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Cryptocurrency Guide | Guides

What Is XRP? All You Need To Know

Author

Rickie Sanchez

Tags

Tags Editor's Choice / Slider Posts

Reading time

3 mins
Last update

Author

Rickie Sanchez

Tags

Editor's Choice / Slider Posts

Reading time

3 mins
Last update

Author

Rickie Sanchez

Tags

Editor's Choice, Slider Posts

Reading time

3 mins
Last update

xrp

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Key Takeaways

  • XRP is a cryptocurrency token created by Ripple Labs, a company that provides financial services and cross-border payments.
  • XRP is designed to be a bridge currency, facilitating faster and cheaper cross-border transactions between fiat currencies and other cryptocurrencies.

What Is XRP?

XRP is a native cryptocurrency that uses the XRP Ledger (XRPL), which offers secure payment services globally with fast throughput and cheap transaction fees. The Ripple ecosystem resolves transactions using XRP tokens rather than time-consuming, expensive traditional money transfer platforms like SWIFT.

How Does XRP Work?

XRP is a cryptocurrency designed on the Ripple network to facilitate faster and cheaper international payments. Here’s a breakdown of how XRP works:

Bridge Currency

Unlike some cryptocurrencies used for direct purchases, XRP acts as a transaction middleman. When two parties want to exchange different currencies, say USD to JPY, XRP bridges that gap. Each party sends its currency to an intermediary on the network and receives XRP in return. The XRP is then exchanged for the desired payout currency.

Faster Settlements

XRP transactions are validated very quickly, typically within 3-5 seconds. This is because Ripple uses a different system from traditional blockchains like Bitcoin. XRP relies on a network of trusted validators to verify transactions instead of miners solving complex puzzles.

Lower Fees

Transactions on the Ripple network incur a small fee paid in XRP. This fee is usually a fraction of a cent, significantly lower than bank transaction fees for international transfers.

Pre-mined XRP

XRP has a pre-defined maximum supply of 100 billion tokens. All XRP tokens were created at the outset and are not mined like Bitcoin.

XRP Token And Tokenomics

Tokenomics

The XRP token is used for:

  • Bridge Currency
  • Transaction Facilitator
  • Tradeable Asset within the Ripple Network

Token Details

Total Supply 100,000,000,000 XRP

Circulating Supply 55,119,895,152 XRP

Current Price $0.50

Market Capitalization $27,535,815,423

This information is current as of April 25th, 2024, and the token’s price, market value, and available supply may fluctuate.

Distribution

  • Ripple – Holds a large portion, estimated at 80 billion XRP initially.
  • Escrow – A significant amount (around 55 billion currently) is placed in escrow accounts. Ripple gradually releases 1 billion XRP every month.
  • Founders and Team – 20 billion XRP were allocated to Ripple co-founders and the core team.

Where Can I Buy XRP?

Binance Binance is a major exchange offering a wide range of cryptocurrencies. It offers multiple ways to buy crypto, including credit cards, debit cards, and peer-to-peer (P2P) trading.

Bybit This exchange is known for its derivatives and margin trading features, but you can also use the platform for spot trading.

Coinbase Coinbase is an American-based cryptocurrency exchange that allows you to buy cryptocurrencies using various payment methods, including bank transfers, debit cards, and wire transfers.

Is XRP A Good Investment?

Pros

  • Transaction Speed And Cost – XRP excels at facilitating fast and cheap transactions. Compared to traditional wire transfers, which can take days, XRP transactions settle in a mere 4-5 seconds with minimal fees (a fraction of a penny).
  • Institutional Adoption – Unlike many cryptocurrencies, XRP has gained traction with established financial institutions like banks and payment processors.
  • Not A Security – In July 2023, a US court ruled that XRP itself is not a security when sold to the general public.

Cons

  • SEC Lawsuit – The US Securities and Exchange Commission (SEC) is suing Ripple Labs in an ongoing lawsuit, alleging that XRP is an unregistered security. 
  • Centralization Concerns – A significant criticism of XRP is its centralized nature. Some argue that Ripple Labs initially holds a significant portion of XRP tokens and controls the release of XRP from escrow.
  • XRP Has Not Reached All-Time Highs Since 2017 – Compared to its meteoric rise in 2017, XRP’s price has remained stagnant for the past several years.

Final Thoughts

Whether XRP is a good investment depends on your risk tolerance and goals. Remember, this guide provides a starting point for your research. Always conduct your due diligence before making any investment decisions.