What is Ripple?

XRP aims to revolutionize the way we send money around the world.

That’s a bold statement, but it’s why XRP is now the second-largest cryptocurrency by market capitalization.

But let’s not get carried away. XRP and its closely-connected company, Ripple, have divided the cryptocurrency community by partnering with some of the world’s biggest banks.

So what is Ripple and the cryptocurrency XRP? Why is it so revolutionary, and why is Ripple criticized? Most importantly, where can you buy XRP and how do you store it safely?


Part 1: What’s the difference between Ripple and XRP?
Part 2: Understanding the Ripple blockchain
Part 3: Exploring Ripple’s Bank Partnerships
Part 4: Why is Ripple so Controversial?
Part 5: How to Buy XRP and Store it Safely
Part 6: What’s Next for Ripple and XRP?

PART 1: What’s the Difference Between Ripple and XRP?

Ripple vs XRP

Before we dive in, let’s clear up a few things:

Ripple is a company

Ripple aims to streamline the way we send money around the world using blockchain-inspired technology. The company has over 100 bank partners using its services.

XRP is the cryptocurrency

XRP is a token created by the same people behind Ripple. Ripple is trying to get banks to use XRP to make international payments more efficient.

The term “Ripple” is often used interchangeably to refer to both the company and the cryptocurrency. But that’s not strictly correct.

So, from here on out, if we mention Ripple, we’re talking about the company. If we mention XRP, we’re talking about the cryptocurrency.

Ripple vs XRP differences infographic
Source: Ripple . Note: although Ripple refers to XRP as an “independent asset” above, some disagree with this classification. We’ll get into this shortly.

Got It. So What Is Ripple (The Company?)

david schwartz“The vision is to make an international payment as cheap and easy as pulling up a web page. Something you would do without even thinking about the mechanics or the cost. It’s just so automatic and cheap… It’s almost invisible.” Ripple CTO David Schwartz.


Have you ever tried to send money abroad? You wait days for the transfer and the bank charges you a fortune for the privilege.

This current method is extremely outdated, slow and expensive. It was created in the ‘70s and ‘80s (and hasn’t changed much since).

Ripple offers its blockchain-inspired software to banks to help change this.

Ripple aims to do for money what the internet did for communication. i.e. make it instant and free. They call it the “internet of value”.

Ripple Has Partnered with 120+ Banks

Here’s where Ripple is different from most other projects in the world of cryptocurrency. Instead of building an alternative to the traditional banking system, Ripple is actively partnering with the world’s biggest banks.

They’re trying to convince banks to switch their old system to the Ripple network.

Ripple now has over 100 partnerships with banks and money services like Santander and American Express. They’re each using (or testing) a version of Ripple’s technology.

But wait. How exactly does XRP fit into this equation?

What is XRP?

XRP was created by the same people that created Ripple.

100 billion XRP tokens exist, and they were created all at once (known as “pre-mined”).

That makes XRP completely different to bitcoin and ethereum, where the tokens are slowly mined into existence by its users.

The key feature of XRP is speed. It allows for significantly faster payments than bitcoin and ethereum.

XRP speed vs Bitcoin and Swift

What Is XRP Used For?

Ripple plans to use XRP as a “bridge currency” when exchanging money abroad.

Let’s say you live in Great Britain and you want to send money to your family in Mexico.

Normally, this would take days and incur a huge fee using the current payment systems.

Worse, you can’t always make a direct exchange. Your bank may have to convert the sterling to a “reserve currency” (US dollars) first, then convert it to Mexican pesos. This adds another layer of fees and delays.

Instead, Ripple aims to use XRP as the “bridge.”

In this example, sterling is instantly converted to XRP, then instantly converted to pesos.

how xrp works diagram


It might seem like a small change, but because you’re exchanging through a digital currency, it’s instant and almost completely free.

How Is XRP Different to Bitcoin?

XRP and bitcoin are both aimed at money transfers. In that sense, they share a similarity.

However, that’s really where the comparisons end. XRP and bitcoin are wildly different in almost every other way.

XRP is faster – An XRP transaction takes 3.5 seconds. Bitcoin may take hours or even days at high volume.

