XRP, Ripple, & XRPL: Untangling the Crypto Trinity

XRP, the sixth-largest digital currency by market value, is sometimes mistaken for Ripple and the XRP Ledger (XRPL). However, there are significant differences between them.

XRP is distinct from the XRP Ledger, and Ripple plays a crucial role in the ecosystem. Crypto investors should also explore the technical aspects of XRPL, the native digital asset of the network, XRP, and the American fintech company that launched the two – Ripple.

Ripple: The Company

Officially known as Ripple Labs Inc., the American fintech company responsible for developing the XRP Ledger and the XRP token, encountered legal troubles with the United States Securities and Exchange Commission (SEC) over the XRP initial coin offering (ICO) in 2020. In its complaint, the regulator asserted that XRP was a security; Judge Analisa Torres ruled in 2023 that, when sold to retail investors, the altcoin was not a security.

In a 2023 interview, Ripple’s chief executive, Brad Garlinghouse, said that his business had spent more than $100 million combating the SEC, adding:

“Well on one hand it’s frustrating. You have a government that has unlimited resources to keep fighting a fight they’ve already lost but there’s no recourse and so, for Ripple we’ve spent over $100 million defending this case. We are very optimistic. The Judge has already said very clearly XRP is not a security. What they have asked permission from the Courts to appeal isn’t actually whether XRP is a security, that is still clear.”

Ripple focuses on quick, safe, and cheap cross-border transactions and has launched a suite of payment solutions including RippleNet. RippleNet uses XRP to offer liquidity and enable faster transactions between financial institutions and across borders, with the aim of transforming the worldwide payment system.

Designed by Ripple, RippleNet is a network of banks and payment providers that process faster and cheaper cross-border payments using the XRP cryptocurrency.

Another tool provided by Ripple is on-demand liquidity (ODL), which uses XRP to provide liquidity during cross-border transactions , thus avoiding the need for pre-funded accounts in destination currencies.

Ripple has developed relationships with many financial institutions and governments all over the globe, advocating for the acceptance of digital assets and blockchain networks to enable transactions. The firm recently partnered with Clear Junction, a firm specializing in cross-border payments solutions for regulated institutions.

Ripple has developed relationships with many financial institutions and governments all over the globe, working on the acceptance of digital assets and blockchain networks to enable transactions. The firm recently partnered with Clear Junction, a firm specializing in cross-border payments solutions for regulated institutions.

Ripple has also partnered with Bhutan’s Royal Monetary Authority, Republic of Palau, the Central Bank of Montenegro, the National Bank of Georgia, and with Colombia’s Banco de la República.

XRP vs XRP Ledger

Despite the similarities in their names, XRP and XRP Ledger are very different. They have different use cases but are also dependent on each other. In this section, Coin Edition will cover the topic: XRP token vs XRP Ledger.

XRP Ledger Explained

A longstanding question that crypto investors have had is “what is XRP and how does it differ from XRP Ledger.” The answer to this is simple—XRP is the native token of the XRPL blockchain , which supports the issuing and transfer of the altcoin.

Unlike the proof-of-work (POW) consensus used by Bitcoin (BTC), proof-of-stake (POS) mechanism used by Ethereum, and the proof-of-history consensus used by Solana (SOL), the XRP Ledger employs a unique consensus algorithm called the Ripple Protocol Consensus Algorithm (RPCA).

Is XRP Ledger a blockchain? Yes, and here are its features:

• XRPL supports faster and more efficient transactions via RPCA, allowing the XRP Ledger to reach consensus without the need for energy-intensive mining.
• The XRP Ledger is maintained by an international network of autonomous validators , ensuring blockchain security and integrity.
• Apart from XRP, the XRP Ledger may support other digital assets and tokens, providing a flexible foundation for several blockchain applications.
• Designed with speed, efficiency, and scalability in mind, the XRP Ledger fits well for global payments and remittances that require a high transaction throughput and low latency.
• In addition, XRPL is far faster than Bitcoin or Ethereum, and is well-known for processing transactions in under 3-5 seconds.

XRP: The Digital Money

Designed in 2012 by Ripple Labs Inc., XRP, a digital currency running on the XRP Ledger, was created to allow speedy, inexpensive worldwide transfers and settlements.

Important XRP traits include:

• One of the fastest digital currencies since transactions are verified in a few seconds
• The XRP Ledger can manage significantly more than Bitcoin and Ethereum—1,500 transactions per second.
• Transferring big amounts of money is economical as transaction fees are quite cheap, sometimes fractions of a penny.
• XRP isn’t mined the way Bitcoin or Ethereum are. Rather, all 100 billion XRP tokens were generated at once, with Ripple Labs holding a sizable share and the balance progressively sold into the market.

It is important to note that Ripple announced that it would not release the remaining 55 billion XRP tokens directly into the market and would follow an unlocking schedule that would last 55 months. Each month, 1 billion XRP tokens enter the market.

How Does XRP Work on the XRP Ledger?

Although XRP, Ripple, and the XRP Ledger are separate entities, they are important aspects of a massive ecosystem that seeks to revolutionize the way cross-border payments are handled.

The native digital currency of the XRP Ledger, XRP is utilized to enable transactions and network liquidity. Technology of the XRP Ledger guarantees quick, safe, reasonably priced XRP transactions.

XRP and RippleNet form important aspects of Ripple’s services including RippleNet and On- Demand Liquidity, allowing the company to provide its customers with faster cross-border payment options.

Although XRPL is not a centralized network, Ripple also helps develop and maintain the XRP Ledger. Despite contributions from developers all around, the XRP Ledger remains an open-source initiative and decentralized in nature.

As reported earlier, XRPLedger is looking to increase its presence in the meme coin sector as well, following the massive explosion in the popularity of the Solana blockchain. Vet, a notable XRPL validator, confirmed that the blockchain is focusing on token launches and will soon be at par with the Solana network.

In Summary

XRP, Ripple, and the XRP Ledger are three different but related elements of a larger ecosystem designed to transform world payments. XRP is a digital currency designed for quick and low-cost transactions, while Ripple is the firm that provides payment and liquidity services leveraging the cryptocurrency. The fundamental, decentralized network for all these operations is the XRP Ledger.

Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.

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