SWIFT transfers are so old-school, slow, and unnecessarily expensive – what’s the solution? Enter Ripple, the innovative American software corporation that provides a real-time gross settlement, remittance, and currency exchange network. 

The company is also well-known for the native cryptocurrency, XRP, that facilitates transactions on this network. Most cryptocurrency enthusiasts have gotten comfortable referring to the coin itself as Ripple, although they aren’t necessarily the same.

Despite a tremendous fall-off in price after reaching a high of $3.84 to now trading (at the time of writing) at roughly $0.27, XRP is the fourth-most traded cryptocurrency, with a market capitalization of approximately $13.6 billion.


The birth of XRP culminates in the vision of two American software programmers, Ryan Fugger and Jed McCaleb, who each had the goal of a decentralized, digital monetary system. Fugger first conceptualized Ripple in 2004, then known as RipplePay. 

RipplePay’s objective was to deliver robust, seamless, and cheap payment solutions globally. In May 2011, almost two and a half years after Bitcoin’s launch, McCaleb began developing a similar cryptocurrency, differentiating it primarily from being one not requiring a mining process.

With seasoned angel investor Chris Larsen, McCaleb proposed the cryptocurrency to Fugger and other Ripple community members. In the end, Fugger would not be part of the eventual formation of OpenCoin in September 2012 (which later rebranded to Ripple Labs, Inc. in 2013 and then simply Ripple in 2015).

Through several successful rounds of funding from venture capital firms in 2013, Ripple began operations on the protocol of global payment solutions for financial institutions as we know it today.

How XRP works

XRP is a cryptocurrency that can act as an ordinary medium of exchange between buyers and sellers. The currency doesn’t have as much mainstream appeal as Bitcoin, but niche retailers, cryptocurrency wallets, and internet hosting providers are just a few places where you can spend XRP.

Transactions are decentralized and peer-to-peer like many of XRP’s counterparts. Anyone can buy the coin at numerous cryptocurrency exchanges.

XRP’s ledger

XRP’s ledger

XRP is unique among most cryptocurrencies since there is no mining process, contributing to why the network can confirm transactions exceptionally quickly. While many utilize a proof-of-work (consensus mechanism) in their blockchains, Ripple uses the RPCA (Ripple Protocol Consensus Algorithm), where independent validating nodes continuously compare transaction records.

Each of the nodes exchanges these until they reach an agreement on the present state of the ledger. Although XRP is a product owned by Ripple, the company claims a decentralized mining process as with nearly all cryptocurrencies.

This statement is significant because although the company is privately-held, XRP’s ledger is open-source and distributed. Therefore, even if the actual brand itself ceased to exist, the creation of XRP coins would still continue.

XRP’s supply

There is a finite amount of XRP that will ever exist, with roughly 45 billion presently in circulating supply. This figure represents 45% of the total limited amount of 100 billion.

Ripple holds the remaining stake as a means to regulate the supply. Using a rolling 5-year escrow plan, 1 billion XRP are released monthly by Ripple. Any unused or unsold portion is returned back to Ripple in escrow.

What makes XRP special?

Amongst the seemingly infinite number of cryptocurrencies in the market, it helps to appreciate what makes a coin stand out from the pack. XRP serves as a relative niche target market, comprising mainly financial service providers.

Banks, for example, consistently need to send large amounts of money internationally. From a client’s perspective, bank wire transfers are notoriously costly and can take a few days or longer. 

Ripple is the solution to both these problems because its platform can process large amounts at an extremely low cost per transaction, about 0.00001 XRP to be precise (roughly $0.000004 at the time of writing). 

The time to confirm transactions on Ripple is incredibly impressive compared to other cryptocurrencies, boasting a time of about 3 to 5 seconds. The level of scalability that the platform can achieve is particularly valuable.

How Ripple solves currency exchange problems

Another major issue faced by financial establishments is currency exchanges. However, this problem extends to any end-user. XRP aims to become a ‘bridge currency’ between different fiat currencies. 

This utility is very beneficial specifically for fiat currencies that people don’t commonly trade against each other. For example, if one wanted to convert South African rands to Nigerian nairas, this typically necessitates first converting the rands to dollars and then dollars to nairas. 

In this example, if both the sender and recipient group since the start of 2018. We should also note that Ripple provides other financial technologies, most notably xCurrent, a messaging solution for settling real-time international payments.

However, at least a third of the world’s 100 largest banks have either tested or are using XRP. Although few financial institutions utilize XRP, based on its value proposition, we should see greater adoption over time.

Ripple is continually facing regulatory concerns over its technical business structure, to the point that pleas exist to separate XRP from Ripple. Most people typically refer to XRP as Ripple, and this has been confusing, to say the least, because one is the actual decentralized cryptocurrency while the other is a privately-held company that created it.

Nonetheless, Ripple’s CEO has stated the company aims to increase transaction volumes in the future exponentially, indicating growth.


The main takeaway from this article is that Ripple clearly has a defined target audience and has supplied an innovative solution. By meeting the demands of cross-border payment transfers and with greater adoption from financial institutions, we should expect XRP’s price to rise in value over the next few years.