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Ripple is an open-source platform that can enable fast and cheap digital monetary transactions. XRP is the digital asset native to the Ripple blockchain. It is used in various Ripple products to facilitate conversion and transfers between two currencies.
Unlike other cryptocurrencies, XRP is not entirely decentralized; rather, Ripple provides a default list of unique nodes that are considered trustworthy to operate the Ripple network.
Key Takeaways:
- XRP is the digital asset native to the Ripple platform.
- The Ripple platform enables fast and cheap cross-border transactions.
- XRP can be purchased on various exchanges such as Bitstamp, Kraken, and Huobi Global.
- Several U.S. exchanges have delisted or temporarily halted XRP trading.
XRP is traded in cryptocurrency markets. Just like other coins, you can purchase XRP via several cryptocurrency exchanges, although controversy surrounding XRP has led to its delisting by several exchanges.
Understanding Ripple (XRP)
XRP is meant to serve as a settlement layer for cross-border banking transactions that involve different currencies. So, if a bank in Europe transacts with a bank in Asia, it may need to swap Euros for Yen. Using XRP as a common currency, it can help arrange and settle these transactions more easily. XRP functions as a sort of digital hawala network based on blockchain technology.
Ripple’s blockchain, known as the XRP Ledger, was launched in June 2012. With a total supply of 100 billion coins, 55 billion XRP are locked in escrow accounts to ensure the stability of XRP’s supply.
Ripple states that its XRP Ledger platform can settle transactions in 3-5 seconds.
The XRP consensus algorithm relies on trusted sub-networks, or networks that are part of a larger validator node spread across geographies, to reach a consensus on transactions. Each node in a Ripple network trusts selected nodes that comprises its Unique Node List (UNL). This design aims to produce a consensus mechanism that can be operated by a limited group of bank-owned servers to confirm XRP transactions.
XRP Price History
As of February 2022, XRP is the sixth-largest cryptocurrency, with a market cap of around $38 billion. During the 2017 runup in crypto prices, XRP hit an all-time daily high on Jan. 4, 2018, when the value of one XRP coin reached $3.84. But by September 2018, XRP had lost more than 93% of its value. On Sep. 11, 2018, XRP’s price hit a new low of $0.26. The downward trend in price generally persisted through 2018 and 2019, with XRP reaching an all-time daily low of $0.12 on March 13, 2020.
In November 2020, XRP experienced an upswing in price—its daily high reached $0.77 on Nov. 24, 2020. The price of XRP has shakily trended upward, reaching another daily high of $1.96 on April 14, 2021. XRP more recently has been trending lower, trading at around $0.80 by early 2022.
How to Buy Ripple (XRP)
Like other cryptocurrencies, XRP is available through several online exchanges. You can buy XRP with fiat currency or cryptocurrency. Ripple’s XRP Ledger platform additionally supports a decentralized exchange that enables XRP trading directly with peers.
As of February 2022, these centralized exchanges support XRP:
- Binance
- Huobi Global
- Bithumb
- Bitstamp
- FTX
- Bitfinex
- Poloniex
- eToro
- Liquid
- Gate.io
- WazirX
- Phemex
Many exchanges have suspended XRP trading in response to an ongoing investigation by the Securities and Exchange Commission (SEC). Exchanges like Coinbase and Gemini do not support the purchase of XRP, while others, like Kraken, allow XRP purchases but do not permit trading.
XRP Controversy
Ripple and XRP have proven controversial. Philosophically, some critics classify XRP as not a cryptocurrency because Ripple’s consensus mechanism is not fully decentralized. Legally, XRP is being investigated by the SEC for potentially being marketed as unregistered securities.
Feb. 17, 2022, is an important day for Ripple and XRP. Two memos, previously submitted as evidence in the SEC vs. Ripple case, are being publicly released. The contents of these memos may reveal or disprove Ripple’s culpability.
The SEC filed its case against Ripple in December 2020, asserting that the distribution of $1.3 billion worth of XRP to stakeholders violated securities laws. While the legal proceedings of case are ongoing, many cryptocurrency exchanges have responded by restricting or withdrawing support for XRP.
The outcome of the Ripple case is being closely watched. The final SEC ruling has historic potential, impacting not only Ripple but cryptocurrencies broadly.
What is XRP?
XRP is the cryptocurrency native to Ripple’s open-source blockchain platform.
How is XRP used?
XRP is used as a medium of exchange to make cross-border transactions faster and less expensive. Financial institutions can use XRP to enable efficient conversion between two different currencies.
Is XRP a good investment?
XRP is cryptocurrency, which many consider risky as investments. XRP is also facing scrutiny by the SEC, which could either provide regulatory clarity or cause XRP to lose significant value. Investors with high risk tolerances may decide to invest in XRP, but take care to not invest more than you can afford to lose.
Investing in cryptocurrencies and other Initial Coin Offerings (ICOs) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Because each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author does not own Ripple.