What Is XRP?
XRP is the native cryptocurrency of products developed by Ripple Labs Inc, a cryptocurrency payment system. XRP is its “digital asset built for global payments.” XRP would allow users to send money at a very low cost, attracting the potential interest of retail customers and banks alike. A key value proposition of Ripple is its minuscule transaction costs while offering transaction finality of under five seconds.
The company was founded in 2012 by Chris Larsen and Jed McCaleb and is based on the work of Ryan Fugger, who created the XRP Ledger in 2012. The XRP Ledger is an open-source cryptographic ledger powered by a peer-to-peer network of nodes. McCaleb eventually left Ripple and founded Stellar another payments-oriented cryptocurrency.
After the company rebranded from its original name OpenCoin to Ripple, it pursued high-level partnerships with Bank of America, Santander, and Standard Chartered.
How Does XRP Work?
Ripple proposes a cheaper and more efficient alternative to the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system to process international transactions. This is supposed to happen via the Internet of Value, the umbrella term for several of Ripple’s products: RippleNet, the XRP Ledger, the XRP coin, and RippleX.
RippleNet is a global network that financial institutions can use to transfer money more quickly and at a lower cost than traditional systems. This is possible thanks to the single API needed to connect to RippleNet. RippleNet also offers On-Demand Liquidity (ODL), thereby removing the need for pre-funding in cross-border transactions. It essentially acts as a middleman between two transacting parties and smooths out liquidity between different foreign currencies. For instance, a European retailer may not wish to receive US dollars and vice versa. ODL steps in and uses XRP as a bridge to facilitate the transaction.
XRP Ledger is Ripple’s open-source blockchain with the XRP coin as its native asset. It runs independently of the Ripple company, although Ripple uses it for various purposes. While not as popular as other blockchains, the XRP Ledger can also be used as a settlement layer.
In contrast to Ethereum, the XRP Ledger does not use a proof-of-work consensus mechanism. Like many other cryptocurrencies, it also does not work with a proof-of-stake consensus mechanism. Instead, it uses the XRP Ledger Consensus Protocol, a more centralized and efficient solution to reduce transaction finality time and transaction costs. With the XRP Ledger, transactions can be completed in mere seconds, much faster than the ten-minute block time of Bitcoin or traditional systems like SWIFT.
Finally, RippleX is a platform offering blockchain solutions to projects that want to provide payment-oriented services. Instead of building their DApps and blockchain solutions from scratch, companies can harness the expertise and products of RippleX and the XRP Ledger to provide mainstream compatibility and an engaging user experience. Thus far, two protocols have launched on RippleX: Interledger, a payments company providing compatibility between different payment systems, and paying, a solution that simplifies payment addresses.
In conclusion, Ripple has a naturally attractive value proposition for cross-border payments, which other protocols have not adequately solved. According to the company, Ripple can become a legitimate alternative to the SWIFT system with its increased speed and efficiency.
How Do You Buy XRP?
XRP is available on most centralized exchanges like Binance, Bithumb, KuCoin, Huobi Global, Bybit, Gate.io, FTX, Bitstamp, Bitfinex, Kraken, etc.
How Do You Store XRP?
You can either store your XRP on an exchange, where the exchange is responsible for the safety of your asset, or store your XRP in a cold or hot wallet.