What is Ripple? A beginners guide to Ripple and XRP

Article by · January 4, 2018 ·

The Ripple (XRP) Cryptocurrency

In 2008, the unknown Satoshi Nakamoto released the now iconic white paper that launched Bitcoin and the Blockchain to the world. It was the beginning of a new wave of emerging technologies collectively known as cryptocurrencies that have captured the imagination of a global audience and firmly established the next phase of the digital revolution.

In the aftermath of the Bitcoin, several other cryptocurrencies have emerged. Some have been Bitcoin derivatives, others have branched out to offer solutions that go beyond the purview of payment processing.

While there is still a lot of change taking place within the cryptocurrency market, one thing that has remained virtually the same has been the reluctance of banks and other financial institutions to legitimize these digital tokens. They are, after all, a technology that disrupts the core of the business process. However, there is a cryptocurrency that is known to have strong connections with banks and other players in the financial industry. The name of this particular cryptocurrency is Ripple.


Not many people are aware that Ripple is actually older than Bitcoin. Ripplepay, the predecessor to the Ripple cryptocurrency was developed way back in 2004 and launched the next year by Ryan Fugger. It was designed to offer secure online payment processing. The project was stuck in development hell for many years until Chris Larsen and Jed McCaleb joined the team and transformed Ripplepay from just an online payment processing solution to a fully operational blockchain based cryptocurrency. The Ripple Transaction Protocol (RXTP) was launched in 2012.

The Ripple Transaction Protocol

The Ripple Transaction Protocol is based upon a distributed and open source ledger framework which supports RTGS. RTGS stands for Real-Time Gross Settlement System. It serves as a cross-platform system that is able to perform financial transactions, currency exchange, as well as remittance. The protocol architecture of Ripple is uniquely designed to make the system functional across several asset classes. This means that it can support transactions carried out with cryptocurrencies, tradable commodities, and fiat currencies like USD, EUR, YEN, and GBP etc.

Like many blockchain-based protocols, Ripple uses a decentralized, DLT (Distributed Ledger Technology) framework. This allows for trustless authentication and authorization through the majority consensus of network participants.

Another key feature of the Ripple network is the Bitcoin Bridge. This is an actual link between the Bitcoin network and the Ripple ecosystem. Holders of XRP can pay Bitcoin account holders directly from their Ripple account without having to make use of cryptocurrency exchange services to convert Ripple coins to Bitcoins.

The Token

XRP is the designation given to the native digital token of the Ripple Protocol just like ETH (Ether) is the name of the native currency of the Ethereum blockchain. In terms of divisibility, it is divisible up to 6 decimal places. This means that it is possible to own one-millionth of an XRP known as a ‘drop’. The total supply of XRP is 100 billion which were pre-mined before the launch of the Ripple Protocol. No more XRP will be mined.

Why Banks Love Ripple

Ripple is a bit of a unicorn within the cryptocurrency scene as it is one of the few, if not the only open source blockchain-based project that is adopted by banks and other players in the financial market. The general consensus within the mainstream financial industry is that Ripple offers a much more secure digital currency framework than Bitcoin and the likes.

The price of XRP isn’t in the hundreds or thousands of dollars, yet it has climbed to number 4 on the most valuable cryptocurrencies in the world in terms of market capitalization. A big reason for this is due to the fact that banks love Ripple. More than 100 banks have bought Blockchain Technology licenses from Ripple. Ripple is designed to support the high liquidity demands of modern day banking and lending institutions due to its incredibly fast transaction speed.

Ripple vs Bitcoin – A comparison with Bitcoin

While XRP is created to coexist with the Bitcoin network ecosystem, due to the fact that the RXTP is supposed to be a robust financial protocol, there are some differences between Ripple and Bitcoin.

1. Blockchain Transaction Speed

The average transaction speed in the Bitcoin Blockchain can take up to 4 hours while in the Ripple protocol, the transaction speed is 4 seconds. The reason for this is due to the time taken to authorize a transaction in Bitcoin is far longer than that for Ripple. The major cause of this delay is the focus of the second difference between these two as discussed below.

2. Mining

Part of the transaction authorization process in Bitcoin involves the mining of transaction blocks. There is no mining in the Ripple protocol as all the ‘coins’ have already been pre-mined. In the absence of t mining, transactions occur a lot faster in the Ripple network than on the Bitcoin network.

3. Cryptocurrency exchange

Anyone wishing to trade Bitcoins has to make use of exchange services like Coinbase whereas Ripple has its own legacy exchange service that is built into the protocol.

4. Privacy Features

There are features in the Ripple protocol that actively track a whole host of user information that isn’t tracked on the Bitcoin network. It is possible to track account balance information on Ripple unlike in Bitcoin where only the transfer of Bitcoins is recorded on the blockchain ledger.

Comparison with other Major Altcoins

Most other Altcoins function primarily as stores of value which means they can be used as a medium of exchange. Within the ecosystem of their respective cryptocurrency networks, these coins act as mediums of exchange or as ‘gas’ to facilitate a transaction. In the case of the Ripple network, XRP is neither a medium of exchange nor a store of value. It isn’t used as ‘gas’ to facilitate transactions, the way Ether is used in the Ethereum network. XRP is majorly a bridge currency that is used when no direct exchange exists between two cryptocurrencies being used in a transaction.

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