What is Ripple XRP? The Beginner’s Guide

What is XRP? Ripple XRP is one of the best-known cryptocurrencies. It is a coin dividing crypto investors into two groups: XRP has both its fanatic supporters and opponents. This article is the XRP Beginner’s Guide. We’ll go through the history of XRP, Ripple, and key technical features.

XRP Beginner’s Guide – Ripple vs XRP

Let’s start by placing XRP into the correct category and explaining the difference between XRP and Ripple.

We like to divide cryptocurrencies into three categories: currencies, platforms, and tokens.

Bitcoin is the best-known cryptocurrency. Other known currencies are Bitcoin Cash, Litecoin, and Monero. They are created to function as P2P digital money and don’t have many other features.

Ethereum is the king of platforms. These are essentially like iOS and Android. Platforms are operating systems for applications. In the crypto world, we call them Dapps (distributed apps). Other platforms include Cardano, Binance Smart Chain, Tezos, and Polkadot.

Tokens are always created on one of the platforms. It means they don’t have a blockchain of their own. Tokens have utility or governance purposes inside a specific app. The most popular ones are DeFi tokens, such as Aave and Uniswap.

XRP doesn’t fit directly into any of these categories. It is not a traditional platform competitor, but it’s also designed to be more versatile than simple cryptocurrencies. XRP is often titled a payment protocol.

The only direct competitor for XRP is Stellar Lumens, which shares its history. They both have a network, which supports multi-currency transactions.

”Unlike other digital currency protocols, the XRP Ledger allows users to denominate their transactions with any currency they prefer, including fiat currencies, digital currencies and other forms of value, in addition to XRP (the native asset of the XRP Ledger)”

Let’s explain the difference between Ripple and XRP. Ripple is an American fintech company, while XRP is the native token of the XRP Ledger.

Ripple wanted to differentiate from XRP in 2018. That is when the name Ripple started to disappear from exchanges and coin listings. You might still see Ripple or Ripple XRP being used to describe the XRP coin. front page

The front page of

Ripple is a tech company building solutions for banks. They have a closed network called RippleNet built for this purpose. Many newbies confuse RippleNet with XRP Ledger and think that RippleNet is the blockchain of XRP token. This is not correct.

XRP is a native token of XRP Ledger. XRPL is an open and distributed ledger, just like Bitcoin’s blockchain.

If you find this confusing so far, don’t be alarmed. Ripple and XRP have a special, symbiotic, relationship. After reading this article, you’d have all your questions answered.

The history of XRP and Ripple

The history of XRP begins in 2011. This is when Jed McCaleb started to develop a better, faster, and more efficient alternative for Bitcoin. He wanted a consensus model with scalability and without physical mining devices.

Not many are aware, that Roger Ver was also a key person in XRP’s history. The founder of Bitcoin Cash offered to pay the first year’s salary of David Schwartz, who was hired as the lead developer. Ver also invested in many other crypto startups in the early 2010s.

See the tweet below: David Schwartz is currently the CTO of Ripple.

Chris Larsen and Arthur Britto joined the project in 2012. Larsen is often named as the founder of Ripple with McCaleb and he’s currently the chairman of Ripple. Larsen is a known person in the crypto industry, while Britto has always wanted to stay out of the spotlight.

After a while, Larsen and McCaleb contacted Ryan Fugger. He had been developing a payment concept called RipplePay since 2004. Fugger decided to join Larsen and McCaleb in 2012. That is when a company called Opencoin was formed, which was re-branded in 2013 to Ripple Labs.

One could say that the history of XRP and Ripple goes all the way to 2004!

Ripple launched the XRP Ledger in 2013. Originally, it was named Ripple Consensus Ledger. This is when the XRP token was created. Exactly 100 billion of them. The token was distributed as follows: 80 billion to Ripple Labs and 20 billion to founders Larsen, McCaleb and Britto.

Ripple Labs was re-branded again to Ripple in 2015. The company was also granted the 2nd BitLicense in the United States history by NYSDFS (New York State Department of Financial Services). Only a handful of companies have been granted a BitLicense.

CEO Brad Garlinghouse is now the face of Ripple. He is a well-known person in the crypto world and featured often in CNBC. See the video below where Garlinghouse shares Ripple’s vision of XRP.

One of the founders, Jed McCaleb, is also known for other projects. He was, in fact, the man behind the infamous Mt. Gox exchange. McCaleb sold Mt. Gox before it was hacked in 2014. About 850,000 bitcoins were lost and the disaster had a big impact on Bitcoin’s price as well.

McCaleb is no longer with Ripple. He left and founded Stellar Foundation in 2014. This foundation is overseeing the development of Stellar Lumens, which is the main rival of Ripple. McCaleb’s exit from Ripple was a messy one. Lawyers were used on both sides.

