Launched in 2012, Ripple is a digital payment system and currency exchange network that can process transactions worldwide. The idea behind Ripple is to serve as a payment settlement asset exchange and remittance system, similar to the SWIFT system for international money and security transfers.
Ripple operates on an open-source and peer-to-peer decentralized platform that allows a seamless transfer of money for various fiat currencies, cryptocurrencies, and even commodities like gold.
Ripple is a global payments network, with major banks and financial services as its customers.
XRP is the native token that runs on the XRP Ledger, an open-source, permissionless, decentralized blockchain technology that can settle transactions in 3-5 seconds. XRP can be sent directly without third parties, making it an intermediate mechanism of exchange between two currencies or networks—as a sort of temporary settlement layer denomination.
XRP Founders
In early 2011, David Schwartz, Jed McCaleb, and Arthur Britto, three software developers, decided to create a more sustainable system for sending value without Bitcoin's high energy consumption and scalability issues.
In 2012, they developed a distributed ledger that improved upon these fundamental limitations of Bitcoin, initially naming the code Ripple. The ledger included a digital asset that would initially be called "ripples" (XRP as the currency code). Ripple stood for the open-source project, the unique consensus ledger (Ripple Consensus Ledger), transaction protocol (Ripple Transaction Protocol or RTXP), the network (Ripple network), and the digital asset (known as "ripples").
80% of the XRP was gifted to NewCoin, soon renamed as OpenCoin, and rebranded as Ripple Labs or "Ripple."
Founded in 2020, the XRPL Foundation is an independent and nonprofit entity with a mission to accelerate the development and adoption of the decentralized XRP Ledger. The Foundation received an initial donation of over $6.5M from Coil, Ripple, and Gatehub.
Today, Ripple has created a use case leveraging the XRP Ledger and XRP for liquidity management in its cross-border payments business. The RippleNet payment platform is a real-time gross settlement (RTGS) system that enables instant monetary transactions globally.
RippleNet's ledger is maintained by the global XRP Community, with Ripple, the company as an active member.
How Does XRP Work
RippleNet "offers connections to hundreds of financial institutions around the world via a single API and makes moving money faster, cheaper, and more reliable."
Ripple's XRP-powered solution helps network members process payments with real-time settlement and improve payment efficiency and certainty. XRP is used to source liquidity on-demand and reduce the amount of Nostro accounts required to make global payments.
Ripple funds the Interledger Protocol, a software platform that facilitates transactions between cryptocurrencies and bank ledgers. XRP also leverages RippleX, allowing developers and entrepreneurs to integrate blockchain technology into their applications with tools and services built on top of the XRP Ledger.
There is a transaction fee to use the exchange, and it must be paid in XRP. No one collects this transaction fee; the XRP is destroyed and ceases to exist. Having a cost associated with ledger entries helps prevent ledger flooding attacks.
XRP was pre-mined, meaning the XRP Ledger created 100 billion tokens that are then periodically released publicly. Ripple owns about 6%, while approximately 48% are held in reserve for regular release into the market through sales.
You can buy and hold XRP to speculate on an increase in the XRP price. Several types of wallets are compatible with the XRP network available on the market, including the software XRP wallet. You can also use it as a coin to exchange for other cryptocurrencies or a way to finance XRP transactions on the Ripple network. For more detailed information, go and check out our how to buy XRP article.
Some investors believe XRP's use by financial institutions via the RippleNet payment platform could significantly drive up demand for the cryptocurrency. As demand grows and its supply drops slightly, proponents argue that XRP will maintain an upward price trajectory.
The general momentum of the crypto market, financial markets, and global strategic macro factors also influence the XRP price.
Ripple Network Security
Ripple is secured by a network of independent validator nodes that efficiently agree on which transactions can be processed in the network. Permissioned servers maintain a Node List that helps the network achieve consensus through a Federated Byzantine Agreement consensus mechanism.
If 80% of these unique nodes deem a transaction valid according to the rules of the XRP Ledger, transactions are efficiently validated.
Where Can You Buy XRP
Check our step by step guide on how to buy XRP.
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