What is XRP?: XRP Explained

XRP, the native token of the XRP Ledger, is one of the top cryptocurrencies available on the market today. Created in 2012,  XRPL is an open-source blockchain, facilitates cross-border transactions with ease. Both the blockchain and the token are controlled by Ripple Labs, a fintech company based in San Francisco. With a market cap of $166.82 billion, this cryptocurrency is ranked #4 in the whole crypto market.

In this article, you’ll explore different aspects of this cryptocurrency, such as what it is, how it works, and much more, to help you understand why this is one of the top cryptocurrencies in the market.

Understanding XRPL: Blockchain Overview

XRP was created by Ripple Labs in 2012. The XRP Ledger functions as an open-source decentralized blockchain and public cryptocurrency network that facilitates fast, energy-efficient, and low-cost cross-border transactions. A unique factor about this blockchain is that it uses a consensus protocol that does not require energy-intensive mining. The blockchain is maintained by a global community of software engineers, server operators, users, and business firms.

Understanding XRP: Token Overview

XRP is the native token of the XRPL network, designed for fast and low-cost cross-border payments that bypass intermediaries like correspondent banks. Unlike Bitcoin and Ethereum, which require mining, XRP was pre-mined with a maximum supply of 100 billion tokens. There are several methods to use the token within the network:

• Transaction Fees: Users can pay transaction fees on the XRP Ledger using XRP. Each transaction requires only a small amount of XRP to be burned, which is necessary to ensure security in the network and prevent spam.
• Bridge Currency: To facilitate faster and cheaper international transactions, XRP can be used as a bridge currency for cross-border transactions.

Understanding Ripple: Industry Overview

Operating in the financial technology sector, Ripple is a blockchain-based e-payment company that has created a network and protocol that uses XRP and XRP Ledger as a payment method. Its main source of revenue is through cross-border payments and crypto liquidity services to business firms. Recently, Ripple launched RLUSD, its stablecoin backed by the US dollar.

Current Market Metrics of XRP

• Current Price: $2.86
• Market Cap: $171.33 billion
• 24-Hour Trading Volume: $3.46 billion
• Fully Diluted Value: $288.37 billion
• Total Supply: 99.98 billion XRP
• Max Supply: 100 billion XRP
• Circulating Supply: 59.82 billion XRP

At press time, XRP is trading at $2.86, with its market cap valued at $171.33 billion, and a 24-hour trade volume of $3.47 billion, making it one of the top cryptocurrencies to invest in 2025.

Origin of XRP

The development of the XRP Ledger began in 2011, led by Jed McCaleb, David Schwartz, and Arthur Britto, to address Bitcoin’s limitations. It was finally launched in 2012, with its native token, XRP, used to aid its function.

The XRP Ledger was created with the objective of providing faster, easier, and secure cross-border transactions, just like Satoshi Nakamoto, the creator of Bitcoin, envisioned. However, more than investors, XRP Ledger has been marketed more to businesses.

At first, the open-source project was named Ripple, which included XRP, the Ripple Consensus Ledger, the Ripple Transaction Protocol, and the Ripple Network. XRP Ledger was developed by Opencoin, which was later renamed to Ripple Labs. 

In 2020, the XRP Ledger Foundation was funded by Ripple and other companies to further develop the XRP Ledger.

Comparing XRP and Bitcoin: Key Differences

Although XRP and BTC have some similarities, they have several differences:

• Consensus Mechanisms: XRP utilizes a unique consensus mechanism that relies on trusted validators or a Unique Node List (UNL) that decides which transactions to add to the Next Ledger. Whereas Bitcoin relies on miners to solve complex mathematical problems, using Proof-of-Work (PoW) consensus to validate transactions
• Cheaper, Faster, and Energy Efficient: XRP’s special consensus mechanism, called the Federated Consensus, allows the network to authenticate transactions faster and cheaper, consuming far less energy. Bitcoin, on the other hand, needs more time and costs more for its mining processes.
• Scalability: With the help of Payment Channels, the XRP Ledger can handle 1,500 transactions per second. While the Payment Channel is open between transacting parties, each XRP token is flagged by the blockchain so that it isn’t spent again. When the channel is closed, the payments are settled in bulk, letting thousands of transactions be settled together without overloading the blockchain’s consensus system.

How To Purchase XRP?

Final Verdict: Is XRP a Good Investment?

XRP is one of the top cryptocurrencies available on the crypto market. It is used to make fast and cheap cross-border payments. It is the native token of the XRP Ledger, which was launched in 2012 by Ripple Labs. The recent price action of the token suggests that it is experiencing an upward trend in the market due to several reasons. Therefore, several crypto analysts suggest the coin is a good investment.

However, as the crypto market is highly speculative and risky in nature, it is crucial to do the required diligence before investing in any digital assets, as it will help avoid financial losses. You can seek help from financial advisors or experienced crypto professionals before you invest in the token.

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