What is XRP?
XRP is the official token that works in the XRP Ledger. With 100 billion tokens pre-mined in 2011.
- Purpose XRP was born:
XRP is used as an intermediary currency in Ripple’s On-Demand Liquidity (ODL) solution.
To be able to transfer money, users need to hold in their wallet at least 20 XRP. This is a provision to limit Ripple’s spam.
XRP is used to pay transaction fees in the XRP Ledger network. The current minimum fee is 0.00001 XRP (~10 drops).
Validators in XRP Ledger will not receive transaction fees like other Blockchains, but these transaction fees will be burned, removed from the supply of XRP.
Learn more about the XRP whitepaper: here.
What is Ripple?
Ripple was first conceived in 2004 by Ryan Fugger, who developed the first prototype of Ripple as a decentralized digital currency system (RipplePay). This system came into operation in 2005 with the goal of providing secure payment solutions in a global network.
In 2005, the Ripplepay decentralized digital currency system was released by the developer of the decentralized system in Canada – Ryan Fugger.
In 2011, Jed McCable (Former founder of Mt.Gox) decided to develop his own cryptocurrency project. In May 2011, Jed and Arthur Britto and David Schwartz developed a ledger called the XRP Ledger.
In September 2012, after convincing Fugger to give full control of Ripplepay, Jed McCaleb, Chris Larsen and Arthur Britto founded the company OpenCoin.
Once established, OpenCoin started building the Ripple payment network with the Ripple Consensus Protocol (RPCA) consensus.
Between April and May 2013, OpenCoin received $5.5 million from major investment funds such as Google Ventures, Andreessen Horowitz, Pantera Capital, Digital Currency Group… in the Seed Round.
After OpenCoin officially changed its name to Ripple Labs in September 2013, Jed McCaleb officially left Ripple Labs to establish Stellar (XLM).
In early 2015, Ripple signed a partnership with Western Union. A few months later, Ripple was fined $700,000 by FinCEN for violating the banking secrecy act by selling XRP without the agency’s permission.
However, this is also the interesting part when FinCEN defaults to XRP as a currency, not a security token.
In October 2015, Ripple Labs rebranded itself as Ripple, but the company still bears the name Ripple Labs Inc.
In September 2016, Ripple was invested $55 million by Japan’s largest stock brokerage, SBI Holdings (accounting for ~10.5% of the shares of Ripple Labs company).
In 2017, Ripple continued to grow with the signing of more banks using their product RippleNet.
Also this year, Ripple held its first annual SwellbyRipple event. As of 2019, this event has been held for the 3rd time.
XRP Ledger (XRPL)
The XRP Ledger is a decentralized ledger based on a network of peer-to-peer servers, created in 2011 by Jed McCaleb, Arthur Britto, and David Schwartz.
Other than Bitcoin, to achieve consensus in the network, XRP Ledger uses a consensus algorithm called Ripple Protocol Consensus Algorithm (RPCA).
So XRP cannot be mined and staking like other cryptos.
In contrast to XRPL, RippleNet is proprietary to the Ripple company and is built on top of XRPL as a payment and transaction network.
RippleNet currently offers a suite of 3 products designed as a payment solution system for banks and other financial institutions. Currently, RippleNet has three main products: xRapid, xCurrent, and xVia.
In short, xRapid is an on-demand liquidity solution that uses XRP as a global bridge currency for fiat currency pairs. Both XRP and xRapid rely on the XRP Ledger, allowing for faster confirmation times and much lower costs than traditional methods.
Let’s take a simple example. Bob wants to send $100 from Australia to Alice in India. Bob transfers money through a financial institution called FIN. To execute trades, FIN uses the xRapid solution to create connections between asset exchanges in both source and destination countries. This way, the company can convert Bob’s $100 into XRP, helping to provide the liquidity needed for the final settlement. In just a few seconds, XRP will be converted into Indian Rupees and Alice can withdraw from the Indian asset exchange.
xCurrent is a solution designed to provide instant settlement and tracking of cross-border payments between members of RippleNet. Unlike xRapid, the xCurrent solution is not based on the XRP Ledger and does not use the XRP cryptocurrency by default. xCurrent is built around the Interledger Protocol (ILP), designed by Ripple as a protocol for connecting different ledgers or payment networks.
The four basic components of xCurrent are:
- Messenger – Messenger provides peer-to-peer communication between RippleNet financial institutions. It is used to exchange information regarding risk and compliance, fees, FX rates, payment details, and expected transfer times.
- Validator – Validator is used to confirm, by cryptographic technique, the success or failure of a transaction, in addition to coordinate the transfer of funds on Interledger. Financial institutions can run their own validators or can rely on third-party validators.
- ILP Ledger – Interledger Protocol is implemented into existing bank ledgers, creating ILP Ledger. The ILP Ledger acts as a secondary ledger and is used to track credits, debits, and liquidity between transacting parties. Funds will be settled very quickly, ie immediately if possible or not.
