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What is Ripple XRP and What Is It Used For?

by Sandip Das from
What is Ripple XRP and What Is It Used For?

Read this complete post ’What is Ripple (XRP) and what is it used for?’ to have an overview of the Ripple cryptocurrency. XRP is the native cryptocurrency of the blockchain platform Ripple. Going by the current market valuation of around $34.5 billion (As of 25th Dec 2023), XRP is the 6th most valued cryptocurrency.

Ripple’s main motto is to promote cross-border financial transactions and seamless currency conversion. Ripple was essentially designed to replace SWIFT (Society for Worldwide Interbank Financial Telecommunications), the gold standard for internal money transfer. This post on XRP crypto discusses the concept behind Ripple, Ripple’s use cases, and Ripple’s differences with Bitcoin. Moreover, we are going to answer the question ‘Is XRP a good buy?’.

1. What is Ripple?

First thing first, what is Ripple in crypto? Ripple is an innovative blockchain platform designed to serve the financial industry. Ripple helps financial institutions and businesses make cross-border monetary transactions like money transfers and currency conversions.

Ripple is establishing itself as a better alternative to traditional financial banking systems by executing cross-border transactions in seconds (compared to days in traditional banks) and at a very low transaction fee. On Ripple, financial transactions are settled in 3-5 seconds, which is much lower compared to settlement time in Bitcoin (BTC). But if you are curious how does Bitcoin work check our dedicated article.

XRP can handle about 3,400 transactions per second. Now, compare this with Bitcoins’ TPS(transactions per second) of only 7-10 and Ethereum’s TPS of roughly 20-30. Plus, the average transaction cost on Ripple is only $0.0002. Moreover, the XRP Ledger is 61,000x more energy-efficient compared to proof-of-work blockchains like Bitcoin (follow through to find more on PoW and PoS differences). These make Ripple an excellent choice for fast, secure, and low-cost financial transactions, especially in the global environment.

Ripple’s distributed ledger called XRP ledger permanently and unalterably records Ripple’s financial transactions. Businesses and financial institutions can use XRP to make cross-border payments and exchange currencies 24/7 without the need for intermediaries. The code for the XRP ledger was completed in 2012 by Jed McCaleb, Arthur Britto, David Schwartz, and Chris Larsen. In the same year, Ripple’s blockchain infrastructure was developed by Ripple Labs. The resulting payment network, which allows faster payment processing, was named RippleNet.

2. How does Ripple work?

Ripple is an innovative blockchain platform designed for the financial industry. Similar to other blockchains, Ripple’s goal is to facilitate financial transactions in a trust-less environment. However, Ripple has certain distinct characteristics compared to other prominent blockchains like Bitcoin and Ethereum. Of course, if you would like to learn first how Ethereum works, pop over to our article on the subject.

Ripple’s consensus mechanism is based on the Federated Byzantine Agreement (FBA) model. This model does not require crypto mining or staking to validate transactions. Rather, the Ripple blockchain is maintained by the Unique Node List (UNL), which is basically a group of trusted validator nodes. Ripple’s consensus mechanism allows it to settle cross-border financial transactions in a matter of seconds. Ripple’s Unique Node List (UNL) achieves consensus, validates transactions, and updates the ledger every 3 to 5 seconds. Ripple network’s unique approach to validating transactions also significantly cuts its transaction costs. Another interesting aspect of Ripple is that it supports fiat transactions as well.

However, since Ripple relies on a preferred list of validators, the platform achieves a lower level of decentralization. This means a few entities control the Ripple network, which makes the blockchain more open to censorship. Therefore, Ripple is considered a centralized cryptocurrency as compared to Bitcoin or Ethereum. Now, let’s look at what is the Ripple cryptocurrency?

3. What is XRP cryptocurrency?

XRP is the native cryptocurrency of the Ripple blockchain. One can use the XRP coin to transfer value within the Ripple network. The original idea behind the XRP coin was to offer an alternative to Bitcoin (which has high settlement time and transaction costs). Compared to BTC, XRP is faster and cheaper. However, as we just discussed, XRP is a less decentralized cryptocurrency.

Let’s look at the tokenomics of the XRP token. Since XRP does not involve mining or staking, it was pre-mined at a very easy stage. In 2012, a total of 100 billion XRP was pre-mined and put into escrow. Periodically, a small amount of XRP is then released into circulation to provide liquidity and manage network operations.

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Since XRP is Ripple’s native cryptocurrency, it provides liquidity to the XRP network and facilitates transactions. Suppose, X wants to send euro to a recipient in India who wants to receive the funds in INR. In that case, XRP acts as a bridge currency to make the transaction happen.

4. What is XRP used for?

Ripple’s cross-border payment platform enables individuals, financial institutions, and businesses to make global financial transactions (like money transfer, payment processing, and currency exchange) in a fast, cost-effective, and secure way.

