The Beginner’s Guide to XRP and Ripple

International money transfers take between 2 and 5 working days. The time you must wait for a transaction to complete often breeds frustration, anxiety, and stress. In an age where most operations are online, instant, and free, the current system seems obsolete and expensive.

XRP is a cryptocurrency that aims to change all of that and make money transfers immediate, cheap, and easy for everyone. Ripple’s most successful product in terms of blockchain technology has already gained universal appraisal and stroke major deals with many banks worldwide.

Read our beginner’s guide to XRP and Ripple to find out more about the cryptocurrency that comes as an alternative to Bitcoin and traditional financial systems!

XRP in a Nutshell

  • XRP was developed by Ripple to improve bank transfers between any (crypto) currencies
  •  XRP is the native digital asset of the XRP ledger
  • The XRP ledger is an open-source blockchain.
  • XRP acts as a transfer bridge between two or more fiat currencies
  •  No one can own the XRP ledger, including Ripple.
  • XRP is managed by the community who deals on the XRP ledger
  • XRP enables extremely secure, nearly instant money transfers
  • XRP does not necessitate mining
  • XRP takes only 4 seconds to complete a financial transaction
  • XRP allows for global transactions to take place almost freely
  • Anyone can use and own XRP.

What is the difference between XRP and Ripple?

If you are new to cryptocurrency, you probably find it confusing when people refer to XRP and Ripple as if they were the same thing. Experts may easily differentiate between the two, but you could easily get your wires crossed initially.

Let us clear the air a bit for you!

Ripple is a currency exchange and payment network developed by Ripple Labs Incorporation, a tech company based in San Francisco. XRP was released in 2012 as an alternative to outdated financial transaction systems.

Ripple supports money transfers in tokens, fiat currency, commodities, and cryptocurrencies on a distributed, independent protocol system called the XRP Ledger.

The XRP Ledger is commonly shared by the community that controls XRP, a decentralized native cryptocurrency.

In conclusion, Ripple is the Ripple Labs Inc. company’s system to support quick financial transactions on the XRP Ledger and through a digital asset called XRP.

What is XRP?

XRP is the intermediary that enables global financial transactions in nearly any currency or cryptocurrency to take place in a matter of seconds and almost completely free.

There are 100 billion XRP tokens in the world right now. All of them were created at once, and they do not require mining, which makes XRP entirely different from other popular cryptocurrencies like Ethereum and Bitcoin.

XRP is not an alternative to traditional banking systems but a grand improvement that should make them relevant to today’s level of technology, business applications, and customer demands.

The main benefit of using XRP in financial transactions is its speed. Using the XRP ledger, you can send and receive financial assets almost instantly as opposed to bank transfers that may take several days. Additionally, you pay a small fee for the transfer, which is even smaller than most bank commissions out there.

A Brief History of XRP and Ripple

Ripple Lab Inc. co-founders, Jed McCaleb and Chris Larsen, along with David Schwartz and Arthur Britto, were all part of the original team that came up with the idea of a decentralized, open-source financial network as a replacement for SWIFT (Society for Worldwide Interbank Financial Telecommunication) back in 2012.

The result of their work was Ripple, which aimed to “integrate with banks’ existing networks” and bring financial transactions to today’s high-speed transit level. The team also created XRP as a convenient intermediary agent that would make the entire process safer and more efficient.

By 2014, the company had secured $3.5 million for open-source payments and virtual currency.

In 2017, for a brief period, XRP hit a market capitalization of $73 billion, making it the second-largest cryptocurrency in the world, second only to Bitcoin.

At the time of writing, Ripple has already amassed more than 120 partnerships with worldwide banks under its belt. Some of them have already implemented projects that involve transfers through XRP, while others are testing the ledger as we speak.

What is the difference between XRP and Bitcoin?

When you hear the word “cryptocurrency,” Bitcoin is surely the first thing that pops into your mind. Now, XRP is a similar digital asset to Bitcoin when it comes to facilitating money transfers. However, there are major differences between the two, which ultimately puts them in two categories of cryptos.

On the one hand, XRP works at a staggering higher speed than Bitcoin. Transfers made through XRP take on average 4 seconds. At the other end of the spectrum, Bitcoin transactions may take between a few hours and a couple of days, depending on the volume.

The XRP tokens were coded all together at once. There was no need for mining, as it is the case for Bitcoin and Ethereum.

While Bitcoin has a hard cap set at 21 million, the amount of XRP has been defined from the start at the sum of 100 billion tokens. Ripple owns more than half of them and has announced that there will not be any more tokens created in the future.

Last but not least, Bitcoin appeared as a much-needed alternative to the traditional banking system. While both Bitcoin and XRP function through blockchain technology, the latter is meant to improve the classic banking network and help users transfer money quicker, cheaper, and more efficiently than ever before.

