Ripple and XRP: a comprehensive guide

What’s Ripple? It’s not a cryptocurrency as such. Ripple is a private company which has developed a payment and trading network called RippleNet. By using blockchain technology, Ripple aims to make interbank payments simpler, faster and cheaper. One of the services developed by the company uses the cryptocurrency known as XRP. Ripple has developed partnerships with many players over the years, including payment service providers and crypto asset trading platforms. Find out everything you need to know about Ripple: its history, how it works, its future…

1. The history of Ripple & XRP

Ryan Fugger, a web developer from Vancouver, came up with the idea behind Ripple in 2004: a decentralised digital money system. This was initially named RipplePay. Ryan Fugger’s idea was to make it easy for individuals and communities to develop their own virtual currency. The RipplePay system was launched in 2005, offering secure payments worldwide.

In 2012, Jed McCaleb of the eDonkey network and Chris Larsen, founder of the companies E-Loan and Prosper, approached Ryan Fugger to pitch their idea for a new digital currency. This was based on a system of verification by consensus between members of the same network, rather than on mining, as with Bitcoin. Ryan Fugger put them in charge of RipplePay. McCaleb and Larsen renamed the company OpenCoin. Their aim was clear: to provide payment solutions for banks and financial institutions. They then developed a new payment protocol, based on the concepts created by Fugger. They called it the Ripple Transaction Protocol (RTXP).

In 2012, inspired by the creation of Bitcoin, Ripple deployed its own blockchain to provide trading services for several currency pairs and to store network participants’ accounting information. The native cryptocurrency of this blockchain, XRP, was created at the same time.

In 2013, OpenCoin changed its name to become Ripple Labs. The company launched numerous projects, some of which have now been discontinued. For instance, Ripple Labs launched Codius in 2014; its aim was to develop smart contracts. It wasn’t until 2015 that the company changed its name to Ripple.

Ripple aims to ensure secure inter-bank exchanges which are verified by network participants via a consensus mechanism, in real time and with an open-source solution.

On 13 June 2016, the New York Department of Financial Services awarded Ripple a virtual currency licence. In October 2017, the company established partnerships with hundreds of financial institutions. Ripple’s virtual money, XRP, is now a leading name in cryptocurrencies.

2. What is the role of the XRP cryptocurrency?

XRP is a unique cryptocurrency. With this system, the XRP token is not used as a payment currency but as a universal bridging currency. To better understand this concept, let’s take the following example: when you carry out international transactions, you very often have to exchange one currency for another, e.g. the euro for the dollar. This system of cross-currency transactions is expensive and can take several days.

With the Ripple protocol, you first exchange one euro for one XRP, then one XRP for one dollar. This system simplifies transactions, making them instantaneous and less costly. As we will see later in this article, XRP’s utility is the subject of debate because the token isn’t used in all the solutions which Ripple offers.

3. How can users buy XRP?

As an individual, you can invest in the XRP token via crypto asset platforms which offer it, such as Coinhouse. But remember that owning XRP doesn’t give you any rights over the evolution of the protocol. Another issue: you won’t take advantage of the intrinsic utility of the XRP token because you’re not using the Ripple network. An XRP does not represent a share in the value of the company, nor does it entitle the holder to any voting rights or reward. Consequently, its purchase is purely speculative. Do you want to invest in this cryptocurrency? Visit this page to buy XRP and read all our advice.

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4. The future of Ripple & the future of XRP

One of Bitcoin’s strengths is the fact that there is no central authority which can take unilateral decisions about the protocol or monetary issuance. It’s this all-important decentralisation which provides a number of solutions.

However, Ripple has the right to sell up to 1 billion XRP per month on the market. It does this to a certain extent: some XRP are allocated for sale to major customers and institutions, while others are sold directly on the market. The fact that the majority of the Ripple cryptocurrency is held by a few investors has an impact on its price. This is an important detail: Ripple and its major investors have real power over the XRP token.

Ripple therefore has significant control over the token’s monetary issuance policy; at the same time, it has a constant source of revenue through the quarterly sale of new units on the market.

In view of the ever-increasing competition from other cryptocurrencies, XRP’s potential is the subject of debate. The XRP token’s monetary policy is relevant here. We advise you to take these issues into account and understand them before making the decision to invest.

The first point to consider is undoubtedly the number of existing XRP tokens: 100 billion. This is an extremely high number, especially in comparison to 21 million Bitcoins. But of these 100 billion, there were only 46 billion units in circulation in April 2021. More than half of the tokens are held by Ripple. As mentioned earlier in this article, the company’s control over such a large proportion of the tokens has an influence on the price of XRP.

What’s more, this causes an artificial scarcity of supply on the market, which the company Ripple completely controls. When the company sells some of these tokens, the value of the XRP token is likely to drop, unless there is significant demand at the same time. Moreover, 70% of the total number of units is controlled by the 100 richest addresses.

Furthermore, while Ripple is a very fast blockchain, there is debate about how it works. Ripple’s choices have ensured that it can offer a much faster blockchain than Bitcoin. XRP transactions can be validated in under four seconds, as opposed to an average of 10 minutes for Bitcoin. This is a real strength, although it must be put into perspective: the concept of trust is relative, because all validators are closely linked to Ripple.

Unlike the Bitcoin blockchain, the Ripple blockchain does not rely on the Proof of Work consensus algorithm. There’s no mining to verify transactions either. The network works differently and reaches a consensus using its own algorithm. There is no reward for running the network and it is not possible to mine XRP: as we have seen, the tokens are issued by Ripple.

