What is Ripple digital currency? Is it different from XRP?

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1 year ago

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If you have the least activity in the digital currency market or are even interested in it, you have probably heard the names of digital currencies such as Bitcoin, Ethereum and Ripple.

In this article, we introduce the Ripple currency and its uses. XRP digital currency is one of the oldest cryptocurrencies in the cryptocurrency market, which has the ability to perform high-speed transactions (transactions settle in 3-5 seconds), low cost ($0.0002 per transaction) and relatively high scalability (1500 transactions per second), has the one of the things that confuse users is the difference between Ripple and XRP.

In this article, we describe the differences between the two in full including:

What is Ripple?

To examine the difference between Ripple and XRP, we will first examine Ripple. Ripple is a private software company. This company is the founder and creator of the Ripple open source protocol, which includes the Ripple Ledger (XRPL) and RippleNet.

These products are a set of payment solution tools that are offered to banks, non-financial institutions and digital currency projects.

This company was founded in 2012 by Chris Larsen and Jed McCaleb. The main process is similar to the SWIFT system for moving money and shares internationally, which is actually a kind of property, asset and remittance exchange system.

All kinds of financial intermediaries and banks that deal with various fiat currencies use this solution to speed up transactions and reduce its cost.

The coin used in this system is already mined and has a symbol called XRP. Therefore, the name of the company and its money transfer system is Ripple, and its digital currency is called XRP.

It should also be noted that the purpose of this coin is to act as an intermediary mechanism between two fiat currencies and acts as a relatively temporary payment layer between two networks or two currencies.

To better understand, consider this system as a kind of global money transfer system without the need for any physical money. It should be noted that the ledger of this protocol, in addition to storing all the accounting information of its users, also provides the possibility of exchanging between types of cryptocurrencies.

Unlike Bitcoin, this coin is not designed based on the proof-of-work consensus algorithm. That is, there is no need for a cryptocurrency mining process to register transactions, instead, a type of personalized algorithm is used.

The ledger of this coin is managed by a separate network of validation nodes that are constantly validating and recording transactions.

Contrary to its claim, this network is a centralized blockchain where valid nodes are selected by Ripple and used for large bank transactions.

These valid nodes are called UNL, which consist of valid financial institutions and verified users.

Getting to know the history of Ripple

It all started around 2012, when a man named Fuger handed over the management of a company called RipplePay to McCaleb and Larsen.

It was from those days that the idea of building this network was formed as a solution for paying financial institutions and banks. The company changed its name several times until finally in 2015 the name Ripple was chosen for it.

This currency has high credibility like Bitcoin and Ethereum and according to the market value, it is the fifth best digital currency in the market.

In this regard, between 2014 and 2018, we saw a sharp increase in the price of this digital currency. Even the company gradually started joint ventures with major banks such as the Federal Reserve Bank of America, Royal Bank of Canada, UniCredit, etc. to improve international transactions.

Interestingly, Ripple started implementing tools like XVIA, XRAPID and XCURRENT at the same time. The creation of these payment and exchange tools led more than a hundred financial institutions to integrate their international payment technology with this system.

But over time, due to the semi-centralization of this company, in the last few years, lawsuits were filed by American lawmakers and the United States Securities and Exchange Commission (SEC) against Ripple and its coin, which caused its value to drop. But in July 2023, Ripple won in court and acquitted itself of all charges.

What are Ripple features?

XRP Ledger offers a wide range of applications and use cases related to payments including micropayments, DeFi and soon NFTs.

Launched in 2012, XRPL supports Python, Java, and JavaScript companies and developers with powerful and flexible tools. On the Ripple website, developers can access various tutorials to start using different coding languages, building apps, managing accounts, and more.

Alongside the native cryptocurrency, the XRP Ledger is used by developers to create solutions to solve payment problems including remittance and asset tokenization.

Currently, the five main uses of XRP Ledger are payments, tokenization, central bank digital currency, DeFi, and stablecoins.

If we want to talk about the uses of the XRP coin, in addition to being used in international transactions, like all digital currencies, it can also be used for investment.

This cryptocurrency has the possibility of staking and by depositing this coin, you can earn profit.

XRP digital currency

Ripple’s blockchain cryptocurrency is XRP, which works as one of the payment tools in the network. In fact, when an institution transfers money through Ripple’s payment tools, the institution’s fiat currency is converted to XRP in the Ripple network and finally, at the time of settlement at the destination, it is converted back to fiat currency.

This process increases the transaction speed and increases the security of the exchange. To understand the advantage of using XRP in the payment network, it is interesting to know that you need to wait 3-4 business days for international money transfer with SWIFT. But this transaction is done in Legder’s XRP network in a few seconds.

In fact, XRP is the native digital currency of the XRP Ledger network, which is only used on one of the company’s products (XRAPID). All 100 billion XRP were mined by Ripple at the start of its operations in 2013, of which 20 billion are held by the developer and the rest in a decentralized depository.

The distribution of this deposit to the market is done every month in the amount of one billion units.

So far, we have learned that Ripple is the parent company of the XRP Ledger blockchain, XRP coin and other products, and XRP coin is the native cryptocurrency of this network and one of the products of this company.

But in the cryptocurrency market, traders have mistakenly named this coin Ripple for convenience.

Ripple’s three main products

Currently, the network is offering three main products as a set for the payment system of banks and financial institutions, which will have an important impact on the future of XRP.

It should be noted that these three products do not necessarily use this cryptocurrency for their activities, so an increase in the company’s customers does not always mean an increase in the use of cryptocurrency.

