Have you heard about RippleNet and its digital currency XRP? Both are products developed by Ripple Labs with a single ambitious goal: to become a global platform covering all international transactions.
To achieve this, the project aims to bring the benefits of decentralized finance to the traditional banking system. This is why XRP is often referred to as "the bank's cryptocurrency."
But how did the idea of applying blockchain technology to banking emerge? Who created it? How does it work? And how can you acquire XRP? This article covers all these questions and more.
What Is Ripple and XRP?
Before diving deeper, it’s important to clarify some common misunderstandings. The terms Ripple, Ripple Labs, and XRP are often used interchangeably, but they refer to distinct entities.
Ripple is not a cryptocurrency. It is an open-source platform designed to enable fast and low-cost transactions. XRP is the native digital currency that operates on the Ripple protocol. When people say they are "buying Ripple," they usually mean they are acquiring XRP.
Ripple Labs is the company that developed the Ripple protocol and launched the XRP cryptocurrency.
Unlike Bitcoin, which aims to be a decentralized peer-to-peer electronic cash system, Ripple has a more specific goal: to facilitate international transactions worldwide.
Interestingly, XRP does not operate on a traditional blockchain structure. Let’s explore how it works.
The Founders of Ripple
The Ripple protocol was first conceptualized in 2004, even before Bitcoin. However, its modern story began in 2013.
That year, Jed McCaleb enlisted Chris Larsen to develop a cryptocurrency that used a consensus mechanism for transaction verification. The company, initially named OpenCoin, was later rebranded to Ripple Labs.
Ripple Labs’ mission is to bridge the gap between cryptocurrency innovations and the traditional financial system. By using consensus-based validation, they enabled cheaper and more accessible cross-border currency transfers. This approach attracted support from major banking institutions, including BBVA.
Now that you understand the origins of Ripple and XRP, let’s look at how the technology functions.
Understanding RippleNet
RippleNet is an open-source platform that allows banks to process international payments in real time. However, it differs significantly from blockchains like Bitcoin or Ethereum.
In the Ripple network, not just anyone can operate a validator node. Only authorized entities—such as banks and financial institutions that are part of the network—can validate transactions.
This permissioned structure means Ripple is not fully decentralized. In fact, it leans toward centralization, which contradicts the core principles of typical blockchain systems.
So, what gives RippleNet its value? The answer lies in its efficiency in facilitating international money transfers.
Sending money across borders, especially in LATAM countries, is often slow and expensive. High fees and long processing times are common. RippleNet solves this by settling transactions within seconds.
Its primary use case is as a payment protocol for international transfers. To achieve global adoption, RippleNet needs more banks to join its network.
Which Banks Use RippleNet?
Ripple has formed partnerships with several major financial institutions worldwide. Some notable examples include:
- BBVA
- Santander
- Itaú
- Union Credit
It’s important to note that these banks are not necessarily accepting XRP as a means of payment. Instead, they are using RippleNet’s technology to streamline their currency exchange and remittance services.
Now, let’s turn our attention to the digital asset that powers this network: XRP.
The XRP Cryptocurrency
XRP is the digital token used to represent value transfers on RippleNet. It is designed for payments and serves as a bridge currency for exchanging both cryptocurrencies and fiat money.
XRP can be used as a medium of exchange and a store of value within the Ripple ecosystem. It plays a critical role in enhancing liquidity, especially for currency pairs with low trading volume.
Using blockchain technology, XRP can be sent directly without a central intermediary, making it an efficient tool for connecting different currencies quickly.
If you’re interested in acquiring XRP, here’s how you can do it.
How to Buy XRP
To invest in or trade XRP, you need a trusted exchange that lists the token and supports its network for deposits and withdrawals.
You can purchase XRP simply and securely by following these steps:
- Register with your email address.
- Transfer funds from your bank or digital wallet to your exchange account.
- Select XRP as the asset you wish to buy and choose your payment method.
Additionally, ensure that the exchange supports the Ripple network, enabling you to deposit and withdraw XRP seamlessly.
This approach offers a user-friendly, low-cost, and secure way to manage your digital asset investments.
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Ripple and XRP represent an ambitious project backed by blockchain-like security and rapid transaction processing. However, the centralized validator model contrasts with the philosophy of decentralized finance (DeFi).
What do you think? Will Ripple achieve its goal of becoming a worldwide payment network? Is XRP a good investment for you?
Frequently Asked Questions
What is the difference between Ripple and XRP?
Ripple refers to the technology company and the payment protocol, while XRP is the native cryptocurrency used within the RippleNet ecosystem for facilitating transactions.
Is Ripple decentralized?
No, Ripple uses a permissioned network where only approved entities can validate transactions. This makes it more centralized than networks like Bitcoin or Ethereum.
Can I use XRP for everyday purchases?
While XRP is designed primarily for cross-border settlements and institutional use, some merchants and platforms do accept it as payment. However, its main utility remains in the backend of financial systems.
How fast are XRP transactions?
XRP transactions are typically confirmed within 3-5 seconds, making it one of the fastest digital assets for transferring value.
What is the total supply of XRP?
The total supply of XRP is capped at 100 billion tokens, all of which were created at its inception.
Is XRP a good long-term investment?
Investment decisions should be based on individual research and risk tolerance. While XRP has institutional backing, it also faces regulatory uncertainties in some regions.
We wish you the best of luck in your future investment endeavors.