XRP has been criticized for many things like being a banker's coin and accused of being centralized in the past and therefore a lot of people stopped educating about it and went for other coins instead. However, XRP is much more than just a cryptocurrency and the goal of creating the XRP Ledger (XRPL) was to create “bitcoin” but with a more advanced and sustainable consensus algorithm, to send value efficiently.
It worked! The XRP Ledger works out a new ledger every 3-4 seconds with a transaction fee of 0.0001 XRP on average, while Bitcoin transactions might take up to an hour. XRPL is also carbon neutral and can process more than 1500 transactions in one second. Every transaction fee is burned/destroyed, which is slowly reducing it's supply. The same cannot be said for BTC.
100 billion XRP was created on June 2nd in 2012 and there is no way to create more of them.
Shortly after that they also created a company called Ripple to pursue its mission and business model. They focused on cross-border payments and improving the banking infrastructure.
There’s a lot to unpack with the XRP ecosystem. Here, we’ll explain some common misconceptions and differences between XRP, XRPL, XRPL.org, XRPLF, Ripple, RippleX and RippleNet.
XRP is the native cryptocurrency of the XRP Ledger (XRPL), an open-source and decentralized blockchain. XRP is used on the XRPL to pay for reserves and fees. It can be used on the XRPL DEX (more on that here) to trade directly with other currencies and to act as an intermediary currency for trade and payments.
XRP can be held and received by any address on the network as long as the base reserve requirement is met. The total supply of XRP is 100B (100,000,000,000). XRP is deflationary as transaction fees are burned unlike Bitcoin. About 2M XRP are burnt for transaction fees every year.
Of the 100B XRP in existence, Ripple holds 47B XRP. In order to make the supply more predictable Ripple locked their (at that time) 55B XRP in a so-called escrow in 2017. The escrowed XRP is locked and only 1B XRP is unlocked every month. The unlocked amount isn’t necessarily released into the market but has been repeatedly put back into escrow since its inception as shown here.
The current circulating supply of XRP is ~53.44B.
XRP Ledger (XRPL)
The XRP Ledger is a blockchain that uses consensus to confirm new transactions on the network. Blocks on the XRPL are called ledgers and they contain a snapshot of all the accounts and objects on the blockchain when the ledger was created. Special nodes called validators
A new ledger is created when 80% or more validators agree on the content of the next ledger. Each ledger contains all the accounts and objects that exist on the network and all the transactions that are about to happen. The next ledger will reflect the changes made by the transactions in the previous ledger and a new set of transactions.
The consensus mechanism differs from Proof-of-Work and Proof-of-Stake in that there is no incentive to confirm transactions. There are pros and cons to this approach and there has been vigorous discussion about whether this is good or bad (here’s a video of Dawid Schwartz making a case for it).
The XRPL lets its users send and receive value fast (3-4s) and cheap (~0.000015XRP). The network also features a fully functional exchange called the XRPL Decentralized Exchange or DEX. There are other advanced features like Escrows, Cross-currency payments, Multisignature, Partial payments, Issued currencies and so on.
XRPL.org is the home of everything XRP. It’s a community driven resource that features everything that has to do with the XRP Ledger and XRP. There you can learn about how XRP is used, its history, impact and more. You can explore the ecosystem with lists of businesses and exchanges and see the network in action in real time with the network explorer.
Finally it is the home of the XRP Ledger documentation so if you want to learn more about the concepts and features of the XRPL or build on it, this is the place to start.
XRP Ledger Foundation is an independent, non-profit foundation that furthers activity and development on the XRP Ledger ecosystem. To find out more about it visit https://xrplf.org/.
We made it to the end of the first part of the blog article where you could find details about what XRP is, on which blockchain operates and how the XRPL works. If this is the first time you heard about these things, there is a pretty big chance you are still not sure you know what you read. That’s okay, just read everything once again before we come up with part two of this blog where we will talk further about Ripple, RippleNet, RippleX and DEX.
Read part 2 of this blog here.