Today, Ripple’s core technology is used by leading financial institutions such as American Express and Standard Chartered. Ripple’s payment processing network called RippleNet includes leading institutional payment providers such as banks and money services businesses. The network uses solutions developed by Ripple to process monetary transactions globally. Let’s look at some of the important use cases of Ripple:

  • Payment processing: Processing cross-border payments across fiat and cryptocurrencies. XRP acts as a bridge currency for cross-border payments.
  • Fast transactions settlement: Settling global financial transactions in real-time.
  • Lowering costs: Processing financial transactions at a very low cost.
  • Tool to help secure transactions: Ensuring transparency by enabling parties to view and track payment status in real time. Also, Ripple provides a way to help fight spam/.
  • Remittance services: Seamless financial transactions and currency conversion help Ripple work as a global remittance service provider.
  • Crypto investing & trading: Enabling millions of crypto investors and traders to invest and trade XRP.

Crypto investing can generate high returns, that is our experts at JohnnyBitcoin prepared a guide for beginners on the topic. Follow through the link to learn what is crypto and how it works, hw to start investing in crypto, and what are the essential safety rules to follow.

5. Is XRP a good investment?

XRP is currently the sixth most valued cryptocurrency. XRP is one of the cryptos that can explode in 2024. Let’s look at why:

  • Innovative technology: Its secure, fast, and low-cost technology makes it suitable for a wide range of use cases.
  • Popularity and reputation: It’s one of the most recognized and reputed cryptocurrencies
  • Best in class security: XRP’s security features are the best in the industry because of which industry leaders are adopting it.
  • Positive sentiment: Currently, the global crypto market is showing strong momentum after a downfall in 2022 and consolidation in 2023. This looks like the perfect time to buy XRP.

Learning how transactions are made secure can be beneficial to further understand how each cryptocurrency works. Visit our article dedicated to private and public keys for a start. For instance, you will gain an understanding on how crypto transactions are executed without an intermediary.

6. How to Buy XRP?

If you are wondering about ’Where can I buy XRP?’, read on. Similar to other cryptos, you need to register with a crypto exchange for buying XRP. Once you are registered with a crypto exchange, you need to fulfill KYC requirements and add a payment method. Most leading crypto exchanges offer a range of payment methods (such as bank transfer, debit cards, third-party payment apps, and P2P payment modes) for purchasing XRP coins. Plus, many crypto exchanges allow you to buy XRP with credit cards. Now, let’s look at where to buy XRP. If we consider factors like ease of use, transaction costs, and security, here are the top 5 crypto exchanges for buying XRP:

  • KuCoin
  • Bybit
  • BTSE
  • Kraken

Of course, our team has prepared extensive reviews on the above exchanges. We suggest checking them out starting from KuCoin, where you will discover not only how this brand works, but also have the chance to use our KuCoin promo code for new users.

7. XRP vs Bitcoin

Even though XRP was launched as an alternative to Bitcoin, the two have many dissimilarities. Here are some of them:

Parameter XRP Bitcoin
Total Supply 100 billion XRP 21 million BTC
Level of decentralization Centralized Decentralized
Mining capability No Yes
Consensus mechanism [key]Ripple Transaction protocol[/key] (RTXTP) Proof of Work (PoW)
Transactions per second (TPS) 3,400 7-10
Average confirmation time 10 minutes 3-5seconds
Energy efficiency Highly energy efficient Energy inefficient

And if you are already a pro of investing and want to have more fun with your crypto, make sure to check out our article about how to gamble with cryptocurrency. In addition to discussing crypto gambling strategies, the article will list the top cryptocurrency gaming sites.

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8. What is Ripple (XRP), and what is it used for? - FAQ

8.1 ❓ What is Ripple Labs?

Ripple Lab is the tech company that developed Ripple’s blockchain infrastructure.

8.2 ❓ How Secure Is XRP?

Many investors wonder about ‘Is XRP secure?’ or ‘Is Ripple secure?’. The answer is that Ripple is a secure blockchain platform for conducting global financial transactions in real-time.

8.3 ❓ Where can I Buy Ripple?

You can buy Ripple from almost all leading crypto exchanges like KuCoin, Bybit, BTSE, Binance, and Kraken.

8.4 ❓ Can you mine Ripple?

Ripple’s consensus mechanism is based on the Federated Byzantine Agreement (FBA) model. It does not involve mining. Crypto mining applies to blockchains running on the Proof of Work consensus mechanism.

8.5 ❓ How to mine XRP?

There is nothing called XRP mining. However, you can mine cryptocurrencies like Bitcoin and then get the same swapped for Ripple.

8.6 ❓ What is Ripple used for?

Ripple is used for processing cross-border financial transactions such as money transfers, payment processing (both fiat and crypto), and currency conversion. This article ‘What is Ripple (XRP), and what is it used for?’ provides a detailed view of the Ripple blockchain.

comment What is Ripple XRP and What Is It Used For?
Comments (2)
football-fanatic
football-fanatic about 1 month ago
imho it is the best token to transfer funds across borders at a low cost
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