Every XRP token already exists – The tokens were simply coded into existence all at once, unlike bitcoin which is mined.

There are 100 billion XRP tokens – Bitcoin, on the other hand, has a hard cap of 21 million. In other words, there are nearly 5,000-times more XRP tokens than bitcoins.

Ripple holds half of all XRP tokens – Ripple currently owns roughly 60% of all XRP tokens. 55 million of those tokens are locked in escrow, with one billion released to Ripple each month.

Bitcoin and XRP both have a hard cap – Ripple claims that no more XRP tokens will ever be created, giving it a hard cap of 100 billion.

XRP is aimed at banks – Of course, the biggest difference is the target audience. Bitcoin was created to provide an alternative to the banking system. It’s a money system or store of value that cuts out banks. XRP is created as a form of liquidity for banks to transfer money.

brad garlinghouse“While contrarian and unpopular in the crypto space, in retrospect it’s very smart” – Ripple CEO, Brad Garlinghouse.

The Ripple Team

Ripple originally goes back to 2004 when Ryan Fuger created an IOU system for exchanging credits.

But Ripple, as we know it now, really began when founders Jed McCaleb, Chris Larsen, and Arthur Britto took over in 2012. They established the company as “NewCoin,” before renaming it “OpenCoin,” and ultimately evolving it into Ripple Labs in 2013.

If the name Jed McCaleb sounds familiar, it’s because he was also the founder of Mt. Gox, the infamous exchange that suffered an $850 billion hack in 2014. (Although McCaleb was no longer involved when the hack took place).

McCaleb also went on to found Stellar – the sixth largest cryptocurrency. He’s a serial cryptocurrency entrepreneur.

Chris Larsen was Ripple’s founding CTO. He’s widely considered the richest person in crypto due to his early stake in Ripple and his XRP holdings.

Brad Garlinghouse is the current CEO of Ripple and David Schwartz is CTO.

Ripple history infographic
Credit: buyripple.com

PART 2: Understanding the Ripple Blockchain

Ripple’s System is Nothing Like Bitcoin’s Blockchain…

Ripple uses a “distributed consensus ledger.”

They call it the XRP Ledger.

To explain, we need to go back to bitcoin for a minute.

The bitcoin blockchain is powered and maintained by miners.

Let’s say Bob sends one bitcoin to Alice. To confirm the payment, a network of miners all over the world compete to validate the transaction. They do it by solving a complex math puzzle with computing power.

(If this all sounds foreign to you, read our Bitcoin eBook first to get your head around the traditional crypto mining system).

This system is called “proof of work.”

This doesn’t happen in the Ripple system. There are no miners involved.

Instead, it uses a “consensus” system.

Let’s say Bob sends 100 XRP to Alice this time.

Instead of miners processing the transaction, the XRP Ledger has roughly 150 computer “validators” all over the world. Some validators are run by individuals, some by companies, some by exchanges. 7% of those validators are run by Ripple itself.

When Bob makes his transaction to Alice, there is a simple poll among the servers and validators on the Ripple network. If a “consensus” of the servers agree, the transaction is made and stored on the ledger.

XRP Ledger consensus-rounds diagram

Users on the XRP Ledger can also tweak their settings to “trust” certain validators in the network. So if one “trusted validator” approves a transaction, another will automatically follow the decision.

xrp-ledger-network diagram

Pros of the Ripple system

It’s fast. Really fast.

Bitcoin mining takes a long time and a huge amount of energy. Competing to solve math puzzles on the Bitcoin network drains enormous amounts of computer power.

Getting rid of that process makes Ripple’s transactions much faster.

XRP speed vs bitcoin and ethereum

We must also consider that Ripple’s network is designed for banks.

Whether you think this is good or bad, Ripple needs a simpler system with more control to get banks on board.

Cons of the Ripple System

It’s arguably more centralized. Without active miners holding every transaction accountable, there’s an argument it’s a more centralized system.

Ripple disputes this, claiming the Ripple system is less centralized than Bitcoin because Bitcoin mining is dominated by a handful of huge mining pools, largely based in China.

PART 3: Exploring Ripple’s Major Bank Partnerships

We know that Ripple is working closely with banks, but let’s dive a little deeper into how their relationships work.

