What Is XRP?

What Is XRP

XRP is a cryptocurrency and the native token of the XRP Ledger (XRPL), an open-source blockchain protocol designed to facilitate fast, cost-effective, and efficient transactions. The XRPL aims to improve cross-border payments, support Central Bank Digital Currencies (CBDCs) and stablecoin solutions, and bridge the gap between traditional fiat systems and cryptocurrencies.

What Is Ripple

Ripple, founded in 2012 by Jed McCaleb, Arthur Britto, and Chris Larsen, is a technology company that develops payment solutions aimed at enhancing the efficiency of cross-border transactions. McCaleb, one of the co-founders, previously co-founded Mt. Gox, one of the earliest Bitcoin exchanges, and eDonkey, a file-sharing platform. Britto, another co-founder, also serves as the co-founder and president of PolySign, while Larsen, a serial entrepreneur, co-founded companies such as E-Loan and Prosper Marketplace before Ripple.

Ripple's flagship product, RippleNet, is designed to streamline global payments by eliminating intermediaries like correspondent banks, significantly reducing both transaction time and costs. Traditional payment networks, such as SWIFT, can take several days to settle cross-border transactions, whereas RippleNet enables near-instant settlement—often within seconds. Additionally, transactions on the Ripple network cost only a fraction of a cent, making them far more economical compared to traditional banking methods.

Backed by strong investor confidence, XRP, the digital asset associated with Ripple, has raised a total of $293.8 million in funding over 14 rounds as of October 2023. Notable investors include Andreessen Horowitz, Reid Hoffman, Peter Thiel, Sequoia Capital, Pantera Capital, and Google Ventures, further reinforcing Ripple’s position as a key player in the evolution of global payments.

What is the Difference Between XRP and Ripple

XRP and Ripple are often used interchangeably, but they refer to distinct entities. XRP is a cryptocurrency and the native digital asset of the XRP Ledger, a decentralized, open-source blockchain designed for fast and cost-efficient transactions. It serves as a bridge currency for cross-border payments and is used within the network to facilitate liquidity and settlement. Ripple, on the other hand, is a technology company that develops financial solutions, including RippleNet, which enables banks and financial institutions to conduct real-time international payments. While Ripple utilizes XRP as part of its payment solutions, the company does not own or control the XRP Ledger. The XRPL operates independently, maintained by a global network of validators.

How Does XRP Work

XRP operates on the XRP Ledger, an open-source, decentralized blockchain designed for fast and cost-efficient transactions. Unlike Bitcoin and Ethereum, which rely on Proof of Work (PoW) and Proof of Stake (PoS), respectively, the XRPL uses the Ripple Protocol Consensus Algorithm (RPCA) to validate transactions. This consensus mechanism does not require energy-intensive mining. Instead, transactions are confirmed by a network of independent validators that reach an agreement approximately every three to five seconds. To maintain network integrity and prevent spam, a small transaction fee—known as the base reserve—is burned rather than distributed to validators. The XRPL is built for scalability, processing up to 1,500 transactions per second (TPS), significantly outperforming Bitcoin’s 3 TPS and Ethereum’s 30 TPS. XRP also functions as a bridge currency, allowing financial institutions to streamline cross-border transactions without the need for pre-funded accounts, enhancing liquidity and reducing costs.

Benefits of XRP

XRP offers several advantages that make it a practical solution for global payments and financial institutions.

Fast Transaction Speed

Transactions on the Ripple network are settled within seconds, ranging between 3-5 seconds. For comparison, Bitcoin takes 500 seconds to settle a transaction.

Low Transaction Cost

Transaction fees on the Ripple network cost $0.0002 per transaction on average which makes transaction costs on the network very affordable. For comparison, the cost of a transaction on Bitcoin is $0.5.

Scalability

With its ability to handle 1,500 transactions per second, the Ripple network is up there with standard payment processors such as Visa, which is able to manage 1,700 transactions per second. For comparison, Bitcoin is only able to handle 3 TPS.

Ripple’s scalability makes it an attractive option for banks and financial institutions that require a stable infrastructure for high transaction volumes. Many other blockchains, in contrast, typically can only handle a fraction of the above-mentioned transactions which makes it non-viable for banks and financial institutions.

Energy Efficient

Because validators do not need to compete to solve complex mathematical problems, validators on the Ripple network can operate efficiently to validate and verify transactions.

As such, the Ripple network is 61,000x more energy efficient than blockchains that utilize the Proof of Work consensus mechanism.

XRP Key Features

These are some of the key features of XRP:

Bridge Currency

XRP serves as a bridge currency for cross-border payments and financial institutions can use it as an intermediate currency when conducting cross-border transactions. XRP helps improve liquidity and reduces the need for pre-funded accounts.

Escrow Feature

The escrow feature provides a secure and trustless way to hold XRP for a specified period or until certain conditions are met. Individuals or entities can benefit from it when conducting business agreements, time-sensitive transfers, and secure transactions.

Multi-Signing

Multi-signing allows users to enhance security and add an extra layer of protection to their XRP accounts by requiring multiple authorized signatures for certain transactions. This can be useful for businesses, organizations, and individuals to help prevent unauthorized access to their XRP accounts.

Payment Channels

Payment Channels, which are variations of smart contracts, enable more flexible and dynamic transactions on XRPL. Users can create “channels” to interact with one another and these payment channels are multi-signature wallets with pre-allocated funds.

The payment channel is established by one party, who deposits and sends XRP payments within the channel to the other party without the need for on-chain transactions for each payment. This allows for reduced transaction fees and faster transaction times compared to traditional on-chain transactions.

XRP Tokenomics

XRP has a total supply of 100,000,000,000 coins of which 56,931,242,174 tokens are in circulation as of November 2024.

Following the 2024 U.S. presidential election results and the prospect of more favorable regulatory developments, XRP has rebounded by over 200% from its 2023 lows. With a circulating supply of 56.93 billion XRP, Ripple boasts a market capitalization of $78.79 billion as of November 2024.

How to Trade XRP on Flipster

1. Sign up for an account on the Flipster website or by downloading the Flipster app (Android or Apple).

2. Click the [Trade] tab.

3. Search for XRP, and click on it.

4. Select the leverage (up to 50x).

5. Select either a Trigger Order or Market Order.

6. Input the amount of crypto you wish to trade, or select a percentage of your available funds to use.

7. Once you have confirmed the details, click the [Long] or [Short] button to open a position.

XRP Perpetual Swap Contract Specifications

Disclaimer: This material is for information purposes only and does not constitute financial advice. Flipster makes no recommendations or guarantees in respect of any digital asset, product, or service. Trading digital assets and digital asset derivatives comes with a significant risk of loss due to its high price volatility, and is not suitable for all investors. Please refer to our Terms.