The decentralisation of the project also raises questions. It is possible to become a validator of the XRP blockchain without requesting permission from Ripple. But once again, Ripple recommends that its customers use a list of trusted participants to validate their transactions. This list is known as the Unique Node List. About half of the nodes on this list belong to Ripple; this significantly undermines any idea of the project’s decentralisation.

The role of validator on the Ripple blockchain is very demanding. Validators need a lot more memory on their computers than for the Bitcoin blockchain. Ripple has strict requirements: validators must be able to maintain the node 24/7, integrate updates very quickly and be identified. This is particularly restrictive for participants.

In theory, the Ripple blockchain works as an open-source distributed ledger which can continue even if the company ceases to exist and to which anyone can contribute. In practice, the company maintains close control over validators and, ultimately, over all the transactions which occur on the network. Ripple and its cryptocurrency have undeniable advantages but it’s important to think carefully before buying or selling XRP.

In short, Ripple has advantages and disadvantages. Its advantages include the speed of transactions, their high level of security and their low cost. Ripple also serves as a bridge between real and virtual currencies. But these undeniable advantages are counterbalanced by several disadvantages which must also be considered:

  • As the cryptocurrency is pre-mined, it does not offer a reward system;
  • The XRP token has not been widely adopted by the general public;
  • Ripple’s centralisation gives it a questionable monopoly.

It’s difficult to predict the future of Ripple and XRP. The company has attracted powerful institutions, including the Abu Dhabi National Bank which now uses XRP to carry out transactions for exorbitant amounts. The XRP token is now one of the top three cryptocurrencies in the world, just behind Bitcoin and Ethereum. However, the volatility of XRP continues to be an issue when it comes to predicting its long-term evolution. Although it may be tempting to buy XRP when the price falls, the price varies too much to guarantee a real capital gain afterwards. Caution is advised, even if the future of XRP looks promising.

5. Understanding the solutions provided by Ripple

The Ripple network currently offers a package of three products, designed as a payment system solution for banks and other financial institutions. Its three main products are: xRapid, xCurrent and xVia.


xRapid is probably the most important product: it’s an on-demand liquidity solution which uses the XRP token as a global bridging currency between different fiat currencies. The system guarantees shorter confirmation times and much lower costs than conventional transfer methods.

Let’s choose another example to better understand how it works: a Spanish bank A wants to send €10m to a Peruvian bank B. Bank A will convert the €10m into XRP with “liquidity providers” and send the XRP in a few seconds; the receiving bank will exchange these XRP with other “liquidity providers” for €10m in Peruvian sols. Although there may still be issues caused by XRP’s volatility, this is unlikely given the speed of the operation. A service like this is appealing to banks because it allows for much faster transactions than traditional inter-currency transfers. The value of the XRP token could appreciate if the xRapid system enjoys large-scale success.


xCurrent is another solution designed to enable instant settlement and tracking of cross-border payments between members of the Ripple network. But unlike xRapid, the xCurrent solution doesn’t use the XRP cryptocurrency by default. Remember that xCurrent enables cost-effective real-time payments between financial institutions.

It is based on an asset exchange system in the form of IOUs (I Owe You). This is simply an informal document acknowledging a debt. IOUs are extremely cheap to send, costing a fraction of an XRP. Consequently, financial institutions are also interested in this solution.

xCurrent incorporates a messaging service which provides peer-to-peer communication between financial institutions connected to the Ripple network. It allows for the exchange of information about fees, exchange rates, payment details and even the timeframe for the payment of funds. xCurrent also supports cryptocurrency transactions.


xVia provides another service, although it isn’t so fundamental: it facilitates the work of banks through a standardised API which enables them to interact within a common framework, without having to support multiple payment network integrations.

To our knowledge, these products are not widely used at present. One of the major problems with the protocol is that XRP, which is supposed to act as a currency of exchange between different parties, is unstable: its price fluctuates against the dollar, for example. What’s more, the various products are all based on the idea that customers only keep XRP during the transaction and get rid of it as soon as possible. However, new protocols with a stable currency have since emerged, such as Tether, and are seeing much faster adoption, simply because they don’t have this issue.

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6. Ripple’s legal woes

At the end of 2020, the SEC, the US stock market regulator, launched an investigation into Ripple and two of its executives. The company is accused of having sold XRP to investors as being a capital gains opportunity, even though XRP is only used to a very limited extent in the company’s products and is therefore a security. However, this kind of product sold by a company is much more regulated than a traditional cryptocurrency such as Bitcoin. It could be relatively difficult for Ripple to recover from this situation.

This lawsuit should be taken into consideration by potential investors because it could have an impact on Ripple’s future. An agreement between Ripple and the SEC could be reached by 2023. Today, the situation and any possible conclusion are unclear, although many investors are predicting a victory for Ripple. Despite this, XRP is undoubtedly one of the top three cryptocurrencies.


Ultimately, XRP is quite dissimilar to most other cryptoassets. It’s a highly centralised network which is controlled by the company which manages it. Monetary creation depends entirely on the goodwill of its management. The XRP token has no other purpose than speculation and is unstable, which is far from ideal for a medium of exchange. A large majority of XRP is owned by a few people and the US authorities accuse the company of manipulation.

We encourage you to be cautious about investing in XRP. Although the price is low compared to Bitcoin, this doesn’t necessarily mean that it’s a “good deal”: you have to look at the total capitalisation, which depends on the number of tokens in circulation. Caveat emptor is a Latin phrase which means “let the buyer beware”: it’s never been truer in this case.