How could a single digital currency like XRP arouse so much division within the crypto community? From heated debates to ad hominems, it’s never a dull day in crypto thanks to Ripple and XRP.

The main problem is that a lot of people don’t understand enough about this peculiar asset to see it for what it is. First of all, one needs to realize that Ripple and XRP are referring to two different things.

The Ripple Protocol is a system that includes a payment and settlement network that may contain different assets, one of which is XRP.

XRP just happens to be the native currency, as well as the ‘standard’ to be used to settle transactions and transfer value in the Ripple network. The question is, what gives it value?

Background on Ripple

The concept behind Ripple existed way before Bitcoin was ever conceived. It started out as RipplePay in 2004, but that version of Ripple is so different from what we see today.

Most of the changes in the Ripple ecosystem started when well-known developer Jed McCaleb entered the scene and invited a group of influential investors to finance Ripple Labs.

Quick facts on McCaleb; he is a well-respected technopreneur who co-founded several remarkable crypto startups including Stellar, Mt Gox, Overnet, eDonky. With the help of his co-founders, McCaleb was able to successfully deploy the Ripple protocol in 2012, which several banks started to adopt in 2013. In fact, 80% of the banks in Japan use their payment protocol.

Today, Ripple Labs is headquartered in San Francisco with over 350 employees.

Ripple Protocol

The Ripple Protocol is a global monetary system used for settlements, payments, and exchange.

Legacy banking institutions are slow and expensive, especially in conducting cross-border transactions. The protocol aims to enhance these slow systems, instead of replacing them. In that sense, it is very much distinguishable from Bitcoin, which is conveyed as a ‘bank killer’.


There are a lot of misconceptions about Ripplenet. Some believe that it is the blockchain that contains the digital currency, XRP. That is only half-true.

While it’s true that Ripplenet is based on blockchain technology and contains XRP, it is not a blockchain per se. Rather, it is a network of payment service providers that offers a way to settle global transactions in a frictionless manner.

You could call it an inter-blockchain, in the sense that it can connect multiple blockchains, a function similar to Cosmos and atomic-swap technology. Ripplenet takes it further by including fiat, commodities, and other assets into the mix, providing a seamless global settlement layer of value.

Ripple Protocol Consensus Algorithm

Since Ripple is not a blockchain, it doesn’t require mining nor staking. Many crypto proponents, however, find a blockchainless cryptocurrency — if you could call it that — absurd.

And the question that usually pops up is, ‘how is the network ensured to have consensus’? Namely, how do we, as participants, know that every node in the network is in agreement and that no one is cheating? While Bitcoin and other decentralized cryptocurrencies use mining and staking for this function, Ripple Labs has patented its own technology, the Ripple Protocol Consensus Algorithm (RPCA).

The RPCA is a consensus mechanism that enables transactions to be validated by validator nodes known as UNL. A UNL’s function is to prevent cheating tactics like double-spending. Furthermore, UNLs have no monetary incentives for validating transactions. Instead, they earn voting rights on Ripplenet.

Ripple has a plan to promote decentralization among its UNLs.

Use Cases of the Ripple Protocol

The Ripple protocol has three main uses:

Payment — Ripple allows individuals or banks to send and receive international payments in about four seconds on average. This is a major improvement from traditional banks that take days to process cross-border transactions.

Settlement — The protocol’s settlement layer enables anyone to issue their own currency with speedy and low-cost transactions. Furthermore, you could also issue gold certificates, air miles, and other valuable assets.

Exchange — Several currencies cannot be converted directly from one another. Therefore, the unofficial world reserve currency, which is currently the USD, is often used as a bridge between different currencies. The problem is that this method requires a double commission — one from currency A to USD, the other from USD to currency B — which costs more. With Ripple as the new mediator, the fee becomes negligibly low.


XRP is a digital asset created by Ripple to be the native currency of the network. As explained above, XRP is purported as the mediator currency between currencies that can’t be directly exchanged. For instance, if someone wants to exchange his Venezuelan bolivar for XMR but can’t find any marketplace that offers this trading pair, XRP can then be used to settle this desired transaction.

One needs to note that users of the Ripple network do not necessarily need to use XRP. Institutions can create issue their own asset on Ripplenet. It just so happens that the Ripple company promotes XRP as the standard for payment settlements. This calls into question the digital currency’s intrinsic value.

With that being said, XRP is one of the speediest and most low-cost digital currency to transfer globally. With a transaction fee of 0.0001 XRP (roughly $0.00002), you can send cross-border payments without worrying about the charges. These transaction fees are burned from the network, making the currency more scarce the more it is used.

However, this is currently offset by the fact that more than half of the asset’s supply is locked in escrow, and is scheduled for release periodically.

XRP has remained the top three most valuable digital currency in terms of market cap for several years.

Exchanges to buy XRP

If you want to buy or trade XRP, here are the following exchanges that offer it:

  • Binance
  • OKEx
  • Huobi
  • Hotbit
  • MXC

The Takeaway

Ripple and XRP receive a considerable amount of flak from the crypto community for allegedly being centralized, but the truth is far more complicated than most could fathom. For one, less than 30% of Ripple validators are from Ripple themselves. And they do plan to separate themselves from the UNL list one day to increase decentralization.

A lot of die-hard crypto enthusiasts also question the security and the incentive mechanism (or the lack of it) of the network, considering that validators don’t earn any monetary reward, unlike in Bitcoin and most cryptocurrencies.

We do need to realize, however, that the crypto space is nascent, and might still not be past the bleeding-edge phase. Therefore, projects like Ripple and XRP should be taken seriously and carefully at the same time.

Can XRP outpace Bitcoin and usurp the dollar as the world reserve currency? Only time will tell.