What is XRP?

Ripple is a technology company who are focused on transforming the way in which money moves globally. Their main objective is to facilitate instant and direct transfers of money between two parties, describing themselves as ‘transforming the way you move, manage and tokenize value’. At their core is RippleNet, a modern network designed to support financial transactions. In essence, RippleNet is a network of financial institutions and payment providers that leverage Ripple’s blockchain technology to support real-time cross-border payments. By leveraging Ripple’s technology, financial institutions can circumvent the traditional, often slow and costly methods of money transfer, thus streamlining global commerce.

Ripple was founded on the vision of enhancing the speed, cost-efficiency, and reliability of financial transactions worldwide. If we consider the existing traditional centralized banking systems and payment networks, such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), these can be time consuming due to the numerous intermediaries involved, which not only slows down transactions but also increases the costs. In the example of SWIFT, which is a global messaging network used by financial institutions to securely communicate and conduct transactions, like Ripple, it facilitates the exchange of financial information, such as payment instructions, between banks and other financial entities worldwide. However, traditional SWIFT transactions can be slow, taking several days to settle, and often involve high fees. For example, the typical wait times are 3 to 5 days and incur fees of up to 10%.

Ripple’s suite of products, including the XRP Ledger, enables anyone from institutions to individuals to send assets more quickly and cheaply anywhere in the world. These solutions allow the customer to source crypto assets, facilitate instant payments, empower their treasury and even lower capital requirements.

Before Ripple became what it is today, there was RipplePay. The project was developed by Ryan Fugger in 2004. RipplePay was designed as a decentralized monetary system that allowed individuals and communities to create their own money systems, facilitating easy and secure transactions within communities. This early version laid the foundational ideas of trust and direct transfers without intermediaries that would eventually evolve into the modern Ripple system.

In 2011, David Schwartz, Jed McCaleb, and Arthur Britto became interested in Bitcoin, and wanted to establish a sustainable alternative that didn’t rely on mining. RipplePay was acquired in 2012, and initially rebranded as OpenCoin following the system's conversion to a network for digital currencies. 
2013 saw the launch of Ripple’s first product, xCurrent, a solution that enabled banks to settle cross-border payments instantly. This was followed in 2014 with the creation of XRP, a digital asset and the native currency of the XRP Ledger, that would serve to facilitate cross-border payments and other financial transactions.

RippleNet, Ripple’s flagship product, provides a unified infrastructure that allows financial institutions to process their customers' payments globally in an instant. It uses XRP to offer optional liquidity solutions, crucial for managing cross-border payment flows efficiently. The platform is built to be secure, scalable, and offers comprehensive tracking of payment transfers from start to finish.

The XRP Ledger (XRPL) is an open-source, decentralized blockchain technology that supports the entire infrastructure for XRP. Known for its fast transaction speeds and scalability, the XRPL leverages the XRP Ledger Consensus Protocol to reach a shared state, in contrast to Bitcoin’s energy intensive Proof-of-Work (PoW). This consensus mechanism ensures faster transaction processing and lower energy consumption, making it an eco-friendly alternative to many other blockchains. The XRPL provides a robust and flexible platform for various financial applications beyond simple money transfers, with a capacity to process more than 3400 TPS, settling within 3 to 5 seconds, with each transaction costing an average of $0.0002. 

XRP is the native asset of the XRPL, and serves core functions within the network. Essentially, XRP acts as the bridge currency to facilitate fast and low-cost international transactions. XRP transactions settle in seconds, making it preferable for cross-border payments.

• Anti-Spam: Every account on the XRPL is subject to a reserve requirement, consisting of two parts, base reserve and owner reserve. The base reserve is set at 10 XRP, and the owner reserve requires 2 XRP to be held in the account per item. Additionally, every transaction on the XRPL is subject to a nominal fee of 0.00001 XRP (10 drops). Together, these features work to prevent flooding of the network.
• Bridge Currency: XRP can act as a mediator currency, making it easier and more efficient to exchange two different currencies quickly and at a low cost.  
• Payments and Value Transfer: XRP can be leveraged as a financial asset to make payments and transfer value between network participants. 

Originally positioned as a network for cross-border payments and remittances, the XRPL has seen its functionality expand over the years to support more robust applications and assets. Some notable proposals include:

• Smart Contracts: The XRPL lacks native support for smart contracts, inherently limiting its ability to support complex decentralized applications. This is being addressed by projects like Xahua Network and Evernode, which seek to combine the best features of the XRPL, such as speed and efficiency, with support for smart contracts to enhance functionality within the ecosystem. 
• Automated Market Maker: Allowing for the creation of liquidity pools, Liquidity Provider tokens, novel revenue streams from trading fees, and more.
• Native Lending Protocol: A proposal for a Native Lending Protocol that would enable direct lending and borrowing of digital assets on the XRPL, and enhance the platform’s DeFi capabilities.
• Non-Fungible Tokens: The XRPL supports the creation of NFTs, allowing for the creation and deployment of unique assets on-chain, inclusive of NFT collections that have garnered significant attention throughout the industry.