What is XRP? A Beginner’s Guide

Key points

• The XRP Ledger (XRPL) was first launched in 2012 by developers David Schwartz, Jed McCaleb, and Arthur Britto.
• XRP is used for peer-to-peer payments on the XRPL due to fast block times, high throughput and quick transactions.
• Ripple, the technology company that developed XRP, continues to battle with the U.S. Securities and Exchange Commission (SEC) in the courts, where both parties have been ruled for and against.
• Major financial institutions worldwide such as Santander, Standard Chartered, and Travelex Bank have endorsed Ripple’s technology to transact globally.

XRP is one of the largest cryptocurrencies in the world, with a market cap of over $180 billion (at the time of writing). It's also a top-ten mainstay by market capitalisation in cryptocurrency rankings.

But what is XRP, how does it work, and why does it have value?

This article will explore the core elements of Ripple, its purpose, and how its currency, XRP, differs from other digital assets.

What is Ripple?

Founded in 2004, Ripple (originally Ripplepay) is a fintech company based in San Francisco. Even before the company delved into crypto in 2012, its core focus was largely the same: to improve upon the legacy settlement systems for international transactions with cheaper and faster settlements.

After entering crypto markets with the launch of its native token, XRP, Ripple has built out an entire global payments network known as RippleNet. The network offers real-time gross settlements for financial institutions, and other features to make banking across borders simple, affordable and faster than incumbent, long-standing settlement and transfer infrastructure.

Designed from the start to replace one of the largest money transfer networks, SWIFT, RippleNET can facilitate exchange between a variety of currencies — not limited to fiat — including the likes of Bitcoin and even commodities like gold. Ripple charges users a miniscule transaction fee (in XRP) to use the network.

What is XRP?

Founded in 2012, XRP is a digital asset created to drive innovation across the financial payments space. It is the native token on the XRP Ledger (XRPL) - a distributed, open-source, permissionless blockchain maintained by a network of peer-to-peer servers (known as unique nodes).

XRP functions as a mechanism of exchange between two different currencies or networks and can be sent directly without the need for an intermediary. Think of it as being able to send cash directly to someone overseas without the need for a bank or payment processor to handle the transaction. The peer-to-peer nature of XRP makes it a convenient tool for bridging two currencies in a matter of seconds, not days. This saves time and money and simplifies the process of international transactions. Banks in various countries have also adopted XRP for routine hawala transfers.

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How has XRP performed in recent years?

In the 2017 bull market, XRP reached an all-time high of US$3.4. Since that time, several challenges, including wider market corrections and the Securities and Exchange Commission’s (SEC) case brought against XRP, saw its price hit lows of around US$0.15 in mid-2020 and US$0.38 in July 2024. The months following the July 2024 low have seen XRP gain almost 600%. These gains are due to positive sentiment following President Donald Trump’s re-election in November 2024, questions over the validity of the SEC’s claims in its case against Ripple (more on that below), growing usage of the network, and hopes of XRP exchange-traded funds (ETF) being approved to begin trading in 2025.

The recent developments signal that XRP could be entering an exciting new stage of growth as usage and the promise of regulatory certainty combine to drive upward momentum. On 15 January, 2025, XRP hit a seven-year high of US$3.40, driven by a surge in meme coin trading volume on the network, anticipation over President Trump’s crypto-friendly administration, and the potential for clarity over the SEC’s case against Ripple as the leadership transition takes place at the SEC.

Are Ripple and XRP the same?

When talking about XRP, one might often hear it used interchangeably with Ripple. However, the two are quite different.

Ripple is a company that provides a blockchain-based digital payment network for its users. XRP is the crypto asset that facilitates payments on this network. XRPL is the software ledger where transactions with XRP are recorded.

The company has undergone multiple rebrandings over time to reflect changes in ownership or direction of the project. In 2023, Ripple acquired crypto businesses Metaco and then Fortress Trust to “support our existing lines of business — specifically in terms of improving the customer experience”. Continuing the takeover strategy in 2024, Ripple bought out Standard Custody, a custody provider designed to service institutions. Throughout the business’s evolution, one thing that has remained consistent is the ticker symbol XRP for its native cryptocurrency.

How does XRP and the XRP Ledger work?

The XRP Ledger

The XRPL consensus model is built upon a core principle: a little trust goes a long way.

Unlike Bitcoin’s Proof of Work or Ethereum’s Proof of Stake protocols, the XRP Ledger doesn’t use mining or staking to validate transactions. Rather, it allows trusted, permissioned servers to create consensus on the network. These servers, or unique nodes, maintain a “unique node list” - a list of nodes that the network deems trustworthy.

If 80% of nodes deem a transaction to be valid, a unique node can then proceed with validating that transaction.

In the past, the XRPL has experienced out-of-sync issues, leading to downtime across the network. When one node on this list is compromised, the effects can spill over to other nodes, further slowing down the network. However, reliability has improved in recent times.

XRP - The native token

The total supply of XRP (100 billion) was created and distributed to individuals and companies at the launch of XRPL. Unlike other consensus mechanisms, nodes do not earn rewards for maintaining the correct version of the ledger.

