What is XRP?

XRP is a cryptocurrency launched by the technology company Ripple. XRP is one of the oldest cryptocurrencies on the market, as its blockchain (XRP Ledger) was launched in 2013. Ripple, the company behind XRP, has gained recognition for its solutions in the banking and financial sectors.

Summary of XRP

• XRP entered the market in 2013 when technology company Ripple launched the XRP Ledger and the XRP token.
• The XRP Ledger (XRPL) is an open-source blockchain and payment system, with XRP serving as its native token.
• XRP’s technology was developed by Jed McCaleb, who left the project in 2014 to launch Stellar (XLM).
• Ripple, the parent company of XRP, is recognized for its banking solutions, many of which do not directly involve XRP.
• XRP emerged as one of the largest cryptos by market cap during the 2017 bull market.
• The SEC sued XRP’s parent company, Ripple, in 2020, but Ripple emerged victorious.
• Ripple launched a stablecoin (RLUSD) and an EVM-compatible sidechain to the XRP Ledger in 2024.
• XRP has been one of the best investments in the bull market that began in 2023.
• It is easy to buy the XRP token from all the most popular cryptocurrency exchanges.

XRP facts

Follow the XRP price from this page: XRP price.

XRP has been the most popular cryptocurrency on the market after Bitcoin and Ethereum since the 2017 cryptocurrency boom. It has also been among the top 5 cryptocurrencies by market capitalization since then, and since the end of 2024, XRP has been the 3rd largest cryptocurrency on the market.

XRP’s position has also been strengthened due to the situation in the United States. The background company Ripple has received significant wins in court from the SEC, and Donald Trump’s election victory could bring a substantial boost to US crypto projects. Ripple’s RLUSD will also likely benefit from stablecoin regulation approved in the United States in 2025.

XRP has grown a huge global fan base over the years. This is one reason why it has maintained its position as one of the largest cryptocurrencies by market capitalization.

The History of XRP and Ripple

The history of Ripple and XRP began in 2011, when Jed McCaleb started developing an entirely new consensus model. In 2012, Chris Larsen and Arthur Britto also joined the team. Chris Larsen is often credited as the founder of Ripple, along with Jed McCaleb.

McCaleb and Larsen then contacted Ryan Fugger. He has been developing the concept of a payment protocol called RipplePay since 2004. As a result, a company called Opencoin was founded in September 2012 and rebranded the following year as Ripple Labs.

The XRP Ledger was launched in 2013. It was first called the Ripple Consensus Ledger. At the same time, the XRP token was created as its native currency. As many as 80 billion XRP tokens were handed to the Ripple company, and 20 billion were distributed among the founders.

Ripple Labs changed its name to Ripple in 2015. The company’s CEO is Brad Garlinghouse, one of the most famous faces in the crypto world. Chief developer David Schwartz (pictured) has served as Ripple’s primary spokesperson for technology since the company’s inception.

Live now at #XRPMEETUPJAPAN: CTO @JoelKatz discusses the core technical innovations that make up #XRP and the #XRPledger. pic.twitter.com/YeTGaSUuH1

— Ripple (@Ripple) November 10, 2019

The founder, Jed McCaleb, is also known in the crypto world. He was also the founder of the infamous Mt. Gox exchange. The hack of Mt. Gox remains one of the worst events to have ever affected the cryptocurrency industry.

McCaleb is no longer on Ripple’s development team. In 2014, he founded an association called Stellar and started developing the Stellar Lumens cryptocurrency. His exit was not pretty; you can read more about it in the Stellar Lumens guide.

Ripple first came to the general public’s attention during the 2017 cryptocurrency boom. Since then, the XRP token has been in the top 10 list of cryptocurrencies. Over the years, XRP has garnered a devoted fan base. XRP has the largest fan base in the cryptocurrency sector, second only to Bitcoin and Ethereum.

The Ripple vs. SEC case

Since 2020, Ripple’s lawsuit has been the most significant topic of conversation regarding Ripple and the XRP token. The legal process began in December 2020 when the US Securities and Exchange Commission (SEC) sued Ripple’s leaders—the SEC charged Brad Garlinghouse and Chris Larsen with issuing an illegal security.

