What is XRP (Ripple)?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 6 min
In short
XRP is the native asset of the XRP Ledger, a blockchain that has been running since 2012. It was designed to settle cross-border payments in seconds, and transactions are confirmed by validator agreement rather than mining. Ripple, a US company, has led its development and adoption, though the ledger itself runs independently of the company.
Key points
- Designed as a bridge asset for cross-border payments and settlement
- No mining: a purpose-built consensus algorithm closes ledgers every few seconds
- A decentralised exchange and token issuance are built into the ledger itself
- Its status as a security was contested for years in Ripple's litigation with the US SEC
Definition
The native asset of the XRP Ledger, used to pay network fees and to bridge payments between different currencies and assets.
The XRP Ledger set out to fix the slowness and cost of cross-border payments. A traditional bank transfer hops through several correspondent banks, taking days and losing a fee at each step. The ledger was designed around a bridge model: convert the sending currency into XRP, then convert it into the destination currency on arrival.
Technically, it uses neither Proof of Work nor Proof of Stake. Each node keeps a list of validators it trusts (a UNL), and when a supermajority of those validators agrees on a set of transactions, that set becomes the new ledger. With no computational race, energy use is low and ledgers close every few seconds. Fees are paid by destroying a tiny amount of XRP, which is what discourages spam.
Token issuance and a decentralised exchange are part of the ledger itself, so institutions can issue tokens denominated in their own currency — including stablecoins — and trade them against each other through XRP. Ripple sells payment products built on this to financial institutions, and remittance companies and some banks use them.
In 2020 the US SEC sued Ripple, arguing that its XRP sales were unregistered securities offerings. A 2023 ruling held that sales to the public through exchanges were not securities transactions, while reaching a different conclusion for direct sales to institutions. Regulatory treatment still varies by country, so check the rules where you live.
Watch out for
- · Most XRP was allocated to Ripple at the start and released into the market over time, so its ownership profile differs from other major assets
- · Anyone can run a validator, but Ripple's role in curating the list many nodes rely on is a recurring decentralisation criticism
- · An XRP Ledger account must keep a reserve balance in XRP that cannot be withdrawn
Frequently asked questions
Are 'Ripple' and 'XRP' the same thing?
No. Ripple is a US company; XRP is the asset on the XRP Ledger. The two are often conflated, but the ledger is designed to keep running regardless of the company.