In the following, we introduce the products of this company.

xRapid

In general, xRAPID can be called as a way to create liquidity based on demand. In this liquidity solution, the XRP coin acts as an intermediary cryptocurrency between several fiat currencies.

In fact, xRAPID, which relies on blockchain, is a way to reduce the cost and increase the speed of bank payments. It should be noted that this product is the only product from Ripple that uses XRP for its transactions.

In order for you to understand the working process of this product well, we will give a simple example. Suppose a person named Kate from Australia wants to deposit $100 to a person named Mark in Japan.

Keith must first pay this amount to a financial institution called a FIN. Then this financial institution performs this transfer through communication with asset conversion exchanges in both the destination and source countries and using the xRAPID product.

In fact, the company in question has the ability to convert $100 of kit into XRP and transfer it to Japan in a few seconds, and finally Mark can receive the deposited money from the exchange located in Japan.

The remarkable point is that this method of money transfer did not eliminate financial intermediaries and only accelerated its process.

xCurrent

It is the primary product of xCURRENT company. This product does not use the XRP coin by default and does not rely on the XRP Legder blockchain. In fact, xCURRENT is an easy way to track and instantly settle international payments between network members.

xVia

This product is the latest product of this project. It can be said to be a standard payment interface for banks and other financial service providers that allows them to interact within a common framework.

It should be noted that xVia, like xCURRENT, does not use the network’s native cryptocurrency for its payments.

How does Ripple work?

In general, the Ripple network cryptocurrency, like all other digital currencies, can be used for transactions and investments. The transactions made in the system are fully validated and that is why we see an integrated system with the ability to prevent double costs in this network.

Also, all transactions made by users will be stored in the ledger. But it should be noted that this record of transactions is recorded publicly on a block chain and does not belong to an account or business.

Ripple advantages

The first advantage of the Ripple network is the speed of transactions. Compared to bank transactions that may take hours or even days due to traffic, transactions on this network can be done in just a few seconds.

Transaction costs in this system are very low and economical. In other words, only $0.0002 is considered as a fee for making a transaction.

Also, this system has a multipurpose exchange network. This means that in addition to the ability to process all transactions, it can also be used to exchange other digital currencies and other fiat currencies.

This currency is used by large and international financial institutions. For example, several large American banks use this network to carry out their exchanges, and this shows the international and large market of this cryptocurrency.

Ripple disadvantages

One of the major disadvantages of the Ripple network is its centralization. As you know, one of the main positive points of digital currencies and the reason why people use them was their decentralization. Because it is beyond the control of the government and banks.

But in the Ripple network, due to cooperation with banks and large financial institutions, it cannot use decentralized blockchains. Therefore, it is forced to use a centralized and traceable network.

The next downside is the initial mining of all XRP coins by the company. This issue and its supply at the wrong times in large volumes may have a great impact on the value of this coin.

But the last and most important issue is the SEC’s action against Ripple. In December 2020, the SEC filed a lawsuit against the company accusing the company of trading in unregistered securities, an allegation the company immediately denied.

But in July 2023, the result of the Ripple court ended in favor of Ripple, and the company was able to prove that its native cryptocurrency was not a security.

Introducing the best XRP wallets

Since the company is a pioneer in cooperation with financial institutions and banks, it has not involved itself in issues such as proprietary wallets. Therefore, novice users should use public wallets to perform their transactions.

But the important thing about this digital currency wallet is that you have to pay 20 Ripples to use it and make the first transaction.

This allows you to act carefully and smartly when choosing a wallet at the very beginning so that you don’t have to change and pay again.

Therefore, to start investing in this digital currency, you need to know the public wallets that support it.

Some of the most reliable ones include the following:

Trust Wallet
Trezor
Ledger
Metamask
Math Wallet

Ripple, a big step in the future of asset exchange

We tried to review XRP digital currency in a comprehensive and complete way in this article. We have also mentioned in detail all the important points about the difference between XRP and Ripple.

In fact, the XRP coin was launched in 2012 with the aim of increasing speed, security and reducing transfer costs. Despite the recent victory in the court, this digital currency has been able to regain its previous strength.

But despite its many advantages, it is still a centralized coin that is fully controlled by Ripple. This factor, which is considered one of the disadvantages of this cryptocurrency, is seen as an advantage by some investors and, in their opinion, shows the validity of the project.

Frequently asked questions on Ripple (XRP)

Is Ripple cryptocurrency worth buying and investing?

So far, less than half of the tokens stored in this company have been released to the market. Therefore, its market will not be saturated for a long time to come, and with the court’s victory, the possibility of a significant increase in its final value will be very high.

What is the difference between XRP and Ripple?

In fact, it can be said that the company is a type of digital currency transfer system, where XRP as its currency is only one of the digital currencies used in the products of this system.

Is the network a decentralized system?

The company presents itself as a decentralized digital currency transfer company. However, many people who are active in the digital currency market consider this company to be semi-centralized.

Bitcoin or Ripple, which is better?

The Ripple system scores better than the Bitcoin network due to its lower processing time and lower transaction fees.

Which banks cooperate with Ripple?

Santander (USA), Royal Bank of Commerce (Canada), Kotak Mahindra Bank (India), Itaú Unibanco (Brazil), IndusInd (India), InstaReM (Singapore), BeeTech (Brazil), Zip Remit (Canada)

What are the best wallets?

Ledger, Trezor, Math Wallet, Trust Wallet, MetaMask, Coinbase and Atomic wallet