There are some customers on Ripple’s Digital Payment Network, RippleNet, that prefer to send funds without a pre-funded account. Ripple makes this possible through their on-demand liquidity service. In this service, XRP, along with a pool of other digital assets (e.g. Bitcoin, Ether, Ethereum Classic, Bitcoin Cash, and Litecoin), is used to provide liquidity for these transactions.

When parties have different preferred methods of sending or receiving money or use different currencies, RippleNet acts as an intermediary for their transaction. As both parties are using different currencies to transact, no physical money moves during the process. Rather, the transaction is conducted in XRP, which equals the value of the money being sent. The network also charges a small fee (in XRP) to complete the transaction, but it’s minuscule when compared to other traditional international payment networks, such as SWIFT.

How is XRP different from Bitcoin?

There are many core differences between XRP and Bitcoin. Firstly, Bitcoin achieves network consensus by using a Proof of Work (PoW) model to validate transactions, whereas XRP uses a consensus protocol across participating nodes to validate transactions through a vote. Given that this method is less energy intensive, some might argue that XRP is more environmentally sustainable than Bitcoin.

Additionally, Bitcoins are released into the network through mining. XRP was pre-mined at launch. A smart contract—not miner activity—controls the release of any future tokens on the network.

Lastly, although both projects are open source, XRP was created and distributed by a privately-owned company, whereas Bitcoin is not owned by any one individual or organisation.

Advantages and disadvantages of XRP

XRP aims to improve how banks and individuals transact money across borders. Let’s explore what sets XRP apart from other digital assets, as well as some challenges that it is trying to overcome.

Advantages

• Low fees: Using XRP for cross-border transactions eliminates the need for a third-party intermediary (such as a bank), resulting in fees far less than $0.01. Users in different countries can transact while avoiding currency conversion fees often charged by banks. If using traditional methods, these fees can reach as high as US$50 in some cases.
• Fast transaction times: Cross-border transactions are often subject to a stricter review process than transactions made within a country’s borders. Financial institutions often will often delay a transaction until this process is completed. The Ripple network can facilitate highly liquid transactions without the need for an institutional go-between, making it a much faster option to send money between countries. Further, the network can handle up to 1,500 transactions per second, settling each in less than 5 seconds.
• Partnerships with leading banks: As early as 2017, 100 financial institutions had joined the Ripple network, seeing value in the new, innovative cross-border payment model. These institutions included Santander, AMEX, Mitsubishi UFJ and more. Since then, Ripple has delivered on its promise to remove friction in cross-border payments. For example, Korean remittance provider, SentBe, saved its customers $25m in FX conversion and transaction fees with RippleNet. Similarly, Travelex Bank uses Ripple’s global payments network to settle cross-border payments almost instantly.
• Staying power: XRP has been in existence for 12 years, only three years shy of Bitcoin’s introduction to the public. While other altcoins have come and gone during these early days of crypto, XRP seems to have a considerable Lindy Effect, creating a staying power through every bear market it survives. Although past performance does not indicate future results, XRP’s ability to endure market swings is a feature that suggests it isn’t going away anytime soon.
• Eco-friendly: Because XRP uses a consensus protocol that requires relatively low computational power from its nodes, it can be considered a sustainable means of exchange. Ripple is also taking steps to become carbon neutral by 2030.

Disadvantages

• Circulating supply control: Compared to other crypto projects, which may release coins through mining or other methods, Ripple has more influence over the value of XRP, choosing when more coins are released. With Ripple controlling over 55% of the total XRP supply, one could argue that Ripple is the principal market maker for XRP, using the sales of the asset to maintain the XRP Ledger and Ripple’s other technologies. With Ripple controlling over 55% of the total XRP supply, is not far from plausible to some.
• Technically centralised: XRP was created and released by the privately-owned Ripple. The network also has a lower-than-average validator count. A low validator count is often correlated with higher centralisation, leading some to believe the blockchain is more centralised than decentralised. Additionally, Ripple, not network participants, decides whether validators are deemed trustworthy. Although the company uses blockchain technology, many argue that it still operates as a centralised entity. This goes against the core philosophy of most decentralised blockchains.

Who created XRP?

Way back in 2004, before Satoshi Nakamoto and Bitcoin, Ryan Fugger created Ripplepay. Ripplepay was in concept what Ripple is today—a network that facilitates cross-border transactions—just without blockchain technology.

After the launch of Bitcoin, three like-minded developers—David Schwartz, Jed McCaleb, and Arthur Britto—sought to build upon the idea of Bitcoin, creating a borderless cryptocurrency that didn’t need a significant amount of computing power for nodes to validate. They bought Ripplepay from Fugger and used the source code to create the XRP Ledger and, subsequently, XRP in 2012.

Upon launch, 80% of XRP tokens were gifted to a new company, which would eventually become known as Ripple. The remaining supply was sold to investors and financial institutions to fund further development of the project.

