Sitting in second place on our list of top cryptocurrencies is XRP, known to some as Ripple. This digital asset currently has a market cap of over $13 billion and boasts a daily volume in the hundreds of millions of dollars. However, there's a lot of confusion surrounding Ripple - especially since the term is used to describe an online payment network, cryptocurrency, and company at the same time. In this article, we'll demystify everything Ripple, helping you understand which Ripple is which and what it's for.
It's generally accepted that the term Ripple refers to an online payment network with the primary purpose of settling international transactions between banks, other financial institutions, and existing payment networks. Ripple is developed by the US technological company Ripple Labs, Inc., which is often referred to as just Ripple, adding to all the naming confusion.
RippleNet is the name given to the global network of banks, other financial institutions, and existing payment networks who use Ripple to settle payments. More information about RippleNet, including a list of the financial institutions involved, is available on the Ripple website.
One of the key features in the Ripple payment network is its proprietary cryptocurrency. While it's known by some as just Ripple, the cryptocurrency is technically called XRP (and uses the same three letter ticker on exchanges).
XRP was created in 2012, and is claimed to be the "fastest and most scalable digital asset", with studies supporting a transaction time of four seconds or less, and a transaction throughput of more than 1,500 transactions per second. There is some controversy over who exactly created XRP, but most believe that it was Ripple Labs.
Unlike many other cryptocurrencies, XRP does not use a blockchain. Instead, it uses a proprietary distributed ledger technology known as the Ripple protocol consensus algorithm. The word consensus is key, since it suggests that every node must agree on the same sequence of events to take part in the network.
Unlike with many other cryptocurrencies, it's not immediately clear whether the Ripple payment network and the associated XRP token are centralized. Since the Ripple payment network is directly controlled by Ripple Labs, it definitely is centralized.
With XRP, the case isn't so clear. Although Ripple Labs does not appear to have direct control over the issuance and usage of XRP, it's clear that a great majority of XRP tokens are held by just a few individuals.
You might be wondering why anyone would use Ripple or the underlying XRP token. Of course, whether it's Ripple or XRP makes a big difference, so let's look at the two cases separately.
Ripple is a payment network, so its main use case is to settle payments across the world. Ripple hopes that its unique technology will allow financial institutions across the world to reach more customers, deliver a better experience, and earn more revenue.
Here are the advantages of using Ripple over other payment networks:
Ripple works well - As a payment network, it's generally established that Ripple works well. Compared to the alternatives, Ripple is a significantly cheaper and faster way for many financial institutions to settle payments.
Ripple is established - Ripple is a tried and tested payment platform that global financial institutions are using. According to the Ripple website, clients include American Express, Santander, and TransferGo, among others.
Some claim that XRP was created by Ripple Labs, so you would think its main purpose is to facilitate transactions on the Ripple payment network. However, there is nothing stopping consumers from using XRP like any other cryptocurrency; in this sense, XRP has two main use cases: as a store of value, and as a medium of exchange.
Here are the advantages of using XRP over other cryptocurrencies:
XRP is fast - As a cryptocurrency, XRP is significantly faster than popular alternatives. Payments are claimed to settle in as little as four seconds, while Ethereum and Bitcoin transactions take minutes, hours, or even days in some cases.
XRP has low fees - XRP transactions cost just fractions of a cent, which makes it a perfect choice for transactions big and choice.
The Ripple community is one of the strongest in the entire cryptocurrency space, so you may have heard Ripple enthusiasts telling you to invest in XRPâ¦ but should you?
While Ripple is one of the most impressive cryptocurrency projects - with scores of real clients actively using their products - it's unclear how the success of Ripple is directly related to the success of the XRP token.
As such, it's hard to make an educated decision on whether or not to invest in XRP. However, if you'd like to learn more about Ripple and its proprietary token, we highly recommend you check out the resources listed on our XRP page.
Our price history for XRP goes as far back as July 2013, when token was worth just over half a cent. Until mid 2017, the price of XRP bounced up and down between that level and just a few cents higher. At the start of May 2017, XRP shot up to 30 cents - an increase of more than one thousand percent.
For most of 2017, XRP traded in the range of 20 to 30 cents. However, from November 27, 2017 to January 1, 2018, the price of XRP skyrocketed from around 25 cents to just under 3 dollars. Since then, XRP has gradually depreciated into its current trading range of between 30 and 40 cents.