How does XRP work?

You are probably familiar with the way Bitcoin uses blockchain technology to complete a transaction. In that case, every transfer receives validation from many “miner” computers that have to solve a difficult math puzzle, confirm the result, and subsequently, the operation’s veridicality.

In the case of XRP, there are no miners involved. Instead, the XRP ledger, which constitutes around 150 computers or validators worldwide, will validate the transaction based on an internal poll or consensus between them. The process takes on average 4 seconds, and it is currently the quickest way to transfer money anywhere on the planet.

In Bitcoin, mining computers need to be high-performance machines that usually consume huge amounts of electricity. When it comes to validating transactions through Ripple, the validator computers can be run by companies, banks, individuals, or through Ripple computers.

XRP users have more control over the transactions than in any other blockchain-based network. They can define certain computers on the ledger as “trusted validators,” which will automatically confirm a transfer of digital assets as long as one of them validates it.

One of the most attractive XRP features for crypto enthusiasts is the ability to issue non-XRP currencies freely. Any user can create these digital assets called “issuances” or “IOUs” and trade them with others for XRP or identical currencies on the ledger’s decentralized exchange. 

This leads us to another exciting aspect of trading on XRP’s ledger: the decentralized exchange. Here, users can create “offers” through which they initiate a transaction. 

The purpose of a transaction is to exchange IOUs between them or for XRP tokens. An offer cannot place anyone in debt, and it goes through a validation process that regulates its value by similar offers in the decentralized exchange.

If two users want to exchange IOUs more cheaply, they can do so using the AutoBridging feature. AutoBridging uses XRP as an intermediary coin between the two issuances. This option occurs automatically on every OfferCreate transaction. Users can opt for alternative paths that have the same effect when they engage in Payment transactions.

Ripple’s expansion on the crypto market

Ripple’s work in blockchain technology does not end with the XRP ledger and its crypto. The company offers a software package called xCurrent for banking institutions to update the traditional transaction system quickly.

XCurrent permits instant international money transfers. It comes with a real-time messaging feature, and it confirms payment details and exchange rates on the spot.

The only problem with xCurrent is that it does not use XRP as a bridging currency. So, Ripple aims to convince banks to upgrade to xRapid, which would use XRP with the same benefit of instant international transfers, but with an additional cost-cut on each transaction of up to 70%.

Another future package from Ripple will be xVia, which will enable regular users to initiate and complete international money transfers through XRP on the payments network that connects all participating banks and exchanges, called RippleNet.

The latest project from Ripple is Xpring, which will be an offer for tech startups to move all of their financial operations on the XRP ledger. In exchange, they will receive grants that should accelerate their initial development.

How to buy XRP

At the moment, there is still an ongoing debate on the cryptocurrency market if XRP is actual crypto or simply security. Ripple has not yet convinced all the naysayers, so for now, you won’t be able to buy XRP on the major cryptocurrency exchanges like Gemini and Coinbase.

Still, there are safe and easy ways to buy XRP, such as:

Where to store XRP

While XRP is currently one of the hottest cryptos out there, storing these tokens online is not the best idea. The optimal choice would be to store XRP on cold wallets (offline storage devices) as soon as you purchase them.

Bitcoin live price
price change

Desktop wallets and online wallets are increasingly becoming the favorite targets of hackers everywhere. If you store your XRP tokens on hardware wallets like USB sticks that have been optimized to secure cryptos, you have a better chance of keeping them safe and sound.

The Benefits of Using XRP

  • With XRP, you can complete international money transfers in just 4 seconds.
  • There are nearly no exchange fees or banking commissions.
  • Ripple enables instant transactions between any currencies or cryptos.
  • The XRP ledger is flexible, scalable, and provides tools for settling smart contracts while you can run other applications in the background.
  • The Payment Channels feature on the XRP ledger enables quick asynchronous balance changes relative to your signature validation speed.
  • The Escrow feature allows for XRP to be locked until particular cryptographic conditions are met.
  • An advanced feature called DepositAuth lets users decide who can send them money and who doesn’t have this permission.
  • The Decentralized Exchange feature enables users to trade tokens or obligations on the ledger.
  • The transaction process is shielded by independent layers of protection against bugs under an advanced feature called Invariant Checking.
  • The Amendments feature allows the technology to evolve and expand through smooth, seamless upgrades.
  • Some of the banking institutions that work with Ripple and XRP include MoneyGram, Bank of America, American Express, UniCredit, and Standard Chartered.
  • XRP represents a viable alternative to other cryptocurrencies and a radical improvement to the old financial system

The Risks of Using XRP

  • Ripple still owns almost 60% of all XRP tokens, making the crypto somehow centralized for now despite Ripple’s denial of it.
  • It will take some time before Ripple and XRP will be equally beneficial to end-users as they are for banks at the moment.
Stay up to date with our latest articles

More posts

What Is CBDC In Crypto?