Ripple and XRP have done fine in the past years. Ripple has already 200+ banks in the RippleNet network, which is expanding steadily. They’ve also got more funding and locked 200 million dollars in late 2019.

The XRP token is also the 3rd biggest cryptocurrency. It has held its market position well, even if the Ripple company has been dumping billions of tokens to the market in recent years.

Now it’s time to look at the tech side.

XRP Ledger (XRPL) explained

Let’s begin with XRP Ledger (XRPL), which differs a lot from Bitcoin, Ethereum, and other well-known cryptocurrencies.

XRP Ledger is an open-source and permissionless payment network. Even if it’s over five years old, it should be compared to 3rd generation platforms due to similar scalability. There are no miners in the XRPL like there are none in EOS, TRON, Cardano, and such platforms.

The throughput of the XRP Ledger is impressive. The block time is just three seconds, and the blockchain can handle 1500 transactions per second. If you have ever made an XRP transaction, you have witnessed how fast it is.

All this is achieved with the Ripple Protocol Consensus Algorithm (RPCA). This is Ripple’s answer to Proof of Work or Proof of Stake consensus algorithms.

Nowadays, all high-capacity blockchains use PoS variants, where miners are replaced with network validators. This means a small number of nodes, which have the responsibility of validating transactions.

XRPL has also validator nodes. In fact, anyone can run their own validator and join this open network. The network is also using a Unique Node List (UNL), which is a list of reliable nodes pre-selected by Ripple.

”Since anybody can run a validator, the burden is on the network participants to choose a reliable set. Currently, Ripple provides a default and recommended list which we expand based on watching the history of validators operated by Ripple and third parties. Eventually, Ripple intends to remove itself from this process entirely by having network participants select their own lists based on publicly available data about validator quality.” (Source:”

The transaction fees are so small in the XRP Ledger, that nodes don’t really get any rewards from supporting the network. This is nothing unique – Bitcoin nodes don’t get any rewards either. The incentive is to support the network. If it can be done cheaply with a small computer, it’s not a big issue.

The official website has everything you need to know about the ledger and the technology behind it. Below you’ll find a video presentation done by CTO David Schwartz, which is about XRPL and ILP.

Even if XRP Ledger has all these fancy features, it is still just one ledger. The Bitcoin blockchain is also just one ledger among thousands of others. Then we have also the legacy systems run by banks.

The InterLedger Protocol (ILP)

The founders of Ripple saw quickly that XRP Ledger wouldn’t be enough to fulfill their “Internet of Value” vision. A protocol was needed to connect XRP Ledger to other blockchains and legacy systems.

This is where the InterLedger Protocol (ILP) was introduced. As the name suggests, ILP was built to connect different ledgers. The value of ILP is not currently to connect XRPL to other ledgers, but it’s used in Ripple’s RippleNet product. This is a closed network s, where ILP is used as a connector between the banks.

The quote below is written by David Schwartz as a reply in Quora:

”RippleNet is a payment network that doesn’t actually move money. Like when you use a credit card to pay for a meal, the restaurant considers you to have paid them and you consider yourself to have paid them, but no money has moved. Really all that’s happened is that you now owe some bank money and some bank owes the restaurant money. The bank still has to transfer money to the restaurant’s bank account and you still have to pay your credit card bill. The actual movement of money is called “settlement”.

XRP is an asset that can be used for settlement. It’s a digital asset that trades on a public ledger. It can change ownership in seconds and doesn’t have any physical location. Since it has value, a transfer of XRP can be used to settle a payment with nothing left to do afterwards.”

To put it all together: XRP Ledger is a public ledger, what anyone can use. If you go to buy XRP tokens and send them to your XRP wallet, you’ll be using the XRP Ledger. Ripple is naturally developing XRPL as well and it supports several other entities, which are building on top of that.

RippleNet explained

XRP is a pretty unique cryptocurrency considering that people know more about Ripple’s banking solutions than the actual XRP Ledger. It’s also very confusing due to the name Ripple in the center of everything. At least the XRP token is now called just XRP to make things clearer.

The RippleNet has been used as a shilling device for years. If a new bank has joined the network, you’ve seen XRP shills to activate in the social media. The truth is, however, that the XRP token has been barely involved at all in this sector.

So, what is RippleNet? It is simply a closed payment network Ripple has built for banks. These financial institutions don’t want to operate in the same open & public network as average XRP investors.

Ripple’s vision is to build a solution to the new internet-of-value environment the world is entering right now. In practice, they want to solve the issues of the legacy banking systems. What are these issues, then?

