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Ripple is a gross settlement system that operates in real-time and facilitates some of the fastest transactions among both traditional cross-border settlement systems and blockchain-based decentralized environments.

Ripple is a private company that developed, issued, and continues to issue XRP. Although commonly mistaken for Ripple tokens, XRP is a token developed by Ripple Labs. It is a decentralized digital asset that was created as a medium for payment on Ripple’s settlement system.

Ripple was often accused of centralization because the company holds a substantial number of XRP units. Ripple has also taken an interest in offering its payment protocol to banks and financial institutions.

After it was created and issued in 2012, Ripple’s XRP soon became one of the top traded assets on the market. The main idea behind the project was to enable instant, secure and low-cost cross border payments with no third parties involved. XRP was created as a medium to carry any type of value, including monetary value.

The Ripple platform is an open-source, decentralized environment set to support tokens based on the model of digital assets resting on blockchain platforms. Ripple was created to offer a secure and scalable environment for making fast transactions at nearly zero fees and with seamless processing times for all transactions made on the ledger. Ripple not only provides an environment for transferring monetary value but also facilitates support for any form of value, including commodities, currencies, cryptocurrencies, and even mobile minutes. Ripple, thus, represents both the remittance system and the company that created the Ripple payment protocol and XRP as a native token for the network.

Ripple encourages the use of XRP, advocating for the mainstream adoption of its cryptocurrency. However, the company allows users of the RippleNet payment network to use their currency of choice or make their own digital assets.


RippleNet is a network of payment providers and Ripple’s partners. These institutional payment providers are banks and financial institutions. Ripple is not only limited to the cryptocurrency market or the utilization of digital assets as payment. Rather, it also offers a cross-border payment system with institutional partners.

Ripple’s method of mainstreaming its technology is not encouraging the adoption of its native token, XRP. While RippleNet has over 100 partners, including institutional banks and payment providers, none of these partners is obligated to use XRP to transfer value via the Ripple network.

What is XRP?

XRP is a token or a digital asset, and it is the native token of the Ripple network. As previously mentioned, Ripple and XRP are often considered two different terms for the same asset or platform. However, Ripple is the company that created XRP and Ripple payment network, while XRP is a digital asset for transferring monetary value. It also belongs to the cryptocurrency asset class.

There are 100 billion XRP units in total supply, as specified by Ripple and as known to the public markets. However, nothing would prevent Ripple from issuing more tokens, which is not the case with currencies such as Bitcoin. BTC has a strictly determined supply, and there is no way to issue more than 21 million units.

Origins and History

Ripple and XRP first appeared in 2012. Ripple issued pre-mined XRP, and the currency has a total supply of 100 billion units. Although the Ripple and XRP are usually associated with Brad Garlinghouse, the CEO of Ripple, Garlinghouse didn’t participate in the initial creation of XRP or the general development of the Ripple network. It all started with an idea from Jed McCaleb.

McCaleb wanted to create an online global payment network with an intermediary asset similar to a cryptocurrency-class asset. (This asset class includes Bitcoin, the original digital currency.) The project was then developed and built by David Schwartz and Arthur Britto, who invited Ryan Fugger to join the team and help them develop the payment protocol we now know as RippleNet.

Fugger had already been working on a financial service designed to satisfy the need to move monetary value across an online payment protocol. Fugger debuted his financial services network back in 2005. At that time, the concept of blockchain, digital assets, and decentralized networks hadn’t been created yet. It wasn’t until 2009 that Bitcoin appeared as the original digital currency with a decentralized network run on the blockchain.

Fugger’s project was originally known as OpenCoin, a network that would later take on an improved form and the name Ripple. The team also decided to build a digital asset similar to Bitcoin, but they weren’t intent on building another alternative to Bitcoin. Rather, they were aiming at using different protocols and a similar architecture to that used by decentralized networks, which resulted in issuing XRP. It is possible that the company wasn’t able to join the IPO market, which is why it turned to issuing its own token and pitching it to ICO market, where XRP became one of the top-traded cryptocurrencies.

Ripple Labs was formed by the primary team of contributors and developers working on the project. The goal was to build a code for a consensus verification system that set the rules for how the Ripple network functions. One of the ideas that formed the network was to create a system that could be easily integrated with the traditional systems used by banks and financial institutions to improve efficiency and lower fees for cross-border and remittance payments. The idea was to make the network attractive to both payment providers and service users by offering seamless transactions, instant transactions, and low-or-no fees.

The only reason why transactions on the network are not free for XRP-based transfers is to protect the network from malicious attacks. With Bitcoin, security is established through the process of mining. However, Ripple has a different infrastructure—it doesn’t use a proof-of-work protocol.

After issuing XRP in an Initial Coin Offering (ICO), officially releasing XRP tokens and opening the Ripple network, the team was accused of making millions by issuing and selling assets that have “non-existent value” while not being legally obliged not to issue more XRP units and make more profits. By owning XRP, buyers are not investing in the value of Ripple as a company, which is why many investors were upset after finding out that XRP exists separately from the company that made it, which is, in fact, part of the decentralization of the token itself. The token has no central authority and cannot be manipulated by Ripple, but the company still has the right to issue more tokens. That way, it can create a situation that would allow the company to have a perpetual ICO with an undefined supply limit.