The cryptocurrency trading revolution exploded more than ten years ago and led to an almost unprecedented economic and financial earthquake. As a result, people are learning to change their approach to payment and investment systems, pushing up the price of many cryptocurrencies. Such a rapid change has not gone unnoticed on the boards of the world's major central banks. In fact, in an increasing number of countries, central banks are working on launching centralized digital currencies, known as CBDC. This…

How Social Leaders on Shrimpy help Investors Maximize Profits from Crypto Trading

The emerging trend of social trading allows millions of investors to interact with their peers and learn from accomplished traders in the crypto market. Every market participant wants to become a profitable crypto trader and maximize earnings from the ongoing crypto boom. Unfortunately, navigating the highly volatile space while grasping the complex learning curve that involves fundamental/technical analysis can be rather daunting. Becoming successful in the crypto market requires time to develop a working strategy that empowers investors to execute…

Decentralized Exchanges 2022: Which is the Best Crypto DEX to Trade on?

Market experts believe that the survival and growth of crypto largely depend on decentralization. The good news is that decentralized exchanges or DEXs have become highly popular, and the crypto market sees this as an opportunity to save the essence of traditional blockchain. Each decentralized exchange platform has the potential to revive and thrive crypto market. Moreover, each new DEX platform comes with its own set of features. There are several methods to use DEXs and make money.  Decentralized exchange…

Top Crypto Exchanges for Beginners in 2022

Investing in crypto is not as complex as most people think. So if you’re curious and optimistic about the rise of crypto, there is no reason to hold back and dive into it. Remember, it is normal for beginner investors to get caught in the cobweb of endless crypto exchanges. As a beginner investor, your objective should focus on the best crypto exchanges to make the right investment decisions. Whether it’s Bitcoin or Ethereum, cryptocurrencies continue to be at the…

Top 10 Cryptocurrencies in January 2022

Cryptocurrencies had a great year in 2021. In this period, we have seen the market go from being classified as a billion-dollar economy into a trillion-dollar economy. Aside from that, cryptocurrencies are gaining visibility in the mainstream world with, for example, El Salvador's adoption of Bitcoin as the official digital currency. As a result, investors are looking for the "new Bitcoin" on the market, hoping to find a great alternative in so-called altcoins. Unfortunately, many traders value an altcoin exclusively…

The Story Of Bitcoin And Ethereum’s Reversed Blockchains

Decentralization is the primary selling point of the three worlds of Bitcoin, crypto, and the web. There are several reasons for this. Some are related to the increased transactional efficiency that decentralization can provide. Others are related to creating permissionless, censorship-resistant digital networks. The most important is that decentralization weakens any single-point-of-failure, hence bolstering network security. This not only keeps a network as close to unbiased and ‘neutral’ as possible but almost guarantees its immutability. Yet the crypto world hasn’t…

What Are the Best Crypto Prediction Sites?

There are now several websites that provide, besides crypto live prices, some forecasts on the future of the leading cryptocurrencies. However, considering the market’s high volatility and the few analysis tools available to the public for formulating these forecasts, it must monitor these portals carefully. This article will report some of the primary sources of price forecasts in the crypto industry. However, we remind you that the information contained in the text does not constitute financial advice, and we invite…

Why Do the Cryptocurrency Prices Go Down on the Weekends?

If you have been in the crypto world for a while, you will probably have noticed a typical behaviour of the market during weekends. With some exceptions, we are used to seeing the price of significant cryptocurrencies drop over the weekend. The phenomenon is known to those who operate in this market, but understanding precisely the causes seems to be rather complex. Therefore, this article will discuss a definitive answer by analyzing the various main factors involved in this market…

How to Track and Stay Updated with Cryptocurrency News

Cryptocurrency is a young market and, as such, very fast-moving. If we exclude the phenomenon of stablecoins, the prices of cryptocurrencies change continuously, with sometimes very high volatility. Since a volatile investment is, by definition, a risky operation, traders usually look for ways to reduce the possibility of incurring significant money losses. In this context, it is vital to stay up to date with market events, even if this can be complex. As seen in the past, a single tweet…

Keeping Consensus: Explaining Ethereum’s Difficulty Bomb

Ethereum’s difficulty bomb is a tool for maintaining network consensus between all classes of participants. This is a challenging task for Ethereum compared to Bitcoin, which performs frequent backwards-incompatible hard-forks. The most significant of these – Ethereum 2.0 – is yet to come. When it does, the difficulty bomb will be crucial in ensuring the community’s smooth transition to the new protocol. Review: Ethereum 2.0 and Proof Of Stake To understand the necessity of the bomb, we must review some…