The background to the SEC charges was a dispute over the definition of security. For example, stocks and ETFs are securities in the United States. They can only be purchased from platforms specialized in securities trading, and in addition, every securities issuer must register with the SEC.

Cryptocurrencies are currently in a gray area. The XRP litigation started from the SEC’s view that XRP is a security.

It was the SEC’s first significant attack on the crypto sector. The SEC’s activity in this area has intensified since the collapse of the FTX exchange in 2022. The SEC has subsequently attacked other companies and cryptocurrencies as well.

The SEC’s attack was naturally a hard blow in Ripple’s direction, but the company decided to defend itself immediately. According to Brad Garlinghouse, the Ripple lawsuit was the only option:

Chris and I had the option to settle separately. We could do that, and it would all be behind us. NOT happening. That’s how confident Chris and I are that we are right. We will aggressively fight – and prove our case – through this case we will get clear rules of the road for the industry here in the U.S. We are not only on the right side of the law, but we will be on the right side of history (source: Ripple)

There weren’t any viable alternatives. Had Ripple decided to settle, it would have almost certainly led to XRP being classified as a security, which would have effectively halted XRP token trading on U.S. crypto exchanges.

Due to this lawsuit, the price of XRP crashed by over 50 percent in December 2020. It has also resulted in all major U.S. exchanges delisting the token. These exchanges don’t want to risk being charged by the SEC should Ripple lose the case. Some global exchanges, like eToro and Crypto.com, followed suit.

Ripple’s big win in court

Ripple’s trial lasted over two and a half years without significant wins. Ripple managed to get some concessions, but the SEC’s army of lawyers effectively blocked any bigger gains.

In the summer of 2023, we finally received good news. On Thursday, July 13, 2023, a verdict was announced, according to which XRP is not a security! In the judge’s opinion, the sales of XRP on exchanges were not illegal securities trading either.

This is how Ripple’s CLO, Stuart Alderoty, commented on the matter in X.

A huge win today – as a matter of law – XRP is not a security. Also a matter of law – sales on exchanges are not securities. Sales by executives are not securities. Other XRP distributions – to developers, to charities, to employees are not securities.

— Stuart Alderoty (@s_alderoty) July 13, 2023

The court decision was a significant victory for Ripple, resulting in a substantial increase in the price of XRP. The price of XRP skyrocketed by as much as 85 percent immediately after the news. US exchanges such as Coinbase and Kraken added XRP back to their lists just a few hours after the incident.

However, it is worth noting that it was not the final whistle for the process. It was the so-called “summary judgment” by one judge, rather than a trial in front of a jury (trial in English).

In October 2023, Chris Larsen and Brad Garlinghouse secured another victory when the SEC dropped all charges against them. Following this, there is only a minor dispute between the SEC and the Ripple company, but the XRP token is no longer in jeopardy.

The win was a massive relief for XRP investors. If the XRP lawsuit had resulted in a different outcome, it would have had a significantly negative impact on the XRP price.

The XRP Ledger

The XRP Ledger (XRPL) is an open blockchain and payment system that utilizes XRP as its native cryptocurrency. XRP is used to pay transaction fees in the XRP Ledger. Although already over ten years old, the XRP Ledger is technically as good as other fast blockchains.

Below is an image from xrpl.org.

With the latest updates, the XRP Ledger can handle approximately 3400 transactions per second with a block time of just a few seconds. Transaction costs are only fractions of a cent, i.e., almost free. This is achieved using the Ripple Protocol Consensus Algorithm (RPCA), a consensus algorithm developed by Ripple.

It is a blockchain designed as a pure payment system. The same applies to Stellar, which was mentioned in the history section.

XRP Ledger is technically different from almost all other cryptocurrencies. The XRP Ledger is not a Proof of Work blockchain like Bitcoin, where miners maintain the blockchain and are rewarded with bitcoins. It is also not a Proof-of-Stake blockchain like Ethereum, where validators receive block rewards through staking.

