What is Ripple?

| Updated on March 26, 2024

Ripple is the native cryptocurrency created by Ripple Labs, a technology company building real-world financial solutions. Other products of the company include a payment protocol and remittance solution used by numerous financial institutions and regular users around the world. Most crypto enthusiasts have already heard about it, but it’s time to take a closer look.

Below we’ll be discussing the technology and mission behind Ripple (XRP) and what makes it one of the highest-ranking digital tokens. 

How Does Ripple Work? 

Ripple transactions are made through a medium called Gateway, which sends and receives XRP to public addresses all over its network. Here is a simple example of it.

Person A wants to send $100 to Person B. “A” gives the money to a third party along with a password that “B” needs to know. The third-party transmits the money to “B” if they tell the correct password. If not, the funds are sent back to “A”. 

Unlike Bitcoin, all XRP coins have been issued (100 billion), which means they can’t be mined. But with each transaction, a small amount of XRP is destroyed. This is done to protect the XRP Ledger from spam or DoS attacks. 

XRP Tokens

Coming back to XRP, this is a token that is used on the network to facilitate transfers. While current systems use USD as a common currency, the Ripple network uses XRP for converting the value of any transfer. This helps minimize the exchange fees and processing times for payments. 

What is Ripple’s Mission? 

Ripple operates based on the principle called the Internet of Value. Their vision is to enable value transfers of the same speed as information transfers. In other words, they want to create a world where money can be sent as easily as a text message. 

Payments, which are now often clunky and fragmented, can be facilitated through multiple solutions under the Ripple brand umbrella – the XRP coin, RippleNet, the XRP Ledger, and RippleX.

Uses, and Limitations of Ripple

Below are all essential use cases that have been made possible through Ripple: 

  • Micropayments (gaming, content, web monetization, etc.)
  • Cryptocurrency wallets that interact with various blockchains
  • Crypto and non-blockchain exchanges
  • Stable Coins
  • NFTs
  • DeFi

As for the flaws, Ripple has a few that you should strongly consider: 

  • Not decentralized (making it similar to a bank)
  • Monopoly (Ripple Labs own 61% of all coins)
  • Might be vulnerable to attacks (because it’s open-source)

Summarizing Thoughts 

Ripple provides real value, and it may be heading towards mainstream adoption. Compared to most cryptocurrencies, it has gained more popularity within the financial sector and the global payment industry. At the time of writing, Ripple has already partnered with services like Western Union, Moneygram, Santander, and IndusInd.

Ripple will need to sort out the availability of XRP on most exchanges and its competitive advantage. In terms of the latter, things have been looking good for Ripple – in the last 5 years, current money transfer services like SWIFT haven’t shown any inclination of change. But perhaps the surest way to see what the future holds for Ripple is to join them on that journey.


John M. Flood

John is a crypto enthusiast, Fintech writer, and stock trader. His writings provide guides to perform your best in the crypto world and stock planet. He is a B-Tech graduate from Stanford University and also holds a certification in creative writing. John also has 5 years of experience in exploring and understanding better about the FinTech industry. Over time, he gained experience and expertise by implementing his customized strategies to play in the crypto market.

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