XRP is a crypto asset (token) that seeks to provide liquidity to banks and financial agents, working as a global settlement network.

More than 100 companies around the world have adopted the RippleNet system to ensure fast, secure, and cheaper transactions. Traditional settlement systems rely on the dollar for intermediation, have high exchange and transfer rates, and are slow.

All these and more are reasons why Ripple has developed a keen competition with SWIFT in recent years. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has long been the de-facto channel for cross-border payments, that is until Ripple offered a worthy alternative.

While Ripple was not designed to be a currency, there are merchants who accept payment in XRP tokens because of its speed and low cost.

what is ripple xrp

Ripple Fees and Charges

One of the most appealing features of XRP is its cheap transaction cost, which is fairly stable. As of the time of writing, the average transaction cost for Ripple transactions is about $ 0.0001.

This is exceptionally low, especially considering the network’s ability to accept worldwide payments.

Fees can go up to $ 0.0004 if the network is very busy, which is still very low. During the July 2019 surge, the highest transaction costs on the Ripple network were only 5 cents.

Keep in mind that these are the Ripple network’s transaction fees. Trading platforms and crypto exchanges may charge you additional fees and commissions should users want to purchase or sell XRP.

Fluctuations in exchange fees depend on many factors including the amount of XRP being traded, the region a user lives in, the fee structure of the platform being used, etc.

How Ripple Consensus Works

How does Ripple’s consensus mechanism work? And how is it any different from Bitcoin?

While Bitcoin is a digital currency that can be used to buy and sell goods and services, Ripple is a currency exchange, settlement, and payment remittance system for banks and payment networks.

Bitcoin is based on blockchain technology, while Ripple does not necessarily use a conventional “blockchain” structure, but rather is rather like a distributed consensus book. This network of XRP encrypted token validation servers is called the XRP Ledger.

XRP coins are not mined and there is no PoW or PoS protocol required to validate transactions. A specialized technology known as the Ripple Protocol Consensus Algorithm (RPCA) was developed and patented to process and verify transactions.

This means that in order to verify a transaction, all nodes in the network must unanimously agree. It also contributes to the reasons why Ripple transactions are cheaper and use less energy compared to transactions using Bitcoin.

The decision of approving transactions or not goes through a group of validators among a list recommended by Ripple Labs, until 80% reaches a consensus. Only then does each one of these nodes (nodes) calculate a new hash and compare the results with the others, and then approve the new state of the network.

The time to confirm an XRP transaction is four seconds, compared to 10 minutes for Bitcoin. Thus, its computing capacity exceeds 1,500 transactions per second, compared to 7 for Bitcoin, and 56 for Litecoin.

This concept is different from the blockchain, and it’s not necessarily worse, or better. In search of greater processing power, agility, and lower transaction costs, the model opted for a slightly more centralized version.

XRP Mining

Unlike Bitcoin, where new coins are created as a reward for miners who use computing power to maintain the blockchain network, Ripple has created 100 billion XRP coins since its inception. These nodes (nodes) that act in the validation do not receive any compensation for the work.

To date, there are 45 billion XRPs in circulation, although there is a defined timetable for gradual release over time. In December 2017, Ripple Labs set aside 55 billion coins it owns to reduce selling pressure, releasing 1 billion a month, making it the company’s decision to sell them or not.

What are the Advantages of Ripple?

Ripple’s unique decentralized ledger technology means it offers different sets of perks and advantages that other cryptocurrencies do not. 

1. Instant transactions

The time to confirm a transaction is four seconds, compared to 10 minutes for Bitcoin. Thus, its computing capacity exceeds 1,500 transactions per second, compared to 7 for Bitcoin, and 56 for Litecoin. This gives XRP an edge over other cryptocurrencies such as Ethereum and Bitcoin that take longer due to scalability limitations regarding their choice of consensus mechanism.

2. Versatility

A major part of Ripple’s success is down to a deliberate resolve for interoperability. Rather than seeking outright replacement of existing traditional financial institutions and payment methods, it instead finds ways to accommodate them. It is why Ripple’s XRP has found many use cases over SWIFT. 

Anyone can use Ripple to buy or sell any currency they want.

3. Low transaction fees

Ripple’s consistent low transaction fee is also a huge advantage. Unlike most crypto tokens with unpredictable fees, the predictability of RippleNet’s transactions and its affordability remains some of its biggest suits.   The average transaction cost for an XRP transaction is $0.0001 compared to Ethereum’s which can sometimes be hundreds of USD even for smaller transactions, especially considering XRP is often used for major international payments

4. Pre-mined tokens

Part of the reasons for Ripple’s speed and very low transaction fee is down to the fact that there is no need to mine it. And ultimately no need to inctivetize miners with larger transaction fees.

All of Ripple’s tokens are pre-mined, saving time and money and also energy, thus making Ripple one of the greenest crypto around.

5. Business-to-business approach

Ripple’s biggest customers are banks and financial institutions, rather than regular consumers. The goal is to use RippleNet technology to modernize the payment backend system, which will benefit end-users. American Express, MoneyGram, Santander, and Interbank are among the key companies on the platform.

How to buy XRP Token

XRP tokens are traded on cryptocurrency brokerage platforms or exchanges. There is no coordinated pricing or obligation to maintain a certain trading volume.

The XRP quote is determined solely and exclusively by supply and demand at each trading venue.

Ripple (XRP) is traded simultaneously in different countries and currencies and is available on many major crypto exchanges across the world.

Ripple XRP Exchanges

Cryptocurrency brokers mediate the purchase and sale between users, charging a fee for each trade made. They have price variations between them due to each of them having a different profile and number of customers.

Cryptocurrency brokers work like a Stock Exchange, so each exchange has its own market, with its own rules, rates, and terms. This explains possible variations between different currencies, even on exchanges in the same country.

Some exchanges where Ripple is listed are eToro, Binance, BitBuy, Bitstamp, Coinbase, and Kraken.

Ripple and XRP: What To Expect

Since 2012, Ripple’s goal has been to use the internet, blockchain technology, and XRP to enable fast, cost-effective, and reliable cross-border value transfers.

For example, some cryptocurrency payment processing platforms already offer XRP as deposit and withdrawal options.

Ripple set out to revolutionize the payments industry while pursuing a certain standardization of international transactions through financial technologies. Ripple is also encouraging regulators around the world to integrate blockchain into traditional payment transactions.

In essence, Ripple XRP is an ecosystem initiative that aims to invest, incubate, acquire and provide grants to projects and companies that could play a role in realizing XRP use cases outside of international transactions., like crypto debt solutions and the like.


While Ripple’s blazing speed and high scalability are its unrivalled strengths, they are also its weakness, since they are largely possible because of its centralized tendencies, especially when compared to other cryptocurrencies.

The company is also at the receiving end of a barrage of lawsuits in recent times, over the classification of its assets as a security or non-security: a decision that is bound to affect Ripple’s future.

Regardless of its lawsuits and a few worries from crypto purists about its centralization, Ripple remains one of the most successful projects in the crypto industry, and also one of the practical applications of the crypto industry in traditional spaces.

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