What is XRP?
XRP is a cryptocurrency used on the XRP Ledger blockchain, designed to be used on the RippleNet. RippleNet was created by Ripple Labs and has the potential to replace parts of or all the current aging financial transfer service Swift. XRP provides a consensus layer, validating transactions. XRP was engineered by Jed McCaleb, Arthur Britto and David Schwartz.
XRP is the sixth largest cryptocurrency by market capitalisation, behind only Bitcoin, Ethereum and Binance Coin (excluding stablecoins). The XRP Ledger is decentralised, but its 35 validators are chosen by Ripple called unique node lists. Users are however free to choose their own validators if they wish. This has led to some criticism about the extent to which Ripple controls the network.
International transactions can be near-instant, thanks to XRP's unique feature called "rippling," which allows users to transfer any currency to any other currency on the network in a matter of seconds. This feature is made possible by XRP's ability to serve as a bridge currency between different fiat currencies and cryptocurrencies.
In addition to cross-border payments, XRP can be used independently of the RippleNet. This means that any individual or business can use XRP to make cross-border payments without needing to go through a third-party intermediary. XRP has been used by several large financial institutions, including Santander and American Express, to facilitate cross-border payments. Ripple has also partnered with several major banks and financial institutions to integrate its technology into their existing systems.
XRP has a total supply of 100 billion tokens, with about 35 billion in circulating supply. The XRPL founders gifted $80 billion XRP to the company, a move that saw some criticism of the token. In 2017, Ripple sent $55 billion (55% of supply) into a series of escrows to help provide predictability. This is released slowly every month to provide an upper limit to the amount of XRP that is released into circulation.
XRP has faced several lawsuits and regulatory challenges related to its association with Ripple. In December 2020, the SEC filed a lawsuit against Ripple Labs, alleging that XRP was a security and that Ripple had sold it illegally. The lawsuit is ongoing, and its outcome could have significant implications for the future of XRP and other cryptocurrencies.
In our opinion, XRP has one of the strongest use-cases out of all the current crypto tokens. It's faster, more environmentally friendly than other cryptos, and has been used successfully by several major financial institutions for cross-border payments. However, the ongoing regulatory challenges faced by Ripple and XRP mean that potential investors should approach the token with caution and do their due diligence before investing.