SEC v. Ripple

In 2020, the SEC filed a lawsuit against Ripple. The SEC has accused the company of selling XRP as unregistered securities. Over four years later, the case is ongoing, but recent developments suggest that 2025 may finally see an end to SEC v. Ripple. Most recently, the SEC filed an appeal on 15 January, 2025 to challenge the federal court’s July 2023 decision that the sale of XRP to retail investors were not securities.

Ripple Labs Inc achieved a landmark legal victory in July 2023, when a U.S. judge ruled that the company did not violate federal securities law by selling its XRP token on public exchanges. This decision boosted the value of XRP by 75% and may offer support to other crypto firms battling the SEC's jurisdiction. While the ruling was favourable to Ripple, the judge also found that Ripple's sales of $728.9 million of XRP to hedge funds and sophisticated buyers constituted unregistered sales of securities.

The SEC secured a partial win in the case as the judge determined that Ripple's marketing aimed at institutional investors promoted a speculative value proposition tied to the company's efforts, making it subject to securities regulations.

The SEC lost an appeal against the July 2023 decision. Not long after, the SEC came up short again after its charges against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen, were dismissed.

Litigation rumbled on in 2024, with the SEC calling on the New York legal system to impose a fine of nearly $2 billion dollars on Ripple for sales of XRP to non-retail buyers, outside of public exchanges.

With Gary Gensler departing the SEC and Mark Uyeda being appointed acting SEC Chair, it marks the start of a “crypto overhaul” designed to provide clarity over when the agency considers a cryptocurrency a security and reviewing cases before the courts. Paul Atkins is President Donald Trump’s crypto-friendly pick to be the new SEC chair. The appointment requires Senate confirmation, but given the Republican majority, it’s anticipated this will be a formality. A more crypto-friendly SEC is likely to bring much-needed clarity to the cryptocurrency industry. If Ripple gets a favourable ruling in the case, it will positively impact XRP’s and the wider crypto market’s growth. In contrast, if the SEC’s claims stand, cryptocurrencies may be subject to current securities regulation.

Similarly, President Donald Trump has appointed former PayPal Chief Operating Officer David Sacks to be his “White House A.I. & Crypto Czar”. Part of Sacks’ remit will be working on the legal framework for crypto in the U.S. with the aim of helping the sector thrive. These appointments in President Trump’s administration demonstrate that the people and systems are being put in place to provide regulatory clarity, foster innovation, and ensure government agencies aren’t overstepping their power, all of which will have a positive impact on XRP and the wider crypto market.

How to buy in XRP (XRP) in 2025

Buying XRP

The easiest way to buy XRP is through a personal crypto brokerage like Caleb & Brown. We make purchasing XRP easy and accessible whether you use fiat currency or crypto. Trusted by over 35,000 investors across 100 countries, our dedicated team of experts works around the clock to carry out all your crypto trades. If you’re ready to dive in and make your first XRP purchase, open an account with us for free today.

Selling XRP

Selling your XRP with Caleb & Brown is as simple as buying. You can trade your XRP for any of the hundreds of assets available through our crypto brokerage.

Should you decide to exchange your XRP for fiat currency, there are $0 withdrawal fees.

Recommended reading: Common Crypto Investing Strategies Every Investor Should Know

How to store XRP

There are multiple ways of storing XRP, from a cold wallet, hot wallet or with a custodian. Individual risk tolerance and preferences will determine the method employed by most users.

Many of these storage methods can seem complex, especially if you are not tech-savvy. Caleb & Brown provides end-to-end custody solutions for hassle-free storage and peace of mind investing. We have a battle-tested security infrastructure through the leading asset security platform Fireblocks. All clients receive a free security consultation to ensure they follow security best practices.

Recommended reading: Crypto Security Part 1: Best Practices

FAQs

Is XRP a good investment?

Choosing to buy XRP depends largely on your investment goals. Investors also weigh a variety of factors before choosing a project to invest in. Ultimately, it’s up to you to determine whether you decide to invest in XRP and what strategies you use to maintain that investment.

At Caleb & Brown, we follow the facts, not opinions or trends. We encourage you to do your own independent research before making an investment. Our team of crypto experts are more than willing to answer any questions you have along the way.

Why does XRP have value?

XRP gets its value from various factors, but mostly from Ripple’s ability to work with financial institutions worldwide and from its ability to quickly and cost-effectively be exchanged for any currency or asset.

What is the average transaction fee on XRP?

XRP transaction fees cost $0.0002 per transaction on average.

What consensus mechanism does XRP use?

The network uses a consensus protocol that permissions certain servers it deems trustworthy to validate transactions.

Trade XRP with Caleb & Brown

Making your first XRP purchase doesn’t need to be complicated.

Caleb & Brown is the world's leading cryptocurrency brokerage for those looking to trade XRP or other digital assets.

Our personalised crypto broker service makes everything simple. A dedicated member of our team is always on hand to guide you along the way, giving you the confidence you need to navigate the world of crypto. Not to mention key features such as:

• No joining or signup costs
• Industry-leading storage solutions
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If you are ready to take the next step and trade in XRP, contact your crypto broker today.

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