120+ Bank Partnerships

Ripple has announced a number of high-profile partnerships. They are working with Santander, American Express, SBI, Western Union and many more.

Ripple bank partnerships logos

While this sounds impressive, there are a few things we need to explain. When Ripple says they have over 100 bank partnerships, that does not mean they are all using the XRP token.

At least four financial companies are actively using the XRP token to make international payments. The rest are either piloting the XRP technology or using one of Ripple’s other blockchain solutions.

To explain, here’s a breakdown of how Ripple partners with banks.

Ripple xCurrent

xCurrent is Ripple’s main software package. It is still impressive in that it allows banks to settle cross-border payments almost instantly.

xCurrent also provides banks with a real-time messaging service. It verifies payment details before the transaction is made and confirms the exchange when it arrives.

It’s fast and cheap, but it doesn’t use the XRP token to settle payments.

When Ripple talks about bank partnerships, they are usually talking about xCurrent.

Ripple xRapid

Ripple’s main goal is to migrate banks from xCurrent to xRapid.

xRapid does use the XRP token as a “bridge currency” to execute cross-border transactions.

In recent tests, banks have reported between 40-70% cost savings and almost instant transfers.

Why the Old System Is So Inefficient

To understand why xRapid is so revolutionary, we need to understand how inefficient the existing system is.

Let’s go back to our UK-Mexico transaction to explain. Maria wants to send £1,000 to her family’s bank account in Mexico.

To make the transfer, her UK bank needs a “nostro account” in Mexico. That nostro account is pre-funded with Mexican pesos, so the bank can exchange the currency.

Banks have these pre-funded nostro accounts in every country (well, every country with a different currency – the bank will have just one nostro account in the eurozone, for example).

This is what the banks call “liquidity.” They need “liquid” money available in each country to make the currency exchange.

“That’s capital sitting dormant, and not being used.” – Garlinghouse.

An estimated $10 trillion is sitting idle in nostro accounts. It’s wildly inefficient.

Now imagine if they didn’t need pre-funded nostro accounts all over the world. What if they just had a liquid supply of digital currency in one place?

Like XRP…

Are Banks Using xRapid (and Therefore XRP)?

At least four financial companies are now using xRapid commercially.

They include Catalyst Corporate Credit Union (a financial firm), Cuallix, MercuryFX, and Viamericas (money transfer services).

The rest of Ripple’s bank partners are not yet using the XRP token. Ripple hopes to nudge them towards xRapid as they grow more comfortable with the technology.

PART 4: Ripple Controversy

Ripple has been wrapped up in controversy for years in the crypto space. There are few coins and projects that attract as much animosity and criticisms as Ripple. Here are some of the biggest:


Generally speaking, all the criticisms of Ripple and XRP revolve around centralization. In other words, too much control in the hands of Ripple itself and too many relationships with the existing banking industry.

“The Banker’s Coin”

Many in the cryptocurrency community take issue with Ripple’s banking partnerships. They argue that bitcoin and cryptocurrencies were designed to reduce the influence and reliance on banks. Ripple’s involvement with some of the biggest banks in the world makes some people unconformable.

Ripple Holds 60% of XRP

Critics point to the fact that Ripple owns more than half the supply of XRP and can theoretically exact control over it. Of those holdings, 55 million are locked in escrow, with one billion released to Ripple each month.

XRP logo

Ripple’s Involvement in XRP

Unlike bitcoin or ethereum, which is mined into existence by its users, XRP was simply created all at once. Ripple has distanced itself from the creation of XRP, calling it an independent asset.

They say their share of XRP was “gifted” to them by the open source developers that created it. In a UK Parliament hearing, Ripple’s director of regulatory relations said this:

“XRP is open source and it was not created by our company, so [XRP] existed as an open source technology. We created a company that was interested in modernizing payments and then began using that open-source tech to do so … We didn’t create XRP … What we do have is we do own a significant amount of XRP, it was gifted to us by some of the open-source developers that created it. But there’s not a direct connection between Ripple the company and XRP.”

Critics point out, however, that the same registered company that became Ripple Labs also created the XRP token.

