Top Ten Cryptocurrencies – Ripple (XRP)

XRP or Ripple as it’s also known was created with a different idea in mind to most cryptocurrencies.

The aim of Ripple is to provide a service to the traditional banking sector by making global payment transfers much faster, easier and cheaper.


XRP Ripple

XRP Price: $0.46
Current Market Cap: $18.6bn

(Data as at 17 Oct 2018)

Ripple is intended to serve as a real-time gross settlement system for banks and financial service providers. XRP was created in 2012 by US technology company Ripple Labs Inc.

Ripple is based around a shared public ledger known as the XRP Ledger. The Ledger can operate without the Ripple company, using validators such as companies, internet service providers and other organizations.

XRP is now the third biggest cryptocurrency in terms of total market cap, currently standing at over $18 billion US Dollars.

Over 100 financial institutions now use the Ripple network, including Santander, UBS, Standard Chartered Bank and Westpac.

The circulating supply of XRP currently stands at around 39.6 billion XRP

XRP is actually the name of the common currency used by the Ripple network. 100 billion XRP were created at Ripple’s inception and no more can be created according to the rules of the XRP system.

This means that XRP is an asset whose supply will constantly decrease over time. Effectively XRP has been completely “pre-mined”.

Whenever a user initiates a transaction in a non-native currency on the Ripple network, Ripple charges a transaction fee. This serves the purpose of protecting the system from fake transactions or “transaction spam” by making it too expensive for hackers to attack the network.

To use the Ripple network, each Ripple account must hold a small reserve of 20 XRP and pay a fee starting at 0.00001 XRP per transaction. This fee is not collected by Ripple or anyone else and the XRP represented by it is destroyed and ceases to exist.

Transaction fees vary according to the rate of transaction volume by the user.

Another important aspect of XRP is that most of the XRP currency is held by Ripple Labs, the founders, and the Ripple Foundation which makes it a highly centralized currency.

However a large amount of Ripple has since been donated to charitable causes.

XRP and Ripple Are Not The Same

Strictly speaking, Ripple is the payment platform, not the XRP currency. Or to be more technical, a real-time gross settlement system (RTGS).  Ripple also serves as a currency exchange and remittance network for enabling seamless transfers of money, be it fiat currency or cryptocurrencies or other assets.

The aim of Ripple is to make possible almost instantaneous low-cost global payment transactions. This gives Ripple a big advantage over the traditional banking settlement systems such as SWIFT.

XRP is the digital asset used for the transactions.

How Does XRP Differ From Other Cryptocurrencies?


Most permissionless cryptocurrencies are decentralized to a greater or lesser extent and are not owned by any one authority or individual. Power and control is distributed between the miners and participating network nodes.

Ripple by contrast owns around 61 billion of the total 100 billion XRP that were created.

The remainder of the XRP currency is traded on the open market.


Cryptocurrencies are generally based on the idea of providing an alternative to traditional fiat currency and creating a separate transaction processing network independent of mainstream banks and financial institutions.

Ripple and XRP on the other hand are designed to provide a service to support existing financial institutions. XRP was created to serve as a ‘bridge currency’ for financial institutions. In that sense Ripple can be regarded as a wholesale money transmission service.

For this reason, some die-hard cryptocurrency libertarians are opposed to Ripple and XRP.


XRP is completely pre-mined, with Ripple releasing 100 billion XRP tokens from the start. That is the maximum number of tokens that will ever be issued under the technical protocol for the currency.

Currently some 38.6 billion Ripple XRP tokens are in circulation. The remainder are held by Ripple Labs.

This contrasts with most other cryptocurrencies which have built-in “mining” processes of one sort of another which serve to gradually increase the volume of tokens available.

This centralized holding of XRP is also a reason some people are critical of the currency.

Transaction Speed

One big plus with using Ripple is the extremely fast transaction speed. Transactions made using XRP are processed in seconds.

This compares with Bitcoin which needs at least 10 minutes to process a transaction block. In fact, completion times for a given Bitcoin transaction can take anything from minutes to hours depending on the volume of transactions and the size of the transaction fee paid.

