What is XRP Token? Discover More!

3 min readJan 2, 2022

What is XRP?

XRP is a cryptocurrency developed and issued by the American company Ripple Labs, and it is also partially controlled by it. XRP is one of many products of Ripple Labs that is developed to improve the efficiency of cross-border payments, especially in the banking sector.

XRP is currently the 8th largest cryptocurrency by market capitalization, with a total market value of around $38 billion. Due to a large number of coins in circulation, over 45 billion, XRP tokens are relatively cheap. The price per coin is lower compared to other projects from the top 10. Thus it can be attractive for investors.

https://coinmarketcap.com/currencies/xrp/

XRP can be sent directly without the involvement of an intermediary. It makes these tokens a convenient tool for quickly and efficiently linking two currencies. That is to say, XRP acts as a bridge currency to other currencies. It does not discriminate between fiat/cryptocurrency, making it easy for any currency to be exchanged for another.

How does XRP work?

XRP uses distributed ledger technology to support the transfer of tokens that are fiat currencies, cryptocurrencies, or any other unit of value. Since the protocol is completely open-source, anyone can access it without prior permission from Ripple Labs. Such technology allows banking and non-banking organisations to use the Ripple protocol in their own systems.

XRP Specificity & Interesting facts

In addition to the working mechanism, another XRP specificity is the lack of mining. All tokens were issued before the launch of the system. 65 of the 100 billion XRP remained in the company’s ownership, 35 billion were released into circulation.

The average execution time for one transaction in Ripple is 4 seconds. At the same time, the commission is only 0.00001 XRP and acts only as protection against spam.

Ripple’s main clients are banking organizations. Ripple works with a massive number of financial institutions worldwide (100+). Ordinary users can also use the system for mutual settlements.

By replacing traditional expensive and slow services, Ripple hopes to minimize the need for current cash payment platforms such as SWIFT in the future.

The ability to exchange for any currency or valuable things (for example, gold) with a single minimum commission is a huge advantage of XRP.

Pros & Cons of XRP

Let’s take a look at the several XRP advantages:

Transferring money over the Ripple network takes only 4 seconds due to the high speed of transactions.
XRP is the eighth token by market capitalization;
No electricity bills during the emission process: all coins have already been issued. There is no need for mining;

When you decide to invest in any cryptocurrencies, you should remember that there are no investment options that 100% guarantee a profit. If you invest in XRP, the main risk factors to consider are the following:

Recent SEC lawsuit: some companies were forced to end cooperation with Ripple and cryptocurrency exchanges to suspend support for XRP. Capitalization has declined. The further fate of Ripple is still unknown;
Ripple Labs own most of the coins issued. That is not completely decentralized (which is the critical characteristic of cryptocurrencies).

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Summary

XRP is a digital currency for people who believe traditional banking needs an upgrade, but not as radical as other cryptocurrencies see it. XRP value lies in processing speed and attractiveness to organizations. We can say that this is the golden mean between traditional and decentralized finance.