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What is XRP?


With the goal of facilitating the movement of transactions from financial institutions’ central databases into a more open architecture while also lowering costs, the XRP cryptocurrency token was created and is worth as much as $0.709 per unit. XRP transactions are particularly well suited for international transactions because they are secure, rapid, and cost-effective.

Ever since it was introduced in 2012, the cryptocurrency has set itself one of the loftiest objectives in the cryptocurrency sector. As a for-profit corporation that has been a prominent player in the XRP ecosystem from its inception, Ripple does nothing but stoke the fire. As a significant holder of XRP currencies, RippleNet contributes to the seamless operation of the XRP Ledger.


The concept of RippleNet, as well as its native token, existed prior to the establishment of the cryptocurrency market and the introduction of Bitcoin (BTC). Founded in 2004 by John Fugger, RipplePay is a peer-to-peer (P2P) banking network that allows users to send and receive money. The idea was to eliminate the need for banks entirely by utilizing the financial relationships that existed amongst network participants themselves. 

Jed McCaleb, and Arthur Britto were the first contributors to work on the XRP Ledger (XRPL) in 2011. Taking inspiration from the digital asset Bitcoin, they set out to construct a better version with the goal of building a more sustainable digital asset that would only be used for payments. Chris Larsen joined them shortly after, and the three of them went on to start NewCoin (quickly renamed OpenCoin and now named XRP). 

It’s important to remember that Ripple’s original premise was one of peer-to-peer exchange. The team came to the conclusion that in order to achieve consumer trust, it was vital to partner with reputable organizations of adequate scale during the development of their concepts. These firms are referred to as Ripple Gateways by Ripple. This architectural breakthrough resulted in the development of hybrid banking, which blends traditional banking institutions with a peer-to-peer network.

How XRP works

In terms of Ripple and XRP, there are two primary technologies to bear in mind: The XRP ledger (XRPL) and the Ripple Protocol Consensus Algorithm (RPCA).

XRP cryptocurrency transactions are validated through a consensus system that relies on numerous bank-owned servers to complete the transaction. Verification of the authenticity of proposed transactions is carried out using the most recent version of the XRP Ledger. 

XRP benefits 

XRP was created solely for the goal of making international payments and currency transfers more convenient for users. When Ripple was formed, XRP served as the cornerstone for the company’s cross-border payment network. Since then, the Ripple network has been expanded to support the usage of additional currencies in addition to XRP, allowing for greater flexibility in transactions.

For currency swaps to take place, it is usual for the conversion of one currency into another to be required before the transaction can take place. If you want to utilize XRP as an intermediary currency, you can do so in the same way that you would with Bitcoin, only that it has a lower transaction fee than Bitcoin.

XRP acquisition 

If you want to buy XRP on a centralized cryptocurrency exchange, you’ll almost always have to pay the exchange with fiat money (USD, EUR, JPY, etc.) first, and then use those funds to buy XRP.

A number of cryptocurrency exchanges allow clients to acquire digital assets with their credit cards through their websites. You may also be able to purchase XRP using other cryptocurrencies, a practice known as crypto-to-crypto trading, depending on the exchange you choose to do so (such as XRP-BTC). 

The purchase of an asset through a peer-to-peer transaction requires the buyer to meet with a family member or another XRP owner directly. 

XRP and Bitcoin

The most significant distinctions between Bitcoin and XRP are discussed briefly in the following paragraphs.

Both methods of transaction verification are distinct from one another. To verify transactions on the Ripple network, a distributed consensus technique is used. Nodes participating in the network run a poll to verify whether a transaction is genuine. Without the need for a central authority, this allows for near immediate confirmations, unlike Bitcoin which employs the mining concept in a Proof-of-Work (PoW) system.

XRP is a Bitcoin alternative that is both cheaper and faster. It is possible that transaction confirmations will take several minutes and incur significant transaction costs as a result of Bitcoin’s complex and extensive mining. Transactions involving XRP are quick and inexpensive, with confirmations arriving in milliseconds or less. 

XRP has a competitive advantage over Bitcoin because of its larger market capitalization. A total of 1 billion XRP were pre-mined by participants in Ripple’s initial coin offering (ICO), which has since been released into circulation. While the total number of Bitcoins available is limited to 21 million, there will never be more than that amount available. Investor interest in Bitcoin’s potential as a long-term investment has been fueled by a fabricated scarcity scenario. 

It is important to note that the circulation mechanisms of Bitcoin and XRP are distinct. As new Bitcoins are generated by the miners contributing to making the network grow. Although there is no set timetable for the release of these coins, their supply is highly dependent on the speed of the network and the difficulty of mining.

The manner in which XRP is distributed is governed by a smart contract. Ripple had originally planned to release a limit of 1 billion XRP tokens from escrow per month, however, the current quantity of XRP tokens exceeds 50 billion, exceeding the original plan.

XRP Ledger (XRPL) 

RippleNet is able to keep track of network participants’ transactions and reconcile them between different currency pairs because of the usage of a distributed ledger database known as an XRP Ledger (XRPL).

Instead of the 10 minutes required by Bitcoin, the transaction ledger is maintained by a committee of validators who operate as miners and full-node operators, allowing for the establishment of consensus in three to five seconds instead of ten minutes. For transaction validators, there is no financial incentive to perform their functions since there are no block rewards for validating them. 


Despite the fact that Ripple’s legal woes have had an influence on XRP, XRP is an autonomous coin that can and does function fairly independently of Ripple’s business model. To some, the price drop and bleak fundamental outlook present a bleak picture of XRP as a successful investment.

In contrast to other decentralized digital payment systems, XRP emphasizes performance alongside decentralization, with its primary purpose to provide financial institutions with a borderless payment and currency exchange gateway. Because of its rapid transaction times and cheap transaction costs, XRP is considered a serious competitor to cryptocurrencies such as Bitcoin and Ethereum by some investors.

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  • RippleNet
  • XRP
  • XRP Ledger
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Ayo Alabi
Ayo Alabi is an experienced writer and Fintech enthusiast, passionate about educating people and helping businesses that want to see their Google search rankings surge. Her articles have appeared in a number of e-zine sites, with focus on balancing informative with SEO needs–but never at the expense of providing an entertaining read.
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