XRP, a cryptocurrency which runs on a digital payment platform called RippleNet, acts as a bridge for transfers between other currencies.
Mission
A payment settlement asset exchange and remittance system, similar to the SWIFT system used by banks and financial services companies for international money and security transfers.
Running on top of an open-source distributed ledger database called XRP Ledger, XRP allows for the transfer of funds between currencies – whether cryptos such as Bitcoin or fiat money such as the dollar.
Use-cases
The payment system is mainly intended to be used by banks. Transfers are facilitated in seconds, whereas legacy systems can take days to complete a wire transfer.
The fee to conduct transactions is also minimal, compared with expensive remittance costs associated with traditional cross-border payments.
The link between two parties wanting to make a transaction is called a gateway: anyone or any business can register and open a gateway, which authorises them to act as the middleman for exchanging currencies on the network. Each currency on the ecosystem has its own gateway.
Transactions are confirmed when independent validator nodes – made up of the company Ripple, universities and financial institutions – come to a consensus on both the order and validity of XRP transactions, rather than proof-of-work mining like Bitcoin.
Founders
Ryan Fugger had the original idea in Canada back in 2004 but the technology was built by Jed McCaleb and Chris Larson when OpenCoin – later renamed Ripple Labs – was founded in 2012 in San Francisco.
Unlike most coins, Ripple Labs has been through several rounds of traditional venture capital and private equity funding, raised from institutional investors.
Economics
XRP is pre-mined and uses a consensus mechanism, via a group of bank-owned servers, to confirm transactions rather than a mining verification system.
One billion XRP was pre-mined at launch and a further billion has been released into circulation every month since, with most of these returned in escrow at the end of the month.
The global supply in circulation stands at around 50 billion XRP.