On May 27, 2011, Jed McCaleb published a post titled “Bitcoin without mining” on a BitcoinTalk.org forum. Pointing out Bitcoin’s key flaw, he outlined an idea for “a Bitcoin that doesn’t need miners”. The concept focused on eliminating the wasteful mining process by creating a trust-based network of nodes.
Users would select which nodes to trust, allowing them to validate transactions without relying on mining power. Instead of using a majority of miners to secure the ledger, the system would achieve consensus through trusted nodes, with time-stamped transactions ensuring double spending prevention.
At the time of publication, the details were still vague. However, the concept laid the groundwork for what was to become the XRP cryptocurrency, otherwise – even though not fully correct – known as Ripple.
What is Ripple (XRP)? A brief history of the project
McCaleb wasn’t just indulging in theory. He was already engaged in collaboration with David Schwartz and Arthur Britto – all three of them experienced developers fascinated by Bitcoin capabilities. The trio was bent on advancing blockchain technology by improving concepts proposed by “Satoshi Nakamoto.” By June 2012, the team completed the development of the distributed ledger they called Ripple (aka Ripple protocol consensus algorithm) with a related digital asset dubbed ripples.
At that time Ripple worked as an all-encompassing umbrella brand. The core name designated the whole project, Ripple Consensus Ledger referred to the unique consensus ledger, Ripple Transaction Protocol or RTXP described the transaction protocol, and Ripple network quite obviously pointed to the network. For convenience and clarity, the team soon gave up “ripples” for “XRP” – the currency code following the BTC naming pattern. Analogously, the digital record was renamed as the XRP ledger – an open-source solution primarily intended for business use cases.
To market their invention, the team set up a NewCoin company – quickly rebranded to OpenCoin, which again changed its name to Ripple Labs Inc. in 2013 – headed by Chris Larsen. In the following years, Ripple quickly evolved to become one of the most recognized names in the crypto industry. Unlike consumer-oriented Bitcoin, from day one, the project has remained focused on business applications of the DLT technology and enterprise-level solutions.
Ripple and XRP today – an L-1 blockchain for business and a cryptocurrency for investors
Today, Ripple is a top-tier payment network running on a layer-1 blockchain. It supports fast, low-cost international transactions, enabling developers, businesses, global financial entities, and governments to move, manage and tokenize value.
Essentially, Ripple provides payment channels, SWIFT-like settlements, asset exchange, and remittance platforms for handling international money and security transfers. The project is actively working on integrating central bank digital currencies (CBDCs) with decentralized finance (DeFi) solutions, offering tools for institutional DeFi and supporting projects like tokenized real estate collateral.
The Ripple company shouldn’t be confused with the XRP ledger, which remains an open-source project, maintained by a network of independent validators. The same goes for the cryptocurrency (XRP) running on the XRP ledger. Even though a significant portion of XRP remains in escrow, owned by Ripple, to ensure a consistent supply in circulation (the total supply stands at 100 billion), the remaining amount is distributed among a number of entities, including individual investors.
At press time, XRP remains the seventh largest cryptocurrency by market cap, with a capitalization of around 30 billion dollars.
XRP News Today – What’s Up With The XRP SEC Saga?
Apart from the regular market events and price fluctuations, the stream of recent XRP news has been dominated by the XRP SEC saga. The drama began in December 2020 when the US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs. The institution alleged that the company conducted unregistered securities offerings through the sale of XRP tokens, raising over $1.3 billion. Ripple has consistently denied these allegations, arguing that XRP should be classified as a digital currency rather than a security.
A significant ruling in July 2023 determined that while institutional sales of XRP were unregistered securities, programmatic sales to retail investors were not. In August 2024, Ripple was ordered to pay a $125 million fine, significantly lower than the nearly $2 billion sought by the SEC. This ruling was viewed as a partial victory for Ripple, leading to a spike in XRP’s price.
However, on October 3, the SEC filed an appeal against the federal judge decision, which is bound to prolong the XRP lawsuit by at least several months.
“We believe that the district court’s decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws, and we look forward to making our case to the Second Circuit,” an SEC spokesperson said.
Brad Garlinghouse, Ripple’s CEO since December 2016, hit back at SEC questioning the institution’s – and its chair Gary Gensler’s – rationality. According to Garlinghouse, the SEC’s determination to pursue the matter has in no way contributed to protecting investors, having damaged the SEC’s credibility and reputation instead.
As the proceedings continue with both parties geared up for a lengthy legal process, Ripple seeks support on the political front. The company has donated $1 million to Future Forward USA, a political action committee supporting Kamala Harris – an intriguing move, considering Democrats’ cold “stance” towards the crypto market.
Things are bound to get even more interesting in the coming months, with possibly quite a lot depending on the election results.
XRP key characteristics
XRP stands out for its speed, scalability, and low fees. Here’s a brief wrap-up of the key features of the cryptocurrency and the ledger.
Fast transactions
XRP is known for its high transaction speed, with an average transaction confirmation time of 3–5 seconds – much faster than other cryptocurrencies, not to mention the US dollar or other fiat currencies.
Scalability
Ripple’s ledger can handle up to 1,500 XRP transactions per second, whereas Bitcoin transactions are stuck at around 7 per second.
