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Ripple (XRP) 101 - Complete Guide

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Author: Benson Toti Updated: January 28, 2022

Ripple is a cryptographic digital currency built on the XRP Ledger. The ledger uses a decentralised system of governance and has over 150 validators spread across the world. Without a central authority in charge, transactions are fast and cheap. The XRP Ledger supports RippleNet and RippleX, the platform’s leading products.

Enough cannot be said about the potential of Ripple to upend the financial system in the future. Already, XRP is threatening the dominance of SWIFT in cross border money transfers. This guide will take you through the history of Ripple, as well as explain its growth potential. 

What Is Ripple and Why Was (XRP) Created?

Ripple is a form of digital money purpose-built for payment networks and banks. The cryptocurrency is a native token on RippleNet. RippleNet is a payments system run by Ripple Labs and built on top of the XRP Ledger, which is decentralised and open-source blockchain technology. The payments system boasts fast transaction speeds with an average transaction settlement speed of four seconds. Comparably, the transaction settlement time on the Bitcoin network is 3,600 seconds. 

The idea behind Ripple is older than the cryptocurrency ecosystem. Ryan Fugger is credited with conceptualising a decentralised real-time gross settlement (RTGS) system in 2004. Later in 2012, Jed McCaleb and Chris Larson expanded the idea and created OpenCoin, the precursor to Ripple. 

In the OpenCoin whitepaper, McCaleb and Larson described a blockchain-based payment system that would target financial institutions as its primary clients. After being renamed to Ripple, the founders created a company called Ripple Labs, and hired Brad Garlinghouse as the CEO, to run the payments system.

One of the areas where it had an immediate impact was cross border payments. The developers created RippleNet to streamline transactions. When transacting in fiat currency, consumers and businesses often suffer the inconvenience of having to convert between currencies, as well as suffer losses arising from exchange rate differentials. RippleNet uses the XRP token as a go-between to streamline the exchange of fiat currency without suffering slippage. 

Moreover, the digital currency facilitates faster settlement of transactions at speeds unseen in the traditional payments sectors. Due to utilisation of the peer-to-peer transaction system, users enjoy micro-fees where the average fee is $0.0003403. RippleNet’s competitors in the legacy payments sector such as VISA charge thousands of times higher.

How Does Ripple Work?

Before anything else, Ripple is a digital currency that draws its strength from blockchain technology. Most blockchain platforms obtain consensus either through Proof of Work (PoW) or Proof of Stake (PoS) mechanisms. The PoW system is slower and consumes more power, unlike the PoS system that supports faster validation of transactions while consuming less power.

However, blockchain platforms like XRP Ledger utilise another form of consensus, in this case, called the Ripple Protocol Consensus Algorithm (RPCA). Consensus is simply how nodes in a blockchain network maintain agreement and correctness. RPCA runs through the more than 150 nodes that make up the global XRP Community. 

The consensus system has given Ripple seven years of stability, which has enabled its developers to expand the product range of the ecosystem. For instance, the developers have been able to expand RippleNet’s capacity such that it offers on-demand liquidity to its enterprise clients. This makes global payments faster and cheaper.

Key 3 Selling Points of Ripple (XRP)


Fast settlement of transactions

Payments moving across the XRP Ledger take under 4 seconds to complete. This is thanks to Ripple’s network of validators stationed in every continent. RippleNet eliminates pre-funding requirements when it comes to exchanges and remittances of cash. As a result, transactions are confirmed almost instantly. Also, the immutability of details posted on the XRP Ledger has improved transparency around international payments.


Highly scalable

Currently, Ripple can handle up to 1,500 transactions per second around the clock. This is incredible considering the average transactions per second (TPS) on rival networks such as Bitcoin is 5. Ripple developers have determined that RippleNet is scalable to handle the same TPS as VISA, which stood at 65,000 as of July 2019. Therefore, XRP is not only capable of offering transparency and cost-effectiveness but also offers high TPS.



Stability is a difficult concept in cryptoverse especially if you consider the number of forks happening on philosophical grounds. Since Ripple was founded, the ecosystem has remained strong and dynamic. So far, more than 59 million ledgers have been closed without issue. Also, the RPCA consensus mechanism is energy efficient hence no need for major and potentially destabilising upgrades.

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Is Ripple Worth the Investment?

Ripple presents two major reasons why it is a worthwhile investment. Firstly, the price of the digital currency is low. By the time of this writing, one XRP token was worth $0.250355. Interestingly, the price is miles away from the $0.00634 it fetched in early 2017. 

Why would the low price make Ripple worth the investment? Today, it has a wide mainstream appeal, and it is still growing. Products such as RippleNet have shaken the global payments sector and more is still coming. As such, XRP might gain more mainstream usage, the result of which could be a higher valuation and see more people buy Ripple. The possibility of XRP price growth in the future should provide a strong incentive for one to invest in Ripple today. 

Another thing that gives the cryptocurrency value is that it solves problems that consumers and businesses alike have grappled with for years. While consumers want convenience and lower transaction costs, businesses want faster transaction speeds. RippleNet achieves these and it can do better. Undoubtedly, Ripple will play a greater role in international payments, especially if the world continues to shift towards digital payments.

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Frequently Asked Questions

  1. Ripple Labs is the company responsible for developing Ripple. Ripple is a blockchain platform that provides payment solutions where its vision, according to the Ripple website, is to enable the world to move value the same way information moves. RippleNet is Ripple Labs’ flagship product and it boasts more than 300 financial institutions drawn from 40 countries as its clients.
  2. Yes. Ripple enables digital payments without having to rely on intermediaries who often complicate the transaction process. Besides, users wait for fewer than 5 seconds to settle transactions.
  3. XRP’s main role is to facilitate the exchange and remittance of value via the RippleNet payments settlement system. It plays the same role that fiat currency plays in the SWIFT system for global payments.
  4. Ripple promises fast transaction speeds at rock bottom fees. The platform settles transactions in not more than 4 seconds. In terms of fees, the average network transaction fee at the time of writing was $0.0000147.
  5. Yes. All digital assets experience gyrations in price especially since they are a new concept that the world is still trying to wrap its mind around. Over the past three years, the XRP price has fluctuated constantly but it has begun to stabilise.
  6. No. On-demand liquidity (ODL) is a solution that Ripple is piloting to facilitate faster cross border payments. To ensure that the XRP price volatility does not affect the financial institutions that adopt ODL, Ripple has prioritised shorter transaction settlement time (less than 4 seconds) such that the institutions do not have to hold XRP for long hence limiting their exposure to volatility.
  7. Ripple is the company that runs RippleNet, RippleX, and all the other solutions built on the XRP Ledger. XRP, on the other hand, is the digital currency that facilitates transactions in RippleNet and RippleX. The value of the digital asset is independent of Ripple.
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