Blog Cryptocurrency Terms

What is Ripple? A Protocol and a Digital Currency for the Payments Industry


Ripple is as interesting as they come. It is the name of both a protocol and a currency. Ripple is a real-time gross settlement (RTGS) system or an open source network used to facilitate cheaper and faster global transactions.

It is very different from Bitcoin which was initially created to be used as a form of payment. There is no doubt that Ripple has set its eyes on becoming the leader in global remittance and currency exchange sectors.  

The Ripple protocol supports a native currency known as XRP and the platform can also be used to create other tokens.

History of Ripple

Ripple was conceived in 2005 – nearly three years before Bitcoin – as a financial service that allowed secure and global transactions for an online network. It was known as RipplePay at the time and was developed by Ryan Fugger.

However, the Ripple ecosystem known today was conceived by Jed McCaleb, an American programmer who created the now-defunct Mt. Gox cryptocurrency exchange, eDonkey200 application, Overnet, and the P2P eDonkey.

In 2011, McCaleb independently worked on a digital currency system which allowed transactions to be verified by consensus among network members instead of the mining process used in Bitcoin.

McCaleb hired Chris Larsen in 2012 and the pair approached Fugger about the idea of digital currency. The two were handed control of Fugger’s platform and they went on to establish OpenCoin in September 2012. The company changed its name to Ripple Labs.

McCaleb eventually left the company to found Stellar, a competing open-source protocol specializing in the payments industry. According to David Schwartz, Ripple’s current CTO, McCaleb had disagreements with management because he wanted to implement a number of bad ideas that could have hurt the company in the long run.

Whether true or not, this resulted in a lawsuit and an agreement was reached in which McCaleb had to slowly sell-off his XRP stake instead of dumping it all at one go.

Challenges and solutions

Any meaningful blockchain protocol or its associated cryptocurrency is designed to address specific challenges or provide a solution superior to those known to mankind.

Ripple has made a name for itself as a payment platform and its purpose is to bring the industry up to speed with the modern era. According to Ripple, the current payment system suffers from the following:

  • Slow – current transactions are settled in 3 – 5 days
  • Unreliable – the payment system is prone to failures
  • Expensive – consumers pay up to $1.6 trillion per year in transaction fees
  • Unacceptable – the world demands a better experience in executing financial transactions

Ripple’s solution to all of this is RippleNet – a network that connects financial institutions and allows them to send and receive money globally without any hassles.

What is RippleNet?

RippleNet is a network of financial institutions – banks and payment providers – that use Ripple’s standard rules to efficiently facilitate global transactions.

RippleNet offers users four distinct benefits:

  • Speed – RippleNet enables near real-time transactions that settle in seconds instead of days as in the case with the traditional financial system
  • Cheaper costs – transaction costs are significantly lower
  • Access – RippleNet provides a single-entry point to the global financial network
  • Certainty – increased transparency of fees and delivery times through a messenger API

Let’s assume there are three people – John who lives in the U.S., Williams in the United Kingdom, and De Villiers in South Africa. John wants to send money to South Africa, De Villiers wants to pay school fees for his child studying in Britain, and Williams wants to buy property in the U.S.

The steps involved in these transactions are cumbersome, includes a number of exchanges, and are very costly. At the end of the day, people are left with less money while they have to wait for days for their transactions to go through.

RippleNet simply searches for the simplest, quickest, and cheapest way to facilitate the required transactions.

XRP – Ripple’s native token

XRP is the protocol’s native token used to exchange value across the Ripple ecosystem. The digital currency works as a bridge for both digital assets and fiat currencies in cross-border payments. It is used as a source of liquidity for such transactions.

The benefits of using XRP are:

  • Fast – XRP transactions can be completed in 4 sec as compared to ETH’s 2+ mins and BTC’s 1+ hours and the traditional system that takes days.
  • Scalability – blockchain solutions have long suffered from scalability challenges. XRP can handle 1,500 transactions per second (TPS) and can scale to VISA’s 24,000 TPS.

Ripple’s charge very small transaction fees in order to prevent Distributed Denial of Service (DDoS) attacks.

Is Ripple centralized or not?

This is an important question that attracts different answers depending on who is responding. Ripple is operated by a single company, unlike other blockchain protocols that receive guidance from a distributed network of developers spread across the world.

Bitcoin, the largest cryptocurrency on the planet by market cap, has a hard cap of 21 million coins and other digital assets have no known limits, but Ripple was created with 100 billion pre-mined tokens. Ripple Labs owns more than half of those tokens and this goes against the ethos of decentralization.