Transaction fees
XRP has minimal fees, often fractions of a cent. Every XRP token paid in the transfer fee is burned, and no longer tracked. For comparison, BTC transactions incur much higher fees, especially during peak times.
Cross-border payments
XRP is basically designed as a bridge currency for cross-border payments. It was tailored for institutional use rather than a decentralized digital currency for peer-to-peer transactions, like BTC.
Consensus mechanism
XRP uses a unique consensus protocol that has little to do with mining. Transactions are validated by a network of over 150 independent validators. The consensus is achieved when at least 80% agree on the legitimacy of transactions. XRP’s consensus mechanism helps combine security with efficiency while reducing environmental impact compared to proof-of-work systems.
What are XRP use cases?
The XRP Ledger (XRPL) project lists several use cases its website, detailing specific benefits and technicalities. Here’s a short overview of key XRP applications.
Payments
The project’s website specifically points to peer-to-peer payments, restricting deposits, and smart contracts. As described above, XRP operates as a cost-efficient and borderless means of payment with fast transaction confirmations. It allows users to process transactions and receive payments smoothly, requiring nothing but an XRP wallet – either a custodial or a non-custodial one.
As regards the second use case, the XRP ledger allows financial institutions, including large banks, to enable deposit authorization, so that account holders can only receive funds that they explicitly approve. This functionality is crucial due to regulations seeking to prevent money laundering and other illicit activity.
The XRPL also allows users to create smart contracts, i.e., conditional payment agreements that automatically execute when predefined criteria are met.
Tokenization
Ripple Labs’ invention can also be used to tokenize various assets, including real estate, stocks, and commodities, facilitating easier trading and ownership transfer. Businesses can create and manage their digital assets on the XRPL, enhancing liquidity and accessibility. The ledger comes with several security features that make the effort even more worthwhile, including trust lines and authorized trust lines, freeze and clawbacks, non-transferable tokens, and NFT transfer fees.
DeFi
DeFi is another broad use case area for XRP. The cryptocurrency can be utilized in DeFi applications for lending and borrowing, allowing users to earn interest on their holdings or access funds without traditional intermediaries. Users can also participate in liquidity pools, providing liquidity for decentralized exchanges (DEX, non-custodial exchanges) while earning rewards.
The XRPL also supports algorithmic trading, allowing for automated trading strategies that capitalize on quick market opportunities. With rapid transaction settlements and low fees, traders can efficiently execute numerous trades. Moreover, the public availability of exchange data makes the XRPL a good fit for high-frequency and scalping strategies.
How to invest in XRP?
With “what is XRP?” question already settled, let’s zero in on all things trading. Mind though, we’re not giving you investment advice, just laying out trading basics. If you need more detailed insights, consider contacting a professional financial advisor.
With nearly 60 billion XRP in circulating supply, a single XRP price (one XRP native token) is pretty low, especially compared to BTC or ETH. In itself, it doesn’t mean buying XRP will get you millions. With cheaper units though, it’s more tempting to buy Ripple just to get a taste and play around, while learning about the cryptocurrency’s unique characteristics.
Your journey should always start with thorough research. Dive even deeper into understanding the tech behind XRP and the evolution of Ripple the company, including the team behind it and the problems they’ve aimed to solve. The next step is looking at the XRP price and market performance from launch till now.
Below you can find the XRP price history.
As you can see, Ripple’s cryptocurrency has experienced significant price volatility influenced by several events. In 2017, the asset’s price skyrocketed from around $0.006 to over $3.00 later that year. The surge was driven by the overall cryptocurrency boom and increased interest in blockchain.
In December 2020, things took a different turn. The SEC lawsuit caused the price to plummet from approximately $0.60 to around $0.20 within days.
However, following various court rulings in Ripple’s favor, XRP saw a resurgence in price, reaching highs of around $1.90 in early 2021 before fluctuating significantly due to market conditions and ongoing legal battles.
As of October 2024, XRP is trading around $0.53, reflecting ongoing market dynamics and investor sentiment.
Understanding these fluctuations is the first step to making more informed decisions about when to buy XRP and sell it. If you feel ready to start, follow these steps.
1. Choose a crypto exchange
Choose a reputable cryptocurrency exchange, such as Coinbase, Binance, or Kraken. Create an account and complete the KYC verification. If you prefer doing things smoothly, consider using one of the recommended swap exchanges instead of a regular currency exchange
2. Fund your account
Fund your account using fiat currency (like USD) or other assets. Ensure you understand any deposit fees associated with the exchange.
3. Buy XRP
Navigate to the trading section of the exchange to purchase XRP select XRP (get a good look at the XRP logo, so that you don’t confuse Ripple with another digital asset), and place an order. You can choose between market orders (buying at current prices) or limit orders (setting a specific price).
4. Keep your XRP in a secure wallet
After making an XRP transaction, consider transferring your XRP to a secure wallet (hardware or software) for better security compared to leaving it on an exchange.
5. Hodl or trade
It’s up to you to choose whether to hodl a digital asset or actively trade it based on market conditions, risk tolerance, and investment goals. Before you decide to sell XRP, use a free online XRP calculator to calculate your profit, so you know how much exactly you bring home.
Good luck!
This article was originally Posted on Coinpaper.com
