What is Ripple (XRP): A Guide for Crypto Investors

Did you know that Ripple had one of the most impressive, sudden bull runs in crypto history?

Between December 4, 2017 and January 1, 2018, XRP increased its value by over 1,200% in less than 30 days.

However, Ripple is more than an investment product.

It is a crypto project that many believe has the potential to replace SWIFT as the standard network for international bank transfers.

And, in this article, we’ll provide you a detailed overview of Ripple, providing all the information you need to understand the cryptocurrency project.

What Is Ripple (XRP)?

Ripple is both a digital asset platform and a cryptocurrency.

Using an open-source protocol and blockchain technology, Ripple’s goal is to allow fast and cost-efficient payments between users.

Ripple has its own digital asset in the form of XRP, which can be used as the native cryptocurrency on the project’s platform.

The crypto project features an ambitious product in the form of RippleNet, a network that allows financial institutions, payment service providers, and other organizations to send and receive near-instant and low-cost transactions on a global scale.

Users can transact a wide variety of currencies — including both digital assets and fiat currencies — on the platform, while XRP provides on-demand liquidity for the crypto project’s institutional partners.

By utilizing XRP, Ripple’s institutional partners can source real-time liquidity, without the need to fund their bank accounts before making cross-border transactions.

Compared to other blockchain networks, Ripple is among the cryptocurrency projects that feature high scalability with a maximum of 1500 transactions per second (TPS). For reference, Bitcoin has the capability to process a maximum of 7 TPS, while Ethereum can scale up to 20 TPS.

Furthermore, XRP transactions settle very quickly, only taking four seconds to confirm.

The History of Ripple

Founded in 2012, Ripple is currently operated by the US-based blockchain company Ripple Labs.

However, the cryptocurrency project’s history dates back to 2004, when Ryan Fugger founded RipplePay, with the core idea of creating a peer-to-peer (P2P) network of financial institutions.

RipplePay remained a prototype, and Fugger later handed over Ripple to early Bitcoin pioneer Jed McCaleb who co-founded the cryptocurrency project — named “OpenCoin” at the time — with executive chairman Chris Larsen in 2012.

The project launched its XRP token in early 2013 and acquired funding from angel investors, such as Google Ventures, Andreessen Horowitz, and the Bitcoin Opportunity Fund, shortly after, and changed the organization’s name to Ripple Labs in late 2013.

After some major events — including McCaleb leaving the company and founding the crypto project Stellar , the Ripple we know today features a blockchain-powered payments network with over 300 institutional partners.

Ripple’s Partnership with MoneyGram

Ripple Labs’ institutional clients include the remittance specialist MoneyGram that has formed a partnership with the cryptocurrency firm in June 2019. At the same time, Ripple Labs also invested $50 million in the payments company (Ripple owns over 10% of MoneyGram’s shares).

Since its partnership with the cryptocurrency project as well as utilizing XRP and RippleNet for cross-border payments, MoneyGram has reported increased revenue on multiple occasions (including for Q4 2019).

However, Ripple’s partnership with MoneyGram has also been subject to criticism.

Recent news revealed that Ripple Labs sent over $11 million to MoneyGram in the past half-year, which led to the allegation that the cryptocurrency organization is compensating the payments firm for losses originating from MoneyGram’s RippleNet integration.

What Is the Potential of Ripple?

Many see great potential in RippleNet as it allows users to send and receive low-cost and near-instantaneous crypto transactions that have sparked the interest of numerous financial institutions and payment providers.

Furthermore, as RippleNet now features over 300 institutional partners, a part of the cryptocurrency space believes that Ripple will replace SWIFT as the standard network for international transactions.

And achieving the above-mentioned could facilitate the mainstream adoption of blockchain technology and digital assets.

However, it’s a tough quest, and Ripple has a long road ahead to reach this goal.

What Do Critics Say About Ripple?

In addition to MoneyGram’s funding, Ripple has also received criticism on other fronts.

One of the main issues of critics is the centralized nature of the cryptocurrency project that some say goes against the whole concept of digital assets.

Ripple’s tokens are already mined. This provides increased control over XRP’s distribution to developers. What makes the case worse is that Ripple Labs owns approximately 61% of the coins which increases the level of centralization of the crypto project’s network.

Also, there has been a rumor in the crypto space that Ripple Labs has the ability to freeze XRP transactions. The rumor originates from Jed McCaleb’s case, whose withdrawal of over $1 million of XRP was halted by Ripple in 2015.

The case resulted in a lawsuit with Ripple Labs claiming that McCaleb had violated a 2014 agreement that allegedly prevented him from selling his XRP funds.

While the lawsuit has been settled and Ripple has since denied that the organization can freeze XRP funds, many still believe the crypto organization has increased authority over its network.

How Did XRP Perform as a Cryptocurrency?

Currently, Ripple features the third-largest cryptocurrency with a total market capitalization of over $10 billion.

While XRP’s price is standing at $0.235 at the time of writing this article, the cryptocurrency has come a long way to reach this value.

With some exceptions, XRP’s price remained somewhat stable until 2017’s bull market. However, between February 28, 2017 and January 1, 2018, the cryptocurrency has entered into a significant bull run, increasing its value by approximately 500 times (from $0.0055 to $2.75).

Like other cryptocurrencies, 2018’s bear market had hit XRP hard, resulting in a significant price drop.

In 2019, the digital asset continued to downtrend — with some minor bull runs occurring in between — ending last year with a loss of 45%.

However, XRP has started this year in good shape, increasing its price by 20% in approximately three months.

Ripple: A Centralized Crypto Project With Great Potential

Despite the criticism of the project’s increased centralization, Ripple’s vast amount of partnerships with financial institutions indicates the potential of the digital asset solution.

While Ripple has yet to achieve its goal to replace SWIFT for cross-border transactions, we are looking forward to seeing how that will work out for the digital asset project.

Meanwhile, if you are interested in purchasing XRP, you can do so anytime on AAX.

AAX is the world’s first digital asset exchange to be powered by LSEG Technology. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance.

Open an account with AAX, or download the app, and experience the next generation crypto exchange.

Originally published at https://academy.aax.com on February 29, 2020.



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The world’s first crypto exchange powered by LSEG Technology.