Is XRP a Security, Not Currency?

There’s an argument that XRP should be classified as a “security” (like a company stock) not a currency.

Critics say that if XRP was created by Ripple, and a majority is held by the company, it shouldn’t be classified as a currency.

Ripple is currently battling a lawsuit over this issue. The lawsuit argues that Ripple has misled people to expect a return from their XRP investment.

Ripple has denied that XRP is a security, saying: “We’re 100 percent clear, it’s not a security. We don’t meet the standards.”

The US Securities and Exchange Commission (SEC) has yet to make a decision about XRP’s status. The SEC has indicated that bitcoin and ethereum are not securities. But they’re still quiet about XRP.

If XRP is deemed a security, Ripple will be subject to much stricter regulations and requirements.

So, is Ripple Centralized?

In the most recent statement on the issue, Ripple CEO Brad Garlinghouse said:

“It is very clearly decentralized. I, as CEO of the company, can’t control the XRP ledger. I can’t change a transaction… Anybody can participate in the XRP ecosystem, and if Ripple does something that is not in the best interest of the ecosystem, the rest of the ecosystem can ignore us.”

Ripple’s CTO also weighed in, saying XRP is less centralized than bitcoin and ethereum. He pointed to the fact that only four mining groups control more than 50% of the bitcoin and ethereum network. Ripple, he says, controls only 7% of validators on the XRP ledger.

Part Four: How to Buy and Store Ripple XRP Safely

How to Buy XRP

You may have noticed that XRP is not currently available to buy on Coinbase or Gemini – the two largest US crypto exchanges.

Coinbase logo

Why not?

Coinbase and Gemini claim they are reluctant to add XRP because of the ongoing debate about whether it classifies as a security. As mentioned, there are more hoops to jump through when listing a security on an exchange.

Until this issue is cleared, we may not see XRP available on Coinbase.

With that in mind, there are two options for buying XRP:

1. Buy XRP Directly From a Participating Exchange

Exchanges that facilitate US dollar transfers include Bittrex, Bitfinex, Kraken, BitStamp, Bitsane, Gatehub, CEX.io.

Simply create an account at one of these exchanges and exchange USD directly for XRP.


2. Buy Bitcoin on Coinbase, Then Convert to XRP on Another Exchange

This second option is more complicated. However, it may be the best route depending on your local currency.

For example, it is difficult to purchase XRP with British sterling due to the lack of available exchanges and low liquidity.

In this case, you’ll need a roundabout solution:

1. Purchase bitcoin or ethereum on your preferred, trusted exchange, such as Coinbase.

2. Next, register with a crypto-crypto exchange that allows you to trade bitcoin for XRP. (Binance is perhaps the best known, but there are many others out there).


3. Confirm your Binance account via email and set up 2FA (if you want to trade more than 2BTC, you’ll need to upload ID documents).

4. Navigate to “funds” > “deposit” > “Select deposits coin”

5. Select the currency you are sending from Coinbase, in this case, bitcoin. Binance will now give you a “deposit address.” It’s very important that you note this address down correctly. If you get it wrong, you will send the bitcoin to someone else, and you’ll never get it back.

binance deposit

6. Head back to Coinbase. Select “send funds” and input the deposit address from Binance.

7. Send (this may take a couple of hours at peak times)

8. Back on Binance, you should now see your transferred bitcoin funds.

9. Purchase XRP on Binance. Using the trading screen, you can now trade your bitcoin funds for XRP.

How to Safely Store XRP

Once you’ve bought XRP, we highly recommend you move it to a cold storage wallet (in other words, a wallet not connected to the internet).

There are exceptions. For example, if you intend to trade XRP regularly or use it for live transfers. In that case, you may want to keep a small portion in a “hot wallet” connected to the internet or leave it on the exchange for trading.

But let’s assume you want to hold XRP for the future in the safest possible way. That means cold storage.

Hardware wallet – a hardware wallet is like an external hard drive or USB stick but optimized for cryptocurrencies. Except for the short moment when you transfer your coins, hardware wallets are almost always offline. That makes them safe from hackers.

ledger nano cold storage bitcoin wallet plugged into a laptop

The only risk here is losing or damaging your hardware wallet. If that happens, your XRP tokens are gone forever.

