Ripple XRP (XRP): Industry Leader or Cryptocurrency Dinosaur?

Despite it’s OG status in the crypto space, is Ripple XRP still relevant?

Dinosaur stands on the purple grass and stares at XRP laptop.

Designed by Ripple, the XRP token is a true OG in the cryptocurrency market. In fact, Ripple’s open-source blockchain, the XRP Ledger, actually predates the birth of Ethereum. XRP was handling efficient cross-border payments long before Buterin and Co were dreaming up the future of finance.

One of the first-ever alternatives to Bitcoin itself, XRP has always maintained its place as one of the top cryptos by market capitalization. In an industry where ‘new is always better,’ XRPs longevity is a testament to its real-world integration and adoption.

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Despite this continued growth and stability, there are still a lot of questions surrounding this legacy blockchain network. Ripple’s history is plagued with controversy and misunderstandings.

What’s the difference between RippleNet and XRP Ledger? Is Ripple truly as decentralized as they claim to be?

The world of cryptocurrency and blockchain technology has come a long way since XRP first launched. With newer, faster networks available, there’s an argument that Ripple’s scalability has been outclassed.
Is XRP still relevant? Or has the sea of competitors left XRP making ripples instead of waves?

XRP logo over a stomry sea

What Is Ripple XRP?

While often mentioned together, Ripple and XRP are actually separate things. Formerly known as Ripple Labs, Ripple is a for-profit fintech company building products and services that use blockchain technology. XRP is the native digital currency of Ripple’s ecosystem and their decentralized public blockchain, XRP Ledger.

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Ripple aims to create the world’s largest and most efficient global payment network. Powered by XRP, financial institutions use the Ripple protocol to execute cross-border payments with minimal fees and rapid transaction finality.

While other networks cater to the masses and offer peer-to-peer payments to individuals, Ripple is more specialized. The Ripple protocol has been designed with banks and large-scale financial institutions in mind, with the capacity to move digital assets internationally at scale. The Ripple network is also a popular platform for the development of CBDCs.

What Problem Does Ripple XRP Solve?

If you’ve ever tried to make remittance payments or send money overseas, you’ll understand the issues Ripple is trying to solve. Cross-border payments in fiat currencies are a nightmare. International payments take days, and intermediary banks charge extortionate exchange fees, even when swapping common currencies like EUR and USD.

Ripple revolutionizes this process, making it possible to send XRP to another wallet anywhere in the world within 3-5 seconds. What’s more, Ripple transaction fees are almost non-existent. The company claims an average cost of $0.0002 per transaction.

XRP Ledger (XRPL)

The XRP Ledger, or XRPL, is Ripple’s decentralized public blockchain network. XRPL is completely open-source, meaning that developers and users have full access to the networks underlying code. The XRPL community is actively encouraged to contribute and develop apps to help grow the XRP Ledger.

One of the benefits of the XRP Ledger is that it’s far more scalable than other legacy blockchain networks. While Bitcoin (BTC) struggles to process more than 5 transactions per second and Ethereum (ETH) peaks at around 30 TPS, Ripple claims the XRPL can handle 1,500 without breaking a sweat.

While this might paint XRPL as a superior network to Ethereum, it’s important to mention that Ripple doesn’t boast anywhere near the same functionality. The Ripple network doesn’t support smart contracts, meaning the blockchain has limited use cases and XRP staking is technically impossible.

Additionally, Ripple doesn’t support common stablecoins like USDT. This means that users are constantly at the mercy of price volatility in the crypto market and struggle to interact with other blockchain networks.

The XRPL is secured using a federated consensus mechanism. This means that the algorithm relies on a trusted network of validators to process transactions in real-time, rather than intensive block mining.

RippleNet Explained

RippleNet is a network of interconnected banks and financial institutions that uses Ripple’s services. You can think of RippleNet as an enterprise-level blockchain exclusively for corporate use. While XRP Ledger is a public blockchain, Ripple is designed for shifting deeper liquidity through the XRP market.