Ripple CEO Brad Garlinghouse has often used the following example. “If you want to move 10.000 dollars from New York to London, the fastest way is to put it into your luggage and fly it there.”

Banks are using a system called SWIFT (Society for Worldwide Interbank Financial Telecommunication). It is a network for banks, which was founded 46 years ago. It is no longer a viable solution to the internet-of-value, where lightning-fast micropayments are required.

The image below is from Ripple’s website.ripple ripplenet

If two banks in different countries want to make a transaction, it’s a slow and expensive process. The transaction goes through several checkpoints, which make currency exchanges possible. Expensive labor is required to handle all this.

With RippleNet, banks can make the transaction in a couple of seconds. This is where the InterLedger Protocol is used. We explained the basics of ILP in the previous chapters. You’ll find more information about ILP at

Ripple wants ILP to become a global protocol in value transfers, just like TCP/IP is used on the internet and SMTP is used when sending e-mails.

Ripple’s promise to banks is simply this: you’ll get more money. RippleNet could save 30%, 40%, or even 50% in transaction fees. The best-known RippleNet client is Santander Bank. Other clients made public by Ripple include American Express and MoneyGram.

On-Demand Liquidity and XRP

Many newcomers might rush to buy XRP when they see RippleNet-related headlines, like a new bank joining the network. This is where mistakes are made. Nothing we have talked about RippleNet has anything to do with XRP so far.

Where is XRP needed, then? This is where a technology xRapid comes in. CEO Brad Garlinghouse explains xRapid in the following video, which should start from 03:20.

xCurrent is enabling real-time messaging and real-time settlements between banks. xRapid is solving a liquidity problem.” What is this liquidity problem Garlinghouse mentions?

Currency transfers become much more complicated when banks operate with foreign banks and need multiple currencies. If an American bank is transacting with an Argentinian bank, it must buy pesos with dollars and keep them in the local bank as a liquidity pool.

This causes currency risk for the American bank if the peso is losing value against the dollar. Ripple explains the problem on their website in the following way:

“Financial institutions must pre-fund nostro accounts on each side of a transaction in that country’s native currency. These account balances in a local currency improve liquidity by lowering the risk for the parties transacting.

However, these accounts come at a high cost. According to a 2016 McKinsey Global Payments report, there is approximately $5 trillion dollars sitting dormant in these accounts around the world – tying up capital that could be used in more productive ways. They also must be actively managed to ensure balances are commensurate with transaction volume.

The cost and complexity of holding these accounts around the world is one reason why only a handful of banks can process global transactions. The burden of maintaining nostro accounts worldwide is simply unsustainable for most organizations.” (Ripple)

As you can read from the quote, the situation is quite problematic. There is a lot of money tied inside the system and it is forcing transactions to go through a few big operators.

This is what Ripple offers:

ripple ODL

Here we must make an important note: xRapid was re-branded in 2019 as ODL – On-Demand Liquidity.

Ripple can create a digital currency pool (ODL) by using the XRP token. This pool is then used by banks. For example, the American bank mentioned earlier can buy XRP with dollars, transfer them to the Argentinian bank in few seconds, which can then convert XRP to pesos.

The whole operation takes less than a minute and no pre-fund Nostro accounts are needed.

If the ODL solution becomes popular, it could have an impact on XRP’s price. This is the part where XRP is needed and actually used.

Flare Network and Spark

In the autumn of 2020, there was one topic everyone in the XRP community was talking about: Flare Network & Spark token. What is this all about?

Flare is a proper 3rd generation smart contract platform. This means you can compare it to the likes of EOS, Tron, Zilliqa, etc. The important thing is that Flare is tightly connected to XRP Ledger and XRP token.

The idea of Flare is to enable smart contracts for XRP Ledger users. It is an independent network and blockchain, so we are not talking about some add-on piece of XRP Ledger here. However, there is a two-way bridge built between the two.

You can think of the relationship between Flare and XRP Ledger like Ethereum and xDAI. When the Flare Network is up and running, it’s possible to transfer XRP tokens from XRP Ledger to the Flare Network using a bridge. After this, you can issue FXRP (Flare XRP) tokens on the Flare Network, which can be redeemed back to XRP later on.

If you want to get a good overall picture of the Flare Network and how XRP Ledger is connected to it, check the video below.

Flare is also an EVM (Ethereum Virtual Machine) compatible blockchain. This means, that Dapps built on Ethereum can be transferred to Flare easily. Of course, software developers can also build Dapps directly on Flare.

The previously mentioned bridge will finally give XRP holders access to Dapps & smart contracts. It’s also possible to use issued FRXP tokens for creating stablecoins, which can be then transferred back to the XRP Ledger. Possibilities are almost endless here.

