Key Takeaways:
- Ripple connects financial institutions, payment providers, exchanges, and corporations via RippleNet.
- XRP is primarily used as a digital currency on the Ripple network to facilitate cross-border payments and remittances.
- Unlike most cryptocurrencies that cater to peer-to-peer (P2P) needs, Ripple was conceived to connect banks, payment providers, and digital asset exchanges, enabling real-time settlement expeditions and lower transaction fees.
What Is XRP Token (Ripple)?
Ripple connects financial institutions, payment providers, exchanges, and corporations via RippleNet, an independent real-time gross settlement system, to provide a frictionless experience when sending money globally. It is built on blockchain technology designed to be decentralised, scalable, and secure. Ripple’s native token, XRP, is primarily used as a digital currency on the Ripple network to facilitate cross-border payments and remittances. The total supply of XRP is capped at 100 billion, and the network alleges to settle transactions in three to five seconds.
US users can now buy and trade XRP in the Crypto.com App!
A Brief History of XRP
Created by US-based technology company Ripple Labs Inc. (Ripple Labs), XRP is the native cryptocurrency of XRP Ledger (XRPL), a decentralised public blockchain engineered by Jed McCaleb, Arthur Britto, and David Schwartz.
The XRP Ledger was launched in June 2012 with the goal of creating a digital asset that was more sustainable and built specifically for payments. Today, XRP is one of the largest cryptocurrencies by market capitalisation.
How Does XRP Work?
Instead of relying on miners or validators to validate transactions, the XRP Ledger, an open-source distributed ledger created by Ripple Labs, uses a unique consensus algorithm called XRP Ledger Consensus Protocol. In this system, a network of trusted validators works together to validate transactions and reach a consensus on the state of the ledger.
The primary objective of the XRP Ledger Consensus Protocol is to reach a consensus on a specific set of transactions to be added to the subsequent version of the XRP Ledger. These transactions are then applied in a clearly defined sequence, and the results are verified to ensure that all parties have arrived at the same outcome. Once this occurs without issue, the ledger version is considered to be validated and final. According to Ripple Labs, the network can work with over 80% of trusted validators.
Each validator node on the Ripple network maintains its own Unique Node List (UNL), which consists of other validators it considers trustworthy to validate transactions. Each node can choose its own UNL, usually based on a default set provided by a trusted publisher. UNL is a critical component of the Ripple network’s security model, and it helps to ensure that the XRP Ledger remains as tamper-proof and resistant to attacks as possible. Anyone can operate a validator; currently, over 150 validators are active on the ledger, which is operated by universities, exchanges, businesses, and individuals.
What Is RippleNet?
RippleNet is Ripple’s payment network designed to provide a fast, secure, and cost-effective way to send and receive money globally. It consists of financial institutions and payment providers that use Ripple’s technology to facilitate cross-border payments, including banks, payment providers, and other financial institutions from all over the world.
What Is XRP Used For?
XRP is used as a digital currency on the Ripple network to facilitate cross-border payments and remittances. When someone wants to send money over the network, they can use XRP to facilitate the transaction.
The main use cases for XRP include:
- Cross-border payments: XRP can be used to settle transactions on the Ripple network, allowing financial institutions and other users to send and receive payments in multiple currencies with possible settlement times of just a few seconds.
- Remittances: XRP can be used to send money across borders quickly — and potentially cheaply.
Additionally, Ripple is currently working with more than 20 countries on central bank digital currencies (CBDCs), having developed a CBDC platform that enables stability, security, and resilience based on the XRP Ledger. The CBDC Private Ledger is based on the same blockchain technology that powers the XRP Ledger. It also leverages RippleNet technologies and the Interledger Protocol (ILP) that enable payments across different ledgers and payment networks.
Conclusion
Ripple connects financial institutions, payment providers, exchanges, and corporations using its payment network, RippleNet, to provide a fast, secure, and cost-effective way to send and receive money globally. Its native currency, XRP, is primarily used as a digital currency on the Ripple network to facilitate cross-border payments and remittances. In addition, Ripple is currently working on central bank digital currencies (CBDCs) using its CBDC platform, which enables stability, security, and resilience based on the XRP Ledger.
Unlike most cryptocurrencies that cater to peer-to-peer (P2P) needs, Ripple was conceived to enable real-time settlement expeditions and lower transaction fees. Its native token, XRP, is currently (at the time of writing) one of the largest cryptocurrencies by market capitalisation. And US users can now buy and trade XRP in the Crypto.com App.
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