The market of cryptocurrencies gained mass attention in the years after XRP was issued by Ripple, and the team was accused of selling unregistered securities, referring to XRP as a centralized asset owned by the company. Ripple claims that XRP is a decentralized asset with an independent role from the company.

In 2013, only a year after Ripple was launched and XRP was issued, the network made it to its first intended real-life use by partnering with Earthport payment service. Later, when RippleNet was formed to replace three Ripple products —xCurrent, xRapid, and xVia—the company reached a milestone of partnering with 100 banks and financial institutions set to use Ripple’s network but not necessarily XRP.

Technology and Architecture

Other cryptocurrencies are often compared to Bitcoin, but it is difficult to compare Ripple and XRP to BTC and the Bitcoin network. Ripple and XRP are not necessarily related in terms of making transactions via the Ripple payment protocol. If you try to compare the way Ripple works with the Bitcoin protocols, you’ll find that it is easy to conclude that Ripple has more control over XRP than proponents of decentralization would like to believe.

In the case of Bitcoin, miners work on validating transactions, generating new blocks, and securing the network by preventing double-spending. Anyone can become a miner, and miners receive a pre-defined reward for mining in the form of BTC. That reward is halved every four years or so to control the supply in an automated way and prevent inflation. That is not the case with Ripple.

Ripple has more control over its token. All existing 100 billion XRP units have been pre-mined. Developers took 20 billion XRP and gave the rest to the company, and the company distributed its XRP to users and buyers, keeping around 50 billion in escrow.

There are no miners to validate transactions either.

The Ripple Network Demands Reliable Network Validators

Reliable means that not everyone can take on the role of the network validator, which is another reason why some crypto enthusiasts believe that XRP and Ripple are not completely decentralized. In theory, the servers that validate transactions can belong to anyone—any individual, company, or bank—but validators on the network are carefully picked.

Unlike Bitcoin and many of the derivatives, forks and altcoins based on the Bitcoin Core, Ripple and XRP don’t use a proof-of-work (PoW) protocol. PoW has been proven to have a high amount of energy consumption, which is why mining Bitcoin takes a lot of computational and electric power. To enable a faster way to send and receive monetary value and other types of digitized valuables, Ripple also uses a distributed ledger technology (blockchain) that operates on a shared public database with consensus mechanism, enabling communication between validating servers and the public shared database.

Ripple is also open-source, but it is not entirely based on blockchain technology as many have been led to believe due to the open-source network, public shared database and concept of validators. Although oriented through consensus mechanisms much like any other blockchain-based cryptocurrency platform, Ripple doesn’t use the blockchain in its original form. Instead, the network uses a hash tree that summarizes the data on the network, which is then turned into a single source of value. That source of value is then compared and verified by server validators to provide conditions for consensus. That is how transactions, as well as any form of value transferred via the Ripple network, are validated.

Precisely because of the lack of blockchain-oriented components, XRP cannot be mined. Instead, all XRP tokens are categorized as pre-mined, which means that all XRP units that exist in the total supply were created at once. This method of issuing is similar to the way publicly traded companies issue stocks and shares.

However, unlike stocks, XRP doesn’t reflect the value of Ripple as a company. XRP can function without the company, and the Ripple network can operate with other types of currencies, including fiat. Thanks to the use of validators and the hash tree, Ripple can process a great number of transactions at record speed and can scale to the level of Visa.

For the record, Visa can process up to 50,000 transactions in a second. Ripple can process up to 1,500 transactions in a single second, making it one of the fastest ledgers on the market.

As far as the number of validators is concerned, Ripple is said to have around 200 different validators out of which only six belong to the company. This decision is to prevent centralization and diminish a centralized authority from the equation.

Ripple’s XRP Wallets

There are several types of digital wallets for storing cryptocurrency, and many of these wallets support Ripple’s XRP. Depending on how XRP is used or how often you use your XRP units, you can choose from more than a few types of wallets based on your preferences.

Some of the most reliable wallets are hardware wallets, and they are usually the top choice for investors and holders who want to keep their XRP and other cryptocurrencies for a long time. Hardware wallets offer safe and secure storage of your funds, as well as some of the safest and most stable options for XRP storage. Hardware wallets also come with desktop and mobile applications so users can keep track of their balance in real-time and use their XRP on demand.

Other types of wallets that can be used for XRP are online, desktop, mobile and paper wallets. The safest in terms of immunity to cyberattacks are paper wallets and hardware wallets. Mobile wallets for XRP are great for users who want to keep their units for shorter periods of time or spend or trade their tokens more often. Paper wallets are perhaps the least technologically advanced, but are handy for keeping your funds safe in the long run. 

Don’t share your private keys with anyone. Keep them stored in a secure, preferably physical storage location where they can’t be stolen. There are no third parties or centralized authorities that will help you retrieve your private keys if you lose them, so keep your wallet information safe.


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