This means that Ripple Labs can theoretically participate in a pump-and-dump scheme – prop up XRP’s price and cash out – effectively affecting the cryptocurrency or even kill it at worst.

Ripple Labs, a single entity, has the ability to freeze transactions. This happened when McCaleb tried to sell a large portion of his XRP tokens.

While this was a move made in the interest of self-preservation, it this is one of the things that cryptocurrencies stand against. There were also rumors that U.S. cryptocurrency exchange Coinbase delayed listing XRP because the digital asset was considered centralized and possibly regarded as a security by the U.S. Securities and Exchanges Commission (SEC).

Schwartz has denied the allegations that XRP is centralized and argues that the XRP Ledger and the former are two different things.

Ripple’s blockchain and consensus algorithm

Ripple is different from other crypto projects in the sense that it does not have a blockchain – something very strange because many people regard Ripple Labs to be one of the most valuable blockchain companies in the world.

How are transactions verified on Ripple’s network?

Ripple uses what is known as the Ripple Protocol Consensus Algorithm (RPCA). This means that transactions are only validated if all the nodes are in agreement.

Ripple funding and partnership

Many crypto projects were and still funded through initial coin offerings (ICOs) but Ripple’s case is different. The company is privately funded and has secured at least $96 million in five funding rounds consisting of two angel funding rounds and one round each of seed, Series A, and Series B funding.

The fintech startup has secured funding from notable investors such as Andreessen Horowitz, Google Ventures, IDG Capital Partners, Standard Chartered, Santander InnoVentures, Accenture, CME Group, SBI Holdings, Seagate Technology, and more.

Ripple has partnered with more than 200 financial institutions such as Santander, Union Credit, UBS, Axis Bank, Westpac, NBAD, Yes Bank, etc.

How to buy, store, and sell XRP

XRP is listed on several major exchanges such as Binance, Coinbase, Bitfinex, Upbit, CoinEgg, Huobi, Poloniex, Bittrex, Bitstamp, and more. You can buy XRP from using fiat currency, digital currencies (Bitcoin, Ether), and credit card.

You need to have an XRP wallet and address before buying the digital asset. As in almost all cases, it is advisable to store your XRP in cold wallets in order to protect yourself from hacking scandals.

Beginners Guide To Crypto
Subscribe to get your beginners guide and our weekly digest
We respect your privacy.

You may also like

Blog Press Release

Bitmain to reveal world’s first Big Data Analysis Report of Global Mining Farms during World Digital Mining Summit this October


SINGAPORE, 11 September 2019 – Bitmain – the world’s top 10 fabless chipmaker – is set to release the world’s first Big Data Analysis Report of Global Mining Farms during the World Digital Mining Summit (WDMS) on 8-10 October in Frankfurt.

The report will provide in-depth analysis and insights on the cryptocurrency mining industry – covering mining farms, to global electricity costs, site selection of mining farms and construction expenses – to help decision-makers have a more complete and comprehensive understanding of the market opportunities, risks and hurdles.

“Bitmain is proud to be leading research and development efforts in the cryptocurrency mining industry and this comprehensive big data analysis report is a successful outcome of it, thanks to our strength and experience accumulated in this industry,” said Matthew Wang, Director of Mining Farm of Bitmain.

The agenda for the two-day summit features industry investment and innovation for the mining sector….

View More Article
Blockchain Blog Interviews Investing

The Biggest Investing Opportunities In Blockchain | Aly Madhavji Partner BlockchainFF


ChainTalk Podcast 7

Aly Madhavji is Managing Partner at Blockchain Founders Fund. In this chat we discuss his slightly sketchy first experience with crypto, tokens vs equity investing, biggest opportunities right now to invest in, obstacles faced by blockchain companies, working with the United Nations and how blockchain is helping charities and the unbanked, the present and future of blockchain, Asia vs USA in adopting crypto, and the latest news in Asia surrounding crypto including the US China trade wars and recent currency scandal.