Why would anyone want to become a validator and support the XRP Ledger? The validators do not even receive transaction fees, which would be a very small share. Ripple’s response is as follows:

The primary incentive to run a validator is to preserve and protect the stable operation and sensible evolution of the network. It is the validators who decide the evolution of the XRP Ledger, so any business that uses or depends on the XRP Ledger has an inherent incentive to ensure the reliability and stability of the network.

In other words, those who build services on top of the XRP Ledger and want to help the ecosystem succeed run validator nodes.

The situation can be somewhat compared to the nodes of the Bitcoin network. Tens of thousands of people run Bitcoin nodes for free—the more nodes, the safer and more decentralized the network. The node operator thus indirectly helps Bitcoin succeed.

Features of XRP Ledger

The XRP Ledger was initially designed as a payment network, but the ecosystem has recently expanded to include smart contracts. However, it is essential to understand that the XRP Ledger is, first and foremost, a fast payment network, and it is not a competitor to Ethereum, Solana, or other similar smart contract platforms.

Next, let’s go through the current and future features of the XRP Ledger.

Versatile payment system

The XRP Ledger has always been a versatile, scalable, and cheap payment system. It was created as a platform for thousands of currencies. In the XRP Ledger, it is possible to transfer XRP tokens and fiat currencies, such as euros and dollars, at lightning-fast speeds.

Quote from Ripple’s website:

XRP Ledger was built specifically to be able to tokenize arbitrary assets, such as USD, EUR, Oil, Gold, reward points, and more. Any currency can be issued on the XRP Ledger.

Over the years, thousands of different assets have been created in the XRP Ledger. Transfers are cheap and fast, and the XRP Ledger user experience is pleasant.

In March of 2024, Ripple announced its plans to launch a stablecoin. The dollar-backed stablecoin will initially be available on the XRP Ledger and Ethereum.

RLUSD stablecoin

In April 2024, Ripple announced its plans to launch a dollar-backed stablecoin. The new stablecoin will initially be launched on the XRP Ledger and Ethereum. The ticker will be RLUSD, which refers to “Real USD” or “Ripple USD.”

Ripple aims to capture its share of the rapidly growing stablecoin market. It’s a great business because stablecoin operators get a good yield for the dollar collateral from US treasuries. However, the market is competitive, so it won’t be easy for Ripple to capture market share from existing players.

EVM sidechain

The XRP Ledger is designed as a fast payment protocol. It doesn’t support decentralized apps and smart contracts like Ethereum, a significant limitation that Ripple aims to fix with an EVM-compatible sidechain.

EVM stands for Ethereum Virtual Machine. Applications built on Ethereum can be easily cloned to an EVM-compatible sidechain. For example, DeFi apps such as Aave or Uniswap could run on Ripple’s EVM sidechain.

In June 2024, Ripple announced the official name for the sidechain: XRPL EVM Sidechain. A wrapped version (eXRP) of the XRP token will be used as the native token. XRP (and other tokens) can be transferred from the XRP Ledger to the EVM Sidechain using the Axelar Bridge protocol.

Hooks, DiD, NFT, AMM

XRP Ledger also supports NFT minting. Although NFTs have not gained much popularity, XRP Ledger supports this functionality.

DiD, on the other hand, is a Decentralized Identity that enables easy, secure, and decentralized identification for individuals and communities.

Hooks is a lightweight version of smart contracts. It is a technical update to the XRP Ledger, enabling similar functionality to be created on top of Ethereum.

It is also important to note that the XRP Ledger has had a built-in DEX, i.e., a decentralized exchange, since its inception in 2012. In recent years, Ripple has developed a completely new AMM (Automated Market Maker) protocol.

Ripple’s banking solutions

Ripple has gained recognition for its solutions in the banking industry. This sector is somewhat confusing because the names of the services have undergone constant changes in recent years. Almost every Ripple guide on the internet mentions services that no longer exist.

The latest example is the 2023 rebranding. RippleNet, previously known as the solution for Ripple’s banking ecosystem, is now referred to as Ripple Payments. Before Ripplenet, xCurrent, xRapid, and xVia products were also used; however, these brands have since been discontinued.

