What’s Ripple?
Ripple is an American technology company founded in 2012 with the aim of revolutionizing the global banking system. It is important to note that Ripple should not be equated with the cryptocurrency XRP. There are indeed older documents that refer to XRP as Ripple. However, since the XRP initiative in 2018, Ripple has placed great emphasis on clarifying that the cryptocurrency XRP is distinct from Ripple the company.
Ripple, as a company, also emphasizes that the XRP token is not a product of Ripple but rather an open-source software used solely by the company for its product xRapid. Nevertheless, for many in the crypto community, there remains a lack of clear distinction between the XRP token and the company Ripple. More on this will be discussed later in the “Ripple controversy” section.
Ripple’s goal is to provide a cheaper, faster, and more secure payment system for asset transfers across national borders. Ripple directly competes with the current market leader SWIFT, which currently sets the standard for cross-border fiat money transmission. Ripple offers various software solutions for this purpose, aiming for a network that can scale to handle up to 50,000 transactions per second, similar to VISA.
While Bitcoin is designed as a peer-to-peer payment system without intermediaries, Ripple offers a payment system built on the existing infrastructure of banks. This fundamental difference is why a significant portion of the cryptocurrency community refers to Ripple as a “bankster” coin and holds resentment towards both the company and the XRP token. Ripple contradicts the original vision of cryptocurrencies, particularly Bitcoin, which was developed as an alternative to the traditional banking system. This video takes a deep dive into Ripple and XRP, exploring their fascinating journey in the world of cryptocurrency.
Current Ripple (XRP) News
A significant milestone was reached by Ripple when Judge Analisa Torres ruled that XRP does not qualify as a security. Despite XRP’s recent underwhelming performance, Ripple is positioned to capitalize on various trillion-dollar markets. These encompass tokenization, bolstered by the acquisition of Metaco, collaborations with over 30 central banks globally, and the swiftly evolving DeFi market.
The ongoing XRP vs. SEC dispute is anticipated to reach a resolution this year. However, the legal skirmish between the SEC and Ripple Labs concerning XRP might prolong until 2026 due to possible appeals. You find more Ripple (XRP) news here.
The history of Ripple
Ripple’s origins trace back to 2004 when Ryan Fugger founded “Ripple Pay” to provide the online community with a secure payment method across a global network. However, at that time, Ripple bore little resemblance to its current distributed ledger technology.
It wasn’t until 2012, when Chris Larsen and Jed McCaleb founded OpenCoin Inc., that the modern Ripple project began to take shape. A new payment protocol called the “Ripple Transaction Protocol (RTXP)” was developed, forming the foundation for Ripple’s current distributed ledger protocol.
In September 2013, OpenCoin Inc. rebranded to Ripple Labs Inc. and made the source code of the peer-to-peer network available as open-source software. This marked the beginning of Ripple Labs’ efforts to promote the adoption of Ripple technologies by financial and banking institutions. Two years later, in October 2015, Ripple Labs underwent another name change, becoming simply Ripple.
The various technologies offered by Ripple:
Ripple provides financial institutions and payment service providers with three distinct software solutions: xCurrent, xRapid, and xVia.
xCurrent
xCurrent is Ripple’s enterprise software solution that enables banks to conduct cross-border payments using the Inter-Ledger Protocol (ILP). With xCurrent, banks exchange real-time messages to confirm payment details before initiating transactions and to verify delivery once completed. Notably, the XRP token is not required for this solution.
As of October 2018, xCurrent is Ripple’s most widely adopted solution among banks and financial institutions. Over 100 financial institutions currently utilize xCurrent in both live and pilot operations. Among Ripple’s partners are renowned banks and financial institutions such as Santander Bank, SBI Holdings, Rakbank, BBVA (Spain’s second-largest bank), AXIS Bank (India’s third-largest private bank), UniCredit, Bank of America Merrill Lynch, ReiseBank, Mitsubishi UFJ (Japan’s largest bank), and Akbank (Turkey).
xRapid
xRapid targets payment service providers and other financial institutions seeking to minimize liquidity costs, according to the company’s website. The xRapid solution utilizes the XRP token to provide on-demand liquidity.
For international payments, liquidity is often scarce due to fluctuating fiat currency exchange rates, which can destabilize transactions. To mitigate this, banks involved in international transactions typically maintain nostro accounts in various currencies. However, managing these accounts is costly, as they tie up capital. Consequently, only a few global banks can afford to maintain nostro accounts for numerous international currencies, while smaller banks opt to pay substantial fees to liquidity providers (larger banks) rather than manage their own nostro accounts.
xRapid offers a solution tailored to small and medium-sized banks unable to maintain nostro accounts. XRP serves as the “bridge currency,” replacing the need for multiple nostro accounts, as the national currency is exchanged solely for XRP. Consequently, xRapid users only need to maintain liquidity in XRP instead of numerous fiat currencies.
xRapid pilot projects have demonstrated that banks can achieve cost savings ranging from 40% to 70%. Moreover, cross-border transactions are completed within seconds, contrasting with the typical 3-5 day duration.
Officially launched at the beginning of October, xRapid has been available for commercial use since then. Three customers—MercuryFX, Cuallix, and Catalyst Corporate FCU—have already gone live with the platform.
xVia
xVia serves as a user interface designed to enhance the user experience of both xCurrent and xRapid. Through API integration, xVia connects to financial institutions utilizing Ripple’s products, facilitating payment tracking and invoice generation.
Ripple’s Relationship with XRP
Ripple consistently emphasizes the independence of the XRP token. However, a connection between the two cannot be ignored. All 100 billion XRP tokens are pre-mined, with approximately 40% currently in circulation and the remainder owned by Ripple. In response to manipulation concerns, the Ripple team transferred about 60% of XRP to an escrow account in May 2017.
The introduction of XRP tokens to the market occurs gradually, with a maximum of one billion tokens released monthly. Any unused tokens may be returned to the escrow account at month’s end.
For many investors and critics of Ripple, the fact that Ripple holds nearly 60% of the total XRP supply signifies centralization and dependency on XRP. This significant ownership allows Ripple to exert considerable influence over the XRP token’s price. Consequently, investors require a high degree of confidence that Ripple will not manipulate the XRP price.
Is XRP a Sound Investment?
If Ripple successfully persuades more banks to adopt xRapid and XRP technology, the price could experience a surge. Should Ripple dethrone the industry giant SWIFT and capture its transaction volume, XRP could prove to be a lucrative investment. However, it’s essential to consider that Ripple still retains 60 billion XRP in its treasury, potentially more than doubling the available XRP supply.
If you’re considering investing in Ripple, you can begin by reviewing our Ripple (XRP) price chart for the current XRP price or proceed directly to our tutorial on how to buy XRP. In our Ripple (XRP) wallet guide, we provide comprehensive instructions on how and where to securely store your XRP.
At press time (20.02.2024) , the XRP price is trading at $0,57, showing a 2,11% increase in the last 24 hours.