- FX Ticker – FX ticker is used to determine the exchange rates between trading parties. It monitors the current status of each configured ILP Ledger.
While xCurrent is primarily designed for fiat currencies, it also supports cryptocurrency transactions.
xVia is an API-based standardized interface that allows banks and other financial service providers to interact within a single framework – without having to rely on multiple payment network integrations. xVia allows banks to create payments through other banking partners connected to RippleNet and also allows them to attach invoices or other information to transactions.
XRP Basics Today
Token Allocation XRP
With a maximum total supply of up to 100 billion tokens, XRP is 80% kept by Ripple Labs and the remaining 20% belongs to the founders. As follows:
With holding 80% of the total XRP tokens, Ripple has full discretion whether to sell or give away XRP for free for the purpose of developing and promoting RippleNet products.
According to data from BitMEX Research, between January 2013 and July 2015, Ripple sold about 16.5 billion XRP. In which, 12.5 billion XRP is sold to partners, the remaining 4 billion XRP is used to pay the company’s operating expenses.
Ripple created an Escrow fund that pledged to support RippleNet operations at a rate of 55% (or 55 billion XRP) by the end of 2017.
With 1 billion XRP unlocked every month to pay the operating expenses of RippleNet. Unused funds will be returned to the Escrow fund at the end of the month and await the next disbursement.
The remaining 20% of XRP belongs to the 3 founders of XRP Ledger, including: Chris Larsen, Jed McCaleb and Arthur Britto.
While Chris Lersen and Jed McCaleb received 9.5 billion XRP each, Arthur Britto received the remaining 1 billion XRP.
In 2014, Jed McCaleb left Ripple to found Stellar (XLM), so Jed’s XRP will be disbursed according to the following arrangement:
- Jed can be sold up to $10,000 per week for the first year.
- Years 2 to 4: Up to $20,000 sold per week.
- Years 5 to 6: Up to 750 million XRP sold per year.
- Year 7: Maximum sale of 1 billion XRP per year.
- After the 7th year: Up to 2 billion XRP sales per year.
However, the agreement was revised in 2016 after Ripple suspected Jed had violated the original terms.
Under the new agreement in 2016, Jed must donate 2 billion XRP to charity and the remaining 5.3 billion XRP of JED is held by Ripple.
This 7.3 billion XRP will be disbursed by Ripple each year as follows:
- 0.5% for the first year.
- 0.75% for 2nd and 3rd years.
- 1.0% in year 4.
- 1.5% after year 4 onwards.
Secure XRP Storage Wallet
Currently, XRP is supported by many wallets. Here are some supported wallets to store XRP:
- Hardware wallet: Ledger Nano S, Trezor (Model T), CoolWalletS
- Application: Trust Wallet, Atomic Wallet…
- Exchanges: Reputable exchanges Binance, Bitfinex,….
Future of XRP
Ripple enters the payment market targeting bank customers, so there will be competition with the traditional payment system.
Currently, according to the number provided by Ripple, there are more than 300 customers using RippleNet.
XRP Network Review
The number of active wallets on the XRP Ledger network.
The number of active XRP wallets spiked to 57.55 thousand wallets at the beginning of July 2019, equivalent to +364.25%. After that, it fell back to a stable level compared to the beginning of the year.
Next is the number of transactions (transactions) across the network of XRP Ledger.
It can be seen that the transaction volume of XRP Ledger has increased sharply to 1.74 million transactions per day, equivalent to 228.4% compared to the beginning of the year.
Since mid-October alone, the number of transactions has increased by more than 139.5%. This must be the effect due to Ripple’s On-Demand Liquidity solution being commercialized in October 2019.
Since its launch, ODL has only been used by about 10 customers. Up to now, this number has reached 24.
In which, MoneyGram is considered the partner with the most transactions when 10% of their transactions are completed via Ripple’s ODL.
This is also a downside of XRP
Every month Ripple will be able to open 1 billion XRP and have full access to this number.
This is also a large source of selling that makes it difficult for XRP to increase in price, so here is a special part to pay attention to:
Ripple’s XRP sold in Q3 plummeted ~74% compared to Q2/2019. Bringing the value of XRP sold to $64.2 million.
Although the amount of XRP sold has decreased a lot, the price of XRP has continued to decrease by more than 52.2% since the beginning of Q3.
- Note: This article is for informational purposes only about Ripple (XRP) at this time and should not be considered investment advice. Cryptocurrency investment is a risky form of investment, it takes a lot of knowledge and skills to be able to make money from this market. If you are interested in the article please leave a comment below the support team will contact you.
XRP is forming a period of short waves and decreasing amplitude forming a small sideway on the long-term path. XRP has the ability to hold its price extremely well at current prices but probably won’t be as volatile as other Cryptos
The important thing at the moment is to sit still and wait for the signal when the market shows signs of explosion and enjoy the big wave of the market.