Attracted by fast and affordable cross-border payments, RippleNet hosts notable banks and financial institutions worldwide. The network has over 100 partnerships, including globally recognized brands like Santander.

The Team Behind The XRP Ecosystem: Ripple History

Ripple has been through a fair few rebrandings in its lifetime. Its very first iteration was called RipplePay, which was founded by Ryan Fugger as far back as 2004. RipplePay was originally designed to extend credit lines between family and friends but struggled to gain traction.

RipplePay provided the springboard that inspired Jed McCaleb and Chris Larsen to take over Fugger’s system and integrate a digital currency and network of validators. They rebranded RipplePay to OpenCoin in 2012 and launched the XRP cryptocurrency. With the help of CTO David Schwartz, the XRP Ledger was born.

After securing early support from angel investors and venture capitalists, OpenCoin rebranded the company to Ripple Labs. In 2015, Ripple Labs brought on Brad Garlinghouse as CEO to drive the company’s growth. A final rebranding was unveiled, uniting the company under a simple, singular name: Ripple.

XRP vs BTC

The Ripple protocol and XRP token launched with the vision of being a better version of Bitcoin. While Bitcoin is a revolutionary technology in its own right, the world’s first blockchain has its limitations. Namely, the Bitcoin network suffers from scalability issues, making it an inefficient payment protocol.

Table demonstrating XRPs benefits

XRP Advantages over BTC

  • The Ripple network is faster than the Bitcoin network. It processes more transactions and confirms them faster.
  • XRP transactions are cheaper than BTC transactions. XRP fees cost less than a penny, regardless of XRP price.
  • The Ripple network is more sustainable than Bitcoin. Bitcoin’s proof-of-work consensus is 61,000x more energy intensive than Ripple’s validator model.

XRP Disadvantages Against BTC

  • The Bitcoin network is far more decentralized than the Ripple network. Bitcoin has over 10,000 independent nodes securing the network. In comparison, Ripple has only 150 validators.
  • The U.S. Securities and Exchange Commission is suing Ripple for selling unregistered securities. This has inhibited Ripple’s growth and reputation in the blockchain industry.
  • Ripple holds a significant allocation of XRP tokens in Escrow vaults. While these are not all in the circulating supply, it gives Ripple significant control over the value of XRP price and the Ripple protocol.

The Verdict?

Whether or not Ripple is a superior payment network to Bitcoin is simply a question of preference. If you want an efficient and affordable payment method, Ripple is a better option for you.

If you’re a blockchain purist and decentralization is important to you, the Bitcoin network is a better option for transferring funds online.

Ripple XRP Controversy

Like any cutting-edge technology, Ripple has sparked fiery debates from both within the crypto world, and from United States regulators.

Ripple XRP Escrow

The XRP Ledger features a unique mechanism that allows users to send conditional XRP payments, called escrow vaults. Put simply, these payments lock up XRP tokens and releases them when certain conditions are met, such as crypto market conditions and time-based unlock periods.

In December 2017, Ripple created 55 different vaults using these Escrow payments. Each vault contains one billion XRP tokens, with one vault being opened each month that returns the locked XRP tokens to Ripple.

Ripple has made a habit of re-locking these XRP tokens. In the last 62 months, Ripple has re-locked 50 billion XRP tokens into these escrow vaults, allowing ten billion tokens to enter the circulating supply.

While Ripple’s commitment to re-locking these tokens appears honest, it can’t be ignored that Ripple is in control of a significant portion of XRP’s maximum supply. This causes decentralization causes and could cause some investors to hold back from entering the Ripple ecosystem.

Ripple and the SEC

Ripple is at the center of one of crypto history’s largest-ever legal battles. The SEC initiated a lawsuit against Ripple and its executives in 2020, claiming they sold unregistered securities to investors.

The case has been devastating for the growth and reputation of Ripple and the XRP token, forcing crypto exchanges like Coinbase and Binance to delist Ripple, making it difficult to buy XRP temporarily. This stifled XRP price growth during bullish market cycles. 