The most popular hardware wallets are Ledger and Trezor. However, Trezor does not yet support XRP.

BitGo also offers a cold storage custody service for those with large sums of XRP.

Desktop wallet – A desktop wallet stores your cryptocurrency keys on your computer using a software package. On the plus side, they are more convenient for regular use and trading. But on the other hand, they are somewhat more vulnerable to hackers.

One of the most popular XRP desktop wallets is Toast. It’s an open source software available for Mac, Windows, iOS, and Android.

Online wallets – Online wallets do exactly what they say; store your XRP online. While this is super convenient and easy to use, they are less secure. If you want to pursue this route, Coinpayments is a popular option that supports XRP.

Part Six: What’s Next For Ripple XRP?

The fact that four of Ripple’s partners are now using XRP is a huge step forward.

However, there’s a long road before XRP becomes widely adopted by banks and money transfer companies.

Ripple has two main tasks to achieve. First, they must partner with crypto exchange all over the world. So far, Ripple has partnered with Bittrex to facilitate transfers through USD, Bitso for Mexican pesos and Coins.ph for Philippine pesos.

But Ripple will need partnerships like this all over the world for XRP to become a worldwide bridge currency.

Secondly, Ripple needs to convince banks to upgrade from xCurrent to xRapid. In other words, they need to convince banks to actually use cryptocurrency.

As one Ripple exec said, the narrative has always been “blockchain good, crypto bad.” So while xCurrent’s blockchain technology is an easier sell, xRapid’s cryptocurrency product is more difficult.

Ripple calls this the 800-pound gorilla in the room.

Progress is being made. Many banks are trialing the XRP service and reporting good results.

Brad Garlinghouse claims that “dozens” of banks will be using xRapid by the end of 2019. Block Explorer will keep you up to date as we hear more.


Ripple is also working on a project called Xpring (pronounced “spring”). It aims to encourage tech startups to use the XRP Ledger.

Xpring will see Ripple support startups with grants and investments that use XRP in innovative ways.

It aims to open up the XRP ledger to new use-cases, not just global money transfers. Xpring is currently supporting projects in music with Scooter Braun (Justin Bieber’s manager. Yes, really), and a tech startup called Omni, which allows you to rent or store just about anything.


Ripple is building a new standard in global money transfers. With hundreds of bank partners, it has the potential to upend the entire financial industry.

However, that doesn’t mean the cryptocurrency XRP is a sure thing. Getting banks to adopt blockchain technology is one thing. Convincing them to transfer money using a digital currency is the next big challenge.

Watch this space.

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a highway at night with speeding cars

Updated on January 9th, 2019 to include new xRapid developments.

What is xRapid?

xRapid is a service offered by Ripple that uses the XRP cryptocurrency to speed up cross-border money transfers. Banks using xRapid have reported up to 70% savings using the system, with transfers taking place in minutes rather than days using the traditional system.

As many as nine companies are now using Ripple’s xRapid commercially, while others are still testing the product.

Ripple and xRapid Background

Ripple’s astonishing price rise was driven by its partnerships with banks like Santander, American Express, and Western Union. However, most people misunderstood one thing:

The banks weren’t actually using the cryptocurrency XRP yet.

That’s set to change with the introduction of xRapid. Ripple has now on boarded nine financial services, including one bank, to the xRapid platform to settle international payments.

xrapid - how it works

One of those services, MercuryFX, says xRapid improved transfer speeds from the UK to Mexico from days to just two minutes.

Other banks have reported 40%-70% savings when piloting the xRapid service.

But what is xRapid and how does it use cryptocurrency? First, let’s clear up a few terms.

The Difference Between Ripple and XRP

Ripple is a company that aims to speed up cross-border payments. Ripple has partnered with over 100 banks and boasts a range of money transfer services using blockchain and cryptocurrency.

XRP is the cryptocurrency created by Ripple. It is not currently used by most banks, but it’s a big part of their future plans and the xRapid service.

The Current State of Ripple’s Bank Partnerships

Most of Ripple’s 200 bank partners are using a Ripple service called xCurrent. It uses blockchain technology to help banks make faster payments and communicate better.