Bitcoin can only manage a handful of transactions every second. Ripple can already process over 1500 transactions per second.

Ripple has a great opportunity to shake up the financial services sector. Money transfer via the banking system still typically takes 3 or more working days, which is a backward anomaly in the present digital era of instant communications and fast money transfer now possible with cryptocurrencies.

What is RTGS and RTXP?

RTGS is the Real-time Gross Settlement System.

Ripple uses so-called “gateways”. These are effectively nodes or access points onto the Ripple network which companies, financial institutions and other organizations use to join the network.

This network uses the Ripple Transaction Protocol or RTXP (formally known as RippleNet). The gateways then communicate with each other to conduct the transactions.

Any currency can be transmitted via the Ripple Network, but it first needs to be converted into XRP for the transmission. It is then reconverted back into the original currency at the receiving gateway. XRP is what makes the Ripple network function.

Ripple therefore isn’t much direct use to the ordinary user or consumer. Its more something for business to business use, and especially for larger organizations. In that sense it’s rather like a cryptocurrency designed principally for wholesale use.

Ripple’s performance rests in large part on its success in attracting new users to the system. Technically, Ripple is highly efficient as a money transmission system for financial institutions and corporates.

However, the fact that the supply of XRP is largely in the hands of Ripple Labs means they can theoretically decide when to inject new tokens into the system and in so doing influence the price.

Generally speaking, one can assume Ripple Labs will want to keep the price of XRP low in order to encourage usage of the system.

Though people often use the two terms interchangeably, Ripple and XRP are actually two different and completely independent entities.

xCurrent and xRapid

Ripple Labs have recently released two new products. The first is called xCurrent. This is a network for use by banks which serves as a messaging solution for settling cross-border payments in real time. Xcurrent does not use XRP.

The second new product is called xRapid. This is a system which enables financial institutions to convert fiat currencies into XRP quickly and at low cost. XRapid by contrast with XCurrent does utilize the XRP currency.

Ripple Labs has recently been taking steps to rebrand and make its relationship with the XRP clearer and more distinct to meet US SEC requirements to distinguish the Ripple network from the XRP currency.

However in practice the two systems are obviously closely linked from the both from the technical point of view as well as in practice.

My Assessment of XRP

XRP is certainly worth watching. It’s experienced a number of sudden and very sharp peaks – and falls , in price which can be profitable for investors looking for profitable trading opportunities.

And because of their close involvement and support of the traditional financial system Ripple and XRP are unlikely to fall foul of regulators compared to some other cryptocurrencies.

Ripple is one of the most successful payments and exchange platform that will have a big impact on financial transactions in the future.

While XRP, being the underlying digital currency powering the network, should see its value continue to increase as more financial institutions use the Ripple network to facilitate cross-border transactions, Ripple Labs are likely to want to “manage” the XRP market price to help meet their business objectives by releasing new XRP as and when they deem necessary.  They may also release new XRP in order to help counter sharp moves in price.

Since XRP has a company behind it, this means that the development and well-being of the system should be strongly focused. This is the kind of involvement that traditional investors like to see and this could be to XRP’s benefit.

Ripple Labs is a real company with traditional corporate infrastructure – offices, staff, marketing department, programmers, and so on. It’s not a voluntary distributed group of computer geeks scattered all over the world.

And as Ripple is a centralized system, XRP can avoid the technical and organizational-political squabbles that some other blockchain currencies seem to experience.

Finally, XRP is unlikely to suffer from “forking” that besets other cryptocurrencies and unsettle the market –  a notorious example of which was the ZClassic/ZEN fork which caused the ZClassic price to peak and then subsequently collapse.

XRP therefore in my opinion is an interesting currency to trade in – but bear in mind the points about the role played by Ripple Labs in “managing” XRP and its price.

Ripple logo: copyright Ripple, released into public domain. See

Investment disclosure: The author holds investments in the assets mentioned in this article.

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