The Multifaceted Journey of XRP: From RipplePay to a Leading Cryptocurrency

This Disruption Banking piece explores the multifaceted journey of XRP, providing a detailed analysis of how it all started, XRP's technological underpinnings

Prominent cryptocurrency XRP, the native token of the Ripple network, has faced the longest legal battle in crypto history. Yet, it has carved out a distinct niche in digital assets as the go-to medium for cross-border payments, known for speed, cost-effectiveness, and scalability. Today, it ranks 4th by market cap on CoinMarketCap, CoinGecko, and Coinbase. XRP’s tenacious journey so far has piqued the interest of many investors who are now asking how did XRP become a leading cryptocurrency?

This Disruption Banking piece delves into the multifaceted journey of XRP, providing a detailed analysis of its beginnings, technological underpinnings, adoption by financial institutions, the legal battles it has faced up until March this year, XRP’s market performance as of today, and where it could be heading in the foreseeable future.

From RipplePay to XRP Ledger: The Origin Story

XRP's story began with a peer-to-peer (P2P) network called "RipplePay," founded by Ryan Fugger in 2004. The aim was to enable direct transactions without intermediaries. Later, in 2011, Jed McCaleb, a Bitcoin pioneer and founder of the Mt. Gox exchange, together with David Schwartz and Arthur Britto, started developing the "XRP Ledger." McCaleb suggested creating a cryptocurrency network, which led to the establishment of OpenCoin in 2012. This company later evolved into "Ripple Labs."

McCaleb joined forces with Chris Larsen to develop the XRP Ledger further. It was officially launched in 2012 with a total supply of 100 billion XRP. Out of this, over 58 billion XRP are in circulation, while the remaining tokens are held in escrow or were given to the team. This pre-mined structure helps to stabilize the Ripple network in contrast to cryptocurrencies like Bitcoin, which rely on mining to introduce new tokens into circulation.

The project was initially called the "Ripple Consensus Ledger." However, by 2013, it underwent a rebranding to become simply "Ripple," and the token was assigned the ticker "XRP," similar to how BTC is used for Bitcoin.

XRP’s Technological Edge: Speed, Scale, Sustainability

XRP boasts advanced technology. The XRP Ledger is a decentralized blockchain designed for enterprise use. It can settle payments within 3 to 5 seconds and handles up to 1,500 transactions per second. For context, Bitcoin can handle around 7 transactions per second, and Ethereum manages about 15. Of course, Bitcoin has improved throughput with the introduction of the Lightning Network, and Ethereum recently had a planned upgrade to increase throughput, although this didn’t necessarily address the speed of the network.

XRP’s unique Federated Byzantine Agreement (FBA) uses a network of trusted validators, selected by both Ripple and community nodes, to confirm transactions without the energy-intensive process of mining. This aspect appeals to investors who are drawn to sustainability in their investments.

Furthermore, transaction fees are minimal, at just $0.0002 per transaction, making it ideal for both small and high-volume transfers. The ledger’s Payment Channels enable many payments to settle together, boosting capacity to tens of thousands of transactions per second.

Additionally, XRP functions as a bridge currency within RippleNet, facilitating rapid currency conversions and reducing costs for institutions engaging in cross-border payments.

Thanks to these features and substantial corporate support, XRP has risen to become a top cryptocurrency.

Global Reach: XRP’s Financial Partnerships

To a large extent, XRP’s ascent to the forefront of the cryptocurrency scene is linked to its adoption by financial institutions worldwide. This adoption is being driven by RippleNet and its On-Demand Liquidity (ODL) solutions.

RippleNet, Ripple’s enterprise blockchain network, empowers banks and payment providers to conduct seamless cross-border transactions by leveraging XRP as a bridge asset for instant liquidity. This capability has streamlined remittances and international payments, which traditional systems often encumber with delays and high costs.

Here are some of XRP’s key partnerships/collaborations so far:

* In 2023 alone, institutions in eight countries joined RippleNet, showcasing the technology's global appeal.

* In February 2023, MoneyGram, a global leader in money transfer services, began using ODL for U.S.-to-Philippine pay-out flows, marking a significant step in their collaboration.

* December 2022 saw Egyptian bank handling MenaPay rolling out cross-border payments to Nigeria via ODL, expanding financial services in the region.

* October 2022 saw a partnership with Dufry, a leading travel retailer in Europe, to explore blockchain solutions for duty-free and travel retail transactions.

* September 2022 saw the integration of blockchain technology by several financial institutions in Southeast Asia to streamline cross-border payments.