What is XRP?

There is a lot of attention given to the price of XRP as it continues to move up the crypto market charts.

Ripple is the name of the company that created the Ripple protocol, as well as the XRP token.

Ripple’s goal is to build a global, enterprise-scale blockchain solution for handling payments across borders with no chargebacks. This type of service is designed primarily for banks, payment providers, and other financial institutions.

XRP, which is the currency native to the Ripple protocol offers near-instant transactions at low cost but does so in a way that some consider controversial or even contrary to truly decentralized cryptocurrency systems. There’s no mining — instead, network validation is built upon private nodes, which critics point out is a situation that creates centralized power structures.  

XRP price

The XRP market potential consists of the hundreds of trillions of dollars that move across borders each year. Ripple experienced 36,000+ percent growth in 2017, making it the year’s best-performing cryptocurrency. As of late 2018, it ranks second in total market capitalization. At one point in late 2017, Ripple reached a total market capitalization of over $130 billion, rising to an all-time high of $3.84 per XRP token.  

Why is Ripple (XRP) important?

Having raised over $93 million through traditional investment methods from some of the biggest names in venture capital, Ripple is much more than just a small team with a white paper or successful ICO (initial coin offering). The company itself is well-funded and counts the likes of UBS, Santander, Standard Chartered, UniCredit and American Express as customers.  

Ripple primarily seeks to modernize cross-border payments on a global scale.

Transferring money across borders using traditional methods, such as third-party services, is painfully slow, and almost always expensive. The fastest way to get money from San Francisco to Berlin is to literally hop on a plane with cash and fly it there. A standard wire transfer or SWIFT payment can take days, and incur hefty fees. In an era of technological progress and rapid delivery of just about everything else on a global scale, it still remains difficult to move money from one country to another. Antiquated systems have created a need for new, less restrictive methods for transferring funds, and Ripple has developed a solution in an attempt to address this and modernize the global financial system.

How XRP works

The XRP token runs on the Ripple Protocol, which is built with private, centralized nodes. A node is a computer on the Ripple network that is authorized to verify transactions and keep the entire process running smoothly. In this fashion, the XRP ledger is not truly decentralized (like bitcoin’s permissionless, distributed ledger which allows anyone with a computer and internet connection to download and run a node) but rather functions through the collaboration and agreement of 55 validator nodes, held by private institutions such as Microsoft and Massachusetts Institute of Technology. This gives the nodes authority over the network as opposed to a more decentralized system.   


XRP does not use proof-of-work to maintain the network and create new coins. Instead, the coin’s supply is pre-mined. Some are held by Ripple and some have been distributed. Banks love this system because the familiarity of centralization it offers, but its lack of decentralization has been the source of some controversy among the cryptocurrency community.

Think of Ripple as a gateway — banks don’t necessarily need to use the XRP token to adopt the Ripple protocol; they can elect to use native fiat currency, other cryptocurrencies, or any other unit of value such as commodities, or even frequent flyer miles.

Transactions can enter the Ripple gateway as US dollars, for example, exchange into XRP, transfer to where it needs to go, then exchange back out into native fiat currency, such as Indian rupees, once it’s reached its final destination. This method brings international wire transfer times down from days to just seconds. Confirmations are near instant, with no chargebacks, and transaction fees are minimal, with just .00001 XRP charged per transaction.  

Payments settle in four seconds with XRP, compared to hours with bitcoin. XRP can also handle 1,500 transactions per second versus an average of only three to four transactions per second with bitcoin. The rapid transaction speed and the ability to handle a high volume of transactions means that XRP offers a viable alternative to current payment processing models, and has been proven to be able to scale to handle the same throughput as VISA.