XRP is the native cryptocurrency of RippleNet, which is a blockchain-based payments network designed to facilitate faster and cheaper cross-border payments between financial institutions.
Sending payments overseas using the legacy financial system typically takes one to four business days and can be expensive. If a person uses XRP as a bridging currency, it’s possible to settle cross-border transactions in less than five seconds on the open-source XRP Ledger blockchain at a fraction of the cost of the more traditional methods.
The original founders pre-mined (created at the time of the ledger’s launch) 100 billion XRP tokens in 2012. The founders provided Ripple with 80 billion tokens to fund future operations and development, while the founders divided the remaining XRP among themselves.
Unlike bitcoin and other mined cryptocurrencies, where new coins enter the market in the form of block rewards, XRP enters circulation whenever Ripple decides to sell coins from its pre-mined stash on the secondary market.
At the end of each month, unsold tokens are returned to escrow and re-distributed at a later period. Over the last 32 months, 32 billion XRPs have been released from escrow, and 26.7 billion have been returned.
In the three and a half years following the launch of XRP in 2012, its price experienced two significant jumps, including in December 2013 when XRP’s price surged almost 11-fold in 15 days and then one year later, when the price soared 454% in 33 days.
After that, XRP’s price remained under $0.01 until the crypto market began to build momentum in early 2017. Between March 22, 2017, and Jan. 8, 2018, XRP’s price went parabolic in line with bitcoin and other cryptocurrencies at the time, rising by more than 51,000% from under one cent to a height of $3.40.
XRP failed to maintain its momentum above the $3 level, and in a few months, the price fell to $0.10. XRP price remained beneath that level until April 2021, when the broader crypto market began to rise again. That month, XRP price reached a year-to-date high of $1.98. The surge, however, was short-lived, and the price tumbled to less than $1.
How XRP works
The XRP Ledger is a permissionless network of peer-to-peer servers that powers XRP operations.
Once validators agree, a new block – a “ledger version” – is created and validated. The block’s content cannot be changed. That allows servers in the network to store a complete history of the ledger state.
ODL is simply the process of exchanging one fiat currency, say U.S. dollars, for XRP tokens, sending those tokens to a receiving account that then exchanges the XRP for their local fiat currency, say, Philippine pesos. Unlike fiat currencies that can take days to send, XRP transactions usually take around 3 seconds.
Key events and management
Ripple and XRP are two distinct entities. Ripple is a fintech company that builds global payment systems, while XRP is an independent digital asset that can be used by anyone for a variety of reasons including to send remittances or make online payments.