When it comes to Ripple there is one major thing to understand…
There are two;
Ripple the Company and XRP (Ripple) the Cryptocurrency.
Ripple — The Company
Ripple the company makes global payment solutions for banks.
At time of writing they have three products;
xCurrent — settlement between banks — one that processes payments
xRapid — liquidity cost minimisation — one that sources liquidity
xVia — interface to RippleNet — one that makes payments
Out of these three products, only one uses XRP (Ripple) the cryptocurrency.
But wait a minute you say, Ripple has 100’s of financial institution on board using their products, so there must be some correlation to XRP the currency?
Well, yes, but — no.
Yes they do have lots of financial institution customers — and they are expanding all the time — but almost every customer is signed up for xCurrent, which doesn’t use XRP at all. Ripple the company’s main product does not use Ripple (XRP) the cryptocurrency at all.
Yes, the end goal might be the on sell or adoption of XRP. But for right now XRP is not the main focus, in fact XRP is only used in one product — xRapid (which cleverly has xRp in the title).
And on xRapid (and XRP use with this product) Ripple has this to say:
“Financial institutions who use xRapid don’t need to hold XRP for an extended period of time. What’s more, XRP settles in three to five seconds, which means financial institutions are exposed to limited volatility during the course of the transaction.”
— Ripple, FAQ xRapid
Ripple — The Cryptocurrency
XRP is a cryptocurrency brought into existence by Ripple the company.
Ripple the company owns 60 billion XRP, of that 55 billion is locked up in escrow to be released slowly and predictably.
XRP exists independently of the Ripple company — they are definitely connected, but separate.
If you are buying XRP you are not buying a share of Ripple the company and vice versa. But, they are connected… and Ripple the company is definitely invested in XRP…
“We partnered with Ripple because of their strength bringing financial institutions together. Ripple’s lockup of its 55 billion XRP with a cryptographic supply schedule is a clear signal that they are serious about building and maintaining a long-term, healthy ecosystem for XRP based applications,”
— Mike Belshe, Co-founder & CEO of Bitgo.
The ‘Ripple’ effect
Ripple is open about what they are as a company and what XRP is as a cryptocurrency, see the below infographic from Ripple.
Ripple is also really open about how they see the Company and Cryptocurrency working in the larger world and it’s really quite simple — Ripple the company is in the business of bank payment solutions, with a related, but not make or break cryptocurrency as part of its solutions.
See David Schwartz’s take on XRP and decentralisation.
From this open position, all kinds of wild and interesting hype surround the company and the coin.
Ripple is a very good example of the sometimes disconnect between company, currency and connected technology. The Ripple and XRP relationship remains a valuable lesson in doing your research on any token before purchase, all of the information is there, in double.