You’ve probably heard the buzz about XRP, the newest member of our cryptocurrency offering. In true crypto style, there’s plenty of excitement surrounding the currency – but there’s a lot of confusion too. So, what is XRP? And how does it differ from other currencies?
If you’re struggling to navigate between Bitcoin, Litecoin, Ether and the other cryptocurrencies, don’t worry. In this article, we’ll be telling you all you need to know about XRP – and its relation to Ripple.
Well grab your life vest, because we’re going to dive right into XRP! 🏊🏻♂️
XRP vs Ripple - Are XRP and Ripple the same thing? 🧐
It’s okay if you are a little confused about XRP – and how it relates to things like RippleNet and Ripple. It doesn’t help that three different elements – a currency, an interbank network, and a company that runs it – are often each referred to by the single name: Ripple.
However, they are different things – and it’s worth knowing what’s what...
What is Ripple?
Let’s start with Ripple itself. This is actually a payment platform – or a real-time gross settlement (RTGS) system – run by a company of the same name; Ripple. It was designed to allow seamless transfers of money in any form, be it USD, Litecoin, Yen or others.
The idea behind the creation of this platform was to enable almost instant global transactions at low costs. This drew the attention of some of the world’s biggest financial players, who were interested because through RippleNet – its international network – they could send money worldwide without the fees and wait times traditionally associated with international payment systems such as SWIFT.
So, What is XRP
RippleNet is a system, connecting banks and firms, through which money can be sent seamlessly. Ripple, meanwhile, is the company that runs it. What then is XRP?
XRP is the cryptocurrency associated with that system. It is the digital asset promoted by Ripple that allows payments to be facilitated through the platform. However, it is not necessary to use XRP to use its payment platform.
So no, Ripple and XRP are not the same thing. Although, as many people refer to XRP as Ripple, it’s not surprising that there’s some confusion.
And What Does XRP Stand For?
XRP is the abbreviation of the currency, like USD or GBP. Its proper name is actually Ripple, however it is referred to as XRP these days to avoid confusion.
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So how is XRP different from other cryptocurrencies? 🤷
With so many currencies on the cryptocurrency scene though, a legitimate question to ask is what makes XRP special? Why would you choose to use XRP over something like Bitcoin Cash, or Bitcoin?
There are four aspects of the currency that you should know:
1. Volume 💰
In a similar fashion to a company releasing stocks, Ripple released 100 billion XRP tokens at the get go - and this is the maximum amount of tokens there will ever be.
This is in contrast to other cryptocurrencies such as Ether which essentially has no limit to the amount of tokens it can release, or Bitcoin which has to be ‘mined’ and will eventually reach a maximum amount of coins.
To dive a little deeper - Bitcoins are released as rewards for for the ‘miners’ in order to incentivise the continuation of the network, whereas XRP tokens have already been created and are released when Ripple chooses to do so.
If all that sounds like crazy talk to you, to put it simply, we don’t know exactly when Bitcoin will reach its supposed limit, but we do know exactly how many XRP are in existence.
2. Ownership 👑
One of the key elements of other cryptocurrencies is the fact that they are totally decentralised and not owned by any one authority or individual. Bitcoin for example is reliant on its huge number of global miners for it to function, grow and develop - which effectively means that no one person has full control over the currency.
In contrast Ripple owns 61 billion of the 100 billion XRP that were created and the rest of the currency is traded freely on the open market. It’s claimed that Ripple holds nearly 50 billion in an escrow account, systematically releasing the tokens to clients.
Other cryptocurrencies are based firmly on the idea of separating themselves from financial institutions and authorities, whereas Ripple and XRP actively welcome them.
Some crypto fans aren’t keen on the fact that this currency is owned by a company with centralised control and is therefore more regulated, whereas others see this as a sign of security and the potential longevity of XRP.
3. Speed 🏎
Another defining difference between XRP and other cryptocurrencies is the speed at which payments can be processed. A transaction made with XRP is settled in just 4 seconds. For Bitcoin, meanwhile, transaction times can vary depending on how congested the network is – ranging anywhere from 10 minutes to extreme cases of 16 hours.
4. Purpose: What is XRP used for? 💵
Cryptocurrencies like Bitcoin were created as a peer-to-peer payment system, with the purpose of cutting out banks and government control.
XRP was actually intended as a ‘bridge currency’ for financial institutions, to allow them to make simple, fast, cross-border payments, without the need for multiple middlemen, or the huge fees usually associated with these types of transactions.
Although XRP isn’t necessary to use the Ripple platform to make payments, it’s thought that various companies are looking to adopt it. The company’s CEO Brad Garlinghouse tweeted that banks and payment providers are “indeed planning to use XRP in a serious way.”
So that’s our lowdown on XRP, the Ripple cryptocurrency. We hope that we’ve shed some light on one of the more talked-about tokens and helped you to understand how and why it differs from the other cryptocurrencies out there!
A lot of cryptocurrencies are trying to disrupt the way we use and circulate money. Yet, XRP could potentially change inter-bank transactions – and the monetary system as we know it. Only time will tell how we adapt to the challenges thrown down by this technology.
Did we answer your question “what is XRP?” If you have other crypto questions, check out these links:
- What is Bitcoin?
- What is Bitcoin Cash?
- What is Litecoin?
- What is Ethereum?
- What is Blockchain? Fully Explained
- How Cryptocurrency Works: A Guide
- Bitcoin Mining: Everything You Need to Know
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