On its website, Ripple lists three service packages it offers to banks and institutions: Cross-Border Payments, Crypto Liquidity, and Central Bank Digital Currency. Let’s review these next.

Cross-Border Payments

Cross-Border Payments is Ripple’s most essential and well-known product for institutions. As the name suggests, the technology enables easy and fast payments across international borders and currencies.

In this solution, Ripple uses the XRP Ledger, and the XRP token functions as a so-called bridge currency. The illustrative image below is from Ripple’s website.

The XRP Ledger was created for this purpose. It enables fast and seamless payments from one currency to another. With XRP Ledger, transfers are possible on weekends or outside bank opening hours.

Crypto Liquidity

Crypto Liquidity is a liquidity hub for cryptocurrencies developed by Ripple. It is designed for institutions that require tools to manage multiple cryptocurrencies and execute trades. Crypto Liquidity is like an institutional crypto exchange.

Below is a picture from Ripple’s website.

Ripple has recently expanded its Crypto Liquidity service and introduced new cryptocurrencies. Additionally, a crucial component of the liquidity hub is its connections to the fiat world.

CBDC

Ripple also wants to be one of the leading technology suppliers for CBDC, the digital currency of central banks. CBDCs are likely to be launched in all Western countries by the late 2020s. Ripple offers central banks the Ripple CBDC Platform, a solution based on XRP Ledger technology.

Each solution is built on a private ledger that is based upon XRP Ledger technology—a proven blockchain that has transacted over 70 million times over the course of 10 years and is trusted by financial institutions around the world.

As the above quote from Ripple’s website states, CBDCs do not operate on the XRP Ledger, but rather on private blockchains built using XRP Ledger technology. Ripple has already held discussions with more than 20 countries about implementing CBDC on its platform.

XRP as an investment

From an XRP investor’s perspective, Ripple’s future looks brighter than it has in years. The main reason, of course, is the decision of the Ripple vs. SEC lawsuit. This threat has been looming over XRP for years, but it’s now practically gone.

The trial’s outcome was disappointing from the perspective of XRP investors. The price of XRP skyrocketed just a couple of hours after the news, but quickly returned to its starting point. Despite arguably the most significant gain in Ripple’s history, XRP’s price is still more than 80 percent below its peak six years ago.

XRP has been hyped for ten years because of Ripple’s banking partners and contracts. Ripple has hundreds of partners in dozens of countries, and millions of transactions have been made with XRP. How will all this ultimately be reflected in the price of XRP?

From a potential investor’s perspective, XRP will constantly face challenges in meeting inherent demand compared to smart contract platforms. A significant drawback is also the lack of staking, which locks 60-70 percent of the tokens on smart contract platforms out of circulation.

It is also worth noting that the Ripple company has been selling XRP tokens on the market for years and still holds nearly 50 percent of all XRP.

XRP’s strength lies in its massive fan base, which firmly believes in the project’s success. These fans do not easily sell their XRP tokens. Time will tell if there will be enough new demand for XRP from Ripple’s bank deals or the development of the XRP Ledger, which would bring a new boost to the XRP rate.

XRP token: pros and cons from an investor’s perspective

Finally, let’s outline the pros and cons of XRP from an investor’s perspective.

Pros

• History: XRP has established its position in the market for over ten years and is supported by all major exchanges.
• Ripple vs. SEC: The uncertainty over XRP’s future is finally gone!
• Loyal fans: XRP has a huge fan base that attracts new investors.
• Ripple’s deals: Ripple’s payment deals can provide new use cases for XRP

Cons

• Large market capitalization: XRP initially attracted many due to its low unit price, but has since lost this status to meme coins in recent years.
• No staking: XRP Ledger does not use Proof of Stake, which would create demand for tokens and lock them out of circulation.
• No smart contracts: XRP Ledger does not have native support for smart contracts, which limits its use cases.
• Confused price drivers: XRP’s most significant price driver has always been speculation surrounding Ripple-related news; however, the actual impact of this news remains minimal in practice.

To acquire XRP, you can easily do so through Binance. Read here for a beginner’s guide on how to buy XRP. The article goes through the step-by-step process of buying XRP using Binance’s mobile app.