Flare Network has also a native token. That is called Spark. Flare will create 100 billion Spark tokens, which is exactly the amount of XRP tokens out there. These tokens will be airdropped to all XRP holders.

The snapshot for this upcoming airdrop took place on the 12th of December 2020. It means that Spark tokens will be airdropped based on wallet balances on that date. It is not possible to participate in the airdrop later on. Token distribution will take place in early 2021.

Time will tell if this Flare Network and XRP Ledger co-operation will turn out to be a success or not.


Ripple was the talking point of the entire industry around Christmas in 2020. Unfortunately for Ripple, this was just the beginning.

The U.S. Securities and Exchange Commission, SEC, is an institution enforcing the securities law, proposing securities rules, etc. In December 2020, Ripple was charged by the SEC with conducting a $1.3 billion Unregistered Securities Offering. The persons named in the complaint are CEO Brad Garlinghouse and one of the founders, Chris Larsen. 

This lawsuit is built around the debate, which has been going on for years. Is XRP security or not? SEC has decided to charge Ripple for this reason. If you want an overview of the case, check the video below. You’d also check this overview by Coin Bureau.

There are a couple of key points here. First, Ripple and SEC have been discussing this matter since early 2019. This is shown in the video above. This process is called a tolling agreement. Since there was no settlement reached, SEC proceeded with the lawsuit in December 2020.

Garlinghouse has also given clear statements saying that there is no way Ripple is going to settle:

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.

As you can see from the video above, there is probably a reason behind such decisions. It might be that one of the conditions for settling was that XRP would be classified as a security. This would kill the XRP token trading in the cryptocurrency exchanges. If this is true, that would explain why Ripple was so eager to take their chances in court. They might as well try to win settling means almost the same as losing. Ripple has good lawyers and lots of money to go for a long trial.

The definition of security is essential because there are strict laws and regulations around securities in the United States. Crypto exchanges are not included in these. If a cryptocurrency would be classified as a security, it was delisted from all major exchanges effectively killing the market.

The price of XRP crashed over 50 percent in December 2020 due to this lawsuit. It has also resulted in all major U.S. exchanges delisting the token. These exchanges don’t want to take the risk they’d be also charged by the SEC, should Ripple lose the case.

There have been also a couple of European exchanges joining the ranks and as well. It’s probable that there will be more and more exchanges over time. Some of the exchanges have delisted XRP from just U.S. users, some have delisted it entirely.

The next major step between Ripple and SEC is the pretrial conference held on the 22nd of February 2021. If there is no settlement reached, this case will go to trial.

XRP as an investment

Note: the text below is written before the SEC lawsuit was published. Investors should be extremely careful with XRP until there is further information available.

There are lots of hardcore XRP fans, but also an equal amount of XRP opponents. Especially the Bitcoin maximalists seem to despise both XRP and Ripple. There are probably two main reasons for that:

  1. Ripple is building solutions for banks, which many consider as the enemies of cryptocurrencies.
  2. The token economy of XRP: created 100% for Ripple and its founders.

When this article is written (April 2021), there are about 45 billion XRP tokens in the market. The remaining 55 billion tokens are still held by Ripple. This is a fact that drives off many investors. When XRP price moved to 3+ dollars in January 2018, it made Ripple founder Chris Larsen as one of the wealthiest people in the world on paper.

Could Ripple then flood the market with XRP any time they want? No, that’s not possible. Ripple set 55 billion XRP tokens to escrow in January 2018. This limits them from selling more than one billion per month for almost five years.

All in all, XRP is a bit difficult investment. The XRP token economy is one thing and the fact is that Ripple has sold billions of them to fund their operations in the past. How much are they going to sell in the future and how will it impact the price? It isn’t easy to analyze the impact of ODL either.

Check out for more information. You’ll also find the latest news from the official Ripple Reddit page.

The XRP token has had some wild swings in the past few years. It is a “penny stock” due to its low unit price, which makes it attractive to newbie investors. This is quite counter-intuitive since XRP is actually a very difficult investment to analyze. We recommend being extra careful with it.

XRP price and how to buy XRP


If you want to buy XRP with fiat money, use Binance. It is the leading cryptocurrency exchange in the market. Binance supports fast deposits with bank transfers, credit cards, and cryptocurrencies.

Buy XRP from Binance

You can also go to Coinbase. It is a user-friendly exchange for newbies. eToro is another popular option.

The safest storage solution is Ledger Nano X or Ledger Nano S hardware wallet. Both support the XRP token these days. You can also store small amounts in Coinbase use Ripple’s official GateHub online wallet.

For more information, check the official website and Twitter handle @ripple. The official Reddit page is

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