Aly Madhavji 穆亚霖 is the Managing Partner at Blockchain Founders Fund which invests in and venture builds top-tier Start-ups and consults companies and governmental organizations on emerging technologies. He is a Senior Investment Advisor to BitBlock Capital and Fiat Capital Fund, and a Co-Founder of a digital currency exchange. He has served on various blockchain advisory roles including Polymath and traditional advisory boards including the University of…

View More Article
Blog Events Press Release



8月6日夜、2019広州天英彙国際革新創業大会東京湾地区の開会式が東京表参道Portal Pointイノベーション空間で行われた。これらは天英彙が初めて日本で設定した競技場だ。広州市天河区政府の関係者たちと日本学習院大学の遠藤薫さんらが本開会式に出席した。



次に、会場からのカウントダウンの声の中、陳加猛、遠藤薫、天英彙海外地区主催側代表者、IBM日本代表者、アリババ クラウド日本代表者と日本人工知能イノベーション企業Autify代表者が共同で天英彙東京湾の横断幕を掲げ、天英彙試合会が日本に正式に始まることを示した。


続いて行われた「広東·香港·マカオ大湾区と東京湾区イノベーション円卓フォーラム」では、 Brincグローバル投資インキュベーター中国市場とチャンネルの責任者の曽君蔚とIBM日本デジタルコンサルティング専門家の吉本久、TMI総合法律事務所の小川周哉と日本人工知能イノベーション企業Autifyの最高経営責任者の近沢良は、イノベーション企業がいかに効率的に新しい市場に参入できるかについて議論を深めた。


今年度は、天英彙海外競技エリアはサンフランシスコ湾、ニューヨーク湾、トロント、シドニー、東京湾、シンガポール、テルアビブ、ベルリン、パリという9大国際イノベーション都市にそれぞれ競技場を置き、少なくとも600以上のグローバルイノベーションプロジェクトを募集する予定だ。今日まで、広州天英彙国際イノベーション創業大会海外競技エリアはすでに八大国外イノベーション都市地区で盛大に開会式を行い、 その中で、米国オークランド市長のシュエリビ、世界最大のインスタントメッセージングソフトウェアWhatsAPP共同創立エンジニアのEugene Fooksman、パリ19区副区長のJoyce Malai、シンガポール国立大学企業センターの副主任の陳正見、欧州華創会会長の黄進などの革新生態分野の重要なのゲストは各競技区の開会式に出席し、天英彙の競技参加者たちに祝福の言葉を贈った。それと同時に、天英彙は国際イノベーション生態の発展を積極的に推進していて、アメリカのオークランド市長のシュエリビと広州市天河区政府の関連責任者を証人として、天英彙競技海外地区主催側Brincグローバル投資インキュベーターはオークランド華埠商会、サンフランシスコ湾委員会とそれぞれ契約を締結し、同天英彙国際イノベーション連盟が第一歩を踏み出したことを示し、今後は更に多くのグローバルイノベーション都市との契約提携を推進し、国際イノベーション生態の発展を進める。

View More Article
Blockchain Blog Interviews Investing

Changing Banking With Blockchain – Tomohiro Yamaguchi Executive Director SBI


ChainTalk Podcast 6

Tomohiro Yamaguchi is Executive Director at SBI Fintech Solutions. In this chat we discuss his background and role at SBI, SBI’s commitment to blockchain technology, their investment into Ripple, cross border transactions within banks and the affect on international business, Libra and bank tokens, blockchain in the Middle East, and opportunities for investors.

Yamaguchi-san is an 18-year experienced pioneer in finance business and payment/international money transfer industry, in charge of new projects, management and development in Japan and overseas Fintech business. In addition, he is representative of global investment, international money transferring, blockchain space. He was in charge of overseas business development (including fund and financing services) for the SBI group. He leads a team of 17 business development directors.

Visit SBI:

Check out last weeks episode on Ripple:

If you enjoyed this episode and want to support our podcast please share it with your colleagues and friends….

View More Article
Blockchain Blog Cryptocurrency Exchange Mining News

Gone Missing: India Misses the Point on Crypto Regulation, Justin Sun Skips Lunch with Warren Buffett


India is taking a step backward in innovation as it proposes to a blanket ban on cryptocurrencies and severe punishment for those caught on the wrong side of the law. Justin Sun’s delayed his charity lunch with bitcoin critic Warren Buffett due to kidney stones. A bank in the Philippines has launched its own cryptocurrency. Cryptocurrency exchanges need to beef up their security strategies as new reports suggest that they lost $1.2 billion in theft and fraud in Q1 alone. 

Indian panel proposes cryptocurrency ban and jail time for offenders

India’s hostile position on cryptocurrency does not seem to be taking a turn for the better. A high-level panel created by three institutions – Ministry of Electronics and Information Technology, the Securities and Exchange Board of India, and the Reserve Bank of India – has recommended the banning of private cryptocurrencies issued in foreign lands…

View More Article