A list of Ripple bank partnerships and logos

But it does not use XRP to settle transactions.

Ripple intends to use xCurrent as a way to onboard its banking partners before convincing them to upgrade to xRapid.



What Is xRapid?

xRapid aims to make those transactions even faster and cheaper. Most importantly, it does use XRP to settle the money transfer.

XPR is used as a “bridge currency” in the process.

Here’s how it works…

Let’s say Bob lives in the UK and wants to send £1,000 to Alice in India.

Using xRapid, Bob’s bank instantly transfers the £1,000 into XRP, via a cryptocurrency exchange.

The XRP is then instantly converted into Indian rupees via a partner exchange in India.

The fees are almost zero and the whole process takes a matter of seconds.

Had Bob used the traditional bank system, it would take days and cost him a large fee.

diagram of xRapid and RippleNet

xRapid: An End to Nostro Accounts

The description above is a very quick outline of how xRapid works, but there’s a reason why it’s so powerful:

Banks need liquidity (i.e. lots of available money) to make a foreign exchange. And the current way they source liquidity is wildly inefficient.

Let’s go back to Bob and Alice. To send money to India using the traditional system, Bob’s UK bank needs a “nostro account” in India. The nostro account is pre-funded with millions in local currency. (This is the liquidity).

Banks have pre-funded nostro accounts like this in every country with a different currency to facilitate cross-border transfers. It’s expensive and incredibly inefficient.

By switching the local nostro accounts for a digital cryptocurrency, there’s no need for bank accounts full of foreign currency all over the world. It’s faster, cheaper and more efficient.

Got It. But Are Banks Using xRapid?

As many as nine financial companies are currently using xRapid on a commercial scale. They include one bank, Euro Exim Bank, and a handful of money-transfer services such as Viamericas, Cuallix, and MercuryFX (money transfer services).

Others include Catalyst Corporate Credit Union, JNFX, SendFriend, Transpaygo, and FTCS.

The vast majority of Ripple’s other bank partners, like Santander, are using xCurrent, but Ripple is trying to nudge them towards xRapid. Some banks have begun testing the xRapid product and reported 40-70% savings.

Ripple CEO Brad Garlinghouse said that “dozens of banks” will be using xRapid by the end of 2019.

But it’s a big task. As Ripple’s Sagar Sarbhai explained, “a couple of years ago the narrative was: blockchain good, crypto bad.” Banks were open to blockchain technology, but wary of using cryptocurrency to settle payments.

Sarbhai says that’s beginning to change.

“I think that narrative thankfully is now changing because policymakers, regulators are seeing that there is a strong benefit that digital assets, cryptocurrencies bring in.”

xRapid Now Commercially Available

This is the moment that most XRP holders have been waiting for. xRapid is considered Ripple’s silver bullet because it actively uses the XRP token to settle payments.

If more banks adopt xRapid, the volume (and price) of XRP is expected to increase dramatically.

Why? Because banks and (especially) cryptocurrency exchanges will have to hold large sums of XRP in order to make the transfer. The transfer itself will only require XRP for a matter of seconds, but the services still need a pool of cryptocurrency to execute the trade, thus driving up demand.

Let’s look at this way. If xRapid replaced just 1% of the current international bank transfers through SWIFT, the daily volume of XRP would increase 250x.

Ripple is Quietly Building Exchange Partners

To make these instant XRP trades, Ripple is busy partnering with as many crypto exchanges as possible.

For example, the company has partnered with Bittrex to facilitate transfers between US dollars. They’ve partnered with Bitso for exchanges in Mexican pesos and Coins.ph for Philippine pesos. Bitstamp was recently added as an exchange partner too.

So don’t be surprised if the banking partners are slow to adopt xRapid. The exchange partners must come first.

Update: Ripple Merges xRapid into One Service, RippleNet

Since we first published this article, Ripple appears to have removed any mention of xRapid and xCurrent on its website.

Instead, it is now just one product: RippleNet.

It looks like Ripple is bundling its services together in one simple package. This will make it much easier to convince banks to ultimately shift to XRP transfers.

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