Fortunately for XRP bulls, Brad Garlinghouse and Ripple wouldn’t go down without a fight.

XRP Is Not a Security

In July 2023, XRP secured a mighty victory in its long battle with Gary Gensler and the SEC. A groundbreaking revelation in Ripple’s favor emerged when Judge Torres declared that Ripple’s sale of XRP didn’t fit the mold of an investment contract offering. 

Simply put, this pivotal decision means that XRP is not a security. While this might seem like a mere technical definition, it marks a key turning point in the SEC’s treatment of XRP and carries deeper implications. 

The ruling breathed new life into Ripple’s market position, with the XRP price surging in response. But what does this landmark event mean for the rest of the crypto market?

What Does the Ruling Mean for Cryptocurrency?

On top of pumping crypto prices across the board short-term, Judge Torres’ ruling indicates a change in cryptocurrency sentiment. It shines a light on the often murky waters of crypto regulation. 

By affirming that XRP is not a traditional security, the court has arguably opened the door for a nuanced and clear approach to how digital assets are regulated in the United States. This landmark case will be a crucial point of reference for future crypto legal battles, so blockchain enthusiasts are naturally satisfied with the court’s decision.

Before you get too excited, remember that the crypto space is dynamic and volatile, even in the courtroom. While this ruling provides a momentary relief for XRP, the SEC has indicated that it expects to appeal the Judge’s decision.

What Happens Next?

While crypto folk worldwide are basking in the glow of this ruling, the legal battle continues. While still licking its wounds and damaged pride, the SEC is expected to appeal the Judge’s decision, potentially leading to more chapters in this thrilling legal saga. 

On top of that, while the court has given its verdict on XRP’s status concerning public sales, Ripple’s direct sales to institutional investors remain a point of contention. While executing these direct sales, Ripple was still found to be breaching securities laws. A jury trial awaits Garlinghouse and Larsen to decide whether they’re personally accountable for institutional sale violations.

As the crypto community watches eagerly with bated breath, one thing is clear: Ripple may have won the battle, but the SEC’s war against cryptocurrency rages on.

On the Flipside

  • Ripple is a powerful and affordable payment network with widespread adoption. However, in today’s evolving market, competing Layer 1 blockchains like Ethereum, BNB, and Cardano offer greater DeFi and NFT functionality.
  • Ripple’s lack of smart contracts makes it far less versatile than competing blockchains. Even as a payment network blockchains like Solana are far more efficient, and capable of processing over 10,000 TPS with gas fees under a penny.
  • While Ripple is undoubtedly a big player in the industry, it has some catching up to do to shake off its reputation as an outdated blockchain.

Why You Should Care

Ripple is one of the largest crypto projects in the industry. It set an early example of what a blockchain network was capable of and how this technology can revolutionize and disrupt online payment protocols.

FAQs

Will XRP be used by Banks?

Both RippleNet and the XRP cryptocurrency are already being used by over 100 different banks and financial institutions all over the world. 

Is XRP better than Bitcoin?

Whether you or not you think XRP is a better payment network than Bitcoin depends on your personal preferences. Arguably, XRP and the Ripple network are faster and more affordable, making it a better payment protocol. However, it is less decentralized than Bitcoin.

What’s the highest XRP has ever gone?

XRP reached its previous all-time high price in January 2018. XRP price at the time was $3.84.

Why is it hard to buy XRP?

In 2020, the SEC initiated a lawsuit against Ripple and its executives for allegedly selling unregistered securities to investors. As a result, some crypto exchanges like Coinbase have delisted the XRP token, making it harder to buy.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Finn Miller

Finn Miller is a New Zealand-based blockchain writer for DailyCoin who specializes in simplifying complex blockchain topics. He is experienced in crafting whitepapers, researching on-chain data, and advising emerging crypto projects, and uses his unconventional approach to learning and passion for knowledge to provide cornerstone educational content for readers of all levels. When not exploring the depths of DeFi, Finn can be found exploring his other passion, the great outdoors.