How to Buy Ripple (XRP) (Investopedia)
How to Buy Ripple (XRP) (Investopedia)
What Is Ripple (XRP)?
Ripple is a digital payment platform that uses blockchain technology and a native cryptocurrency to facilitate faster and cheaper global transactions. XRP is the native token for the Ripple XRP ledger and is used to enhance currency conversion and international financial transfers. XRP can be purchased on several cryptocurrency exchanges or given as a reward for staking it on the blockchain.
Ripple’s XRP Ledger platform additionally acts as a decentralized exchange that enables XRP trading directly with peers. XRP is primarily meant to serve as a settlement layer—the payment method—for international banking transactions, but it is also treated as a cryptocurrency by the community. XRP functions as a sort of informal money transfer network based on blockchain technology.
The XRP consensus algorithm relies on trusted sub-networks—networks that are part of a larger validator node spread across geographies—to reach a consensus on transactions. Each node in the network trusts selected nodes composing its Unique Node List (UNL). This design aims to produce a consensus mechanism that a limited group of bank-owned servers can operate to confirm XRP transactions.
Key Takeaways
– XRP is the native token for the XRP ledger and the Ripple payment platform.
– The Ripple payment platform enables fast and cheap cross-border transactions.
– You can purchase XRP on several exchanges, such as eToro, Kraken, Huobi Global, and Coinbase.
The History of Ripple (XRP)
The people that founded and developed XRP are familiar faces in the cryptocurrency arena; Jed McCaleb, the founder of Mt. Gox; Chris Larsen, the founder of eLoans and several fintech businesses; Arthur Britto, Stefan Thomas, and David Schwartz.
Ripple is the company behind the blockchain technology that powers XRP payments. In 2012, the XRP Ledger (originally called the Ripple Open Payments System) was created by these crypto enthusiasts and entrepreneurs who envisioned a faster international payment system.
When the ledger was developed, the programmers placed a cap of 100 billion XRP on the token and gave 80 billion to a company now known as
Ripple. The company then locked 55 billion XRP in escrow accounts to ensure XRP’s supply remained stable.
Initially, the ledger used digital assets called “ripples” and had the same currency code it does today, XRP. The network consisted of the Ripple Consensus Ledger, the Ripple Transaction Protocol, the Ripple Network, and the cryptocurrency used in the ledger, XRP.
Today, Ripple (the payment system) has evolved into RippleNet, a union of all of its products and services that facilitates global transactions and reportedly reduces the cost of payments. The network is still powered by its utility token, XRP.
How to Invest in XRP
While XRP wasn’t originally designed to be a security, derivative, or currency, it can be used as an investment because it is traded on several exchanges. One of the current cryptocurrency strategies investors use is buying and holding it as a long-term investment while waiting for it to increase in value.
You can also use it as a
short-term investment or for day trading, where you’d buy and sell it the way traders buy and sell stocks quickly to take advantage of small price changes throughout the day. Cryptocurrency exchanges are open 24 hours a day, seven days a week, so if you prefer to trade this way, you can do it at any time.
Ripple states that its XRP Ledger platform can settle transactions in three to five seconds.
How to Get XRP
XRP cannot be mined the way bitcoin can. You can stake your XRP and receive transaction fees, receive it as payment for services, purchase it from an exchange, or mine other cryptocurrencies and exchange them for it.
Here are some of the exchanges that allow XRP to be bought or traded:
– Coinbase
– Binance
– BitFinex
– Bitget
– Bithumb
– Houbi
– Kraken
– KuKoin
– OKX
– PancakeSwap
– Poloniex
– SushiSwap
Concerns About Ripple
Ripple Labs and XRP have proven to be controversial in that the SEC believes the coin was launched as an unregistered security.
The SEC filed its case against Ripple in December 2020, asserting that the distribution of $1.3 billion worth of XRP to stakeholders violated securities laws. In July 2023, the court decided that XRP purchased on an exchange was not considered a security, while coins offered to institutional investors are considered securities. The executives that conducted the coin offerings to institutions were not given summary judgment, but instead referred to trial.
Future of Ripple
Post-judgment for Ripple, it’s business as usual. In June, before the July decision, the company was granted an In-Principal Approval in Singapore to be a Major Payments Institution. This license allows the company “…to offer regulated digital payment token products and services in the city state.”
This move further reinforces Ripple’s work to be a cross-border payment system. Ripple and XRP appear to be on solid ground for the time being, as the cryptocurrency’s value nearly doubled in the week following the court decision, and its market cap jumped from $24.6 billion to $35.9 billion.
The company, and investors, appear to be optimistic about XRP’s future.
What Is XRP?
XRP is the
cryptocurrency native to Ripple’s open-source blockchain platform.
How Is XRP Used?
XRP is used as a settlement layer for financial institutions to make
cross-border transactions faster and less expensive. It is also used by investors to store value and hope for gains.
Is XRP a Good Cryptocurrency?
XRP is designed as a utility token for use within the Ripple blockchain and payment platform. It isn’t intended to be used as a cryptocurrency, but the investing and cryptocurrency communities use it for trading, holding, and exchanging. However, it’s not as popular as Bitcoin (BTC) or Ethereum (ETH) in this regard.
The Bottom Line
Ripple (XRP) is a blockchain payment solutions company and cryptocurrency intended to speed up global payments at a time when clearing payments can take days. Ripple is the company behind the blockchain, network, and ledger, and XRP is the native cryptocurrency of that blockchain.
You can’t mine XRP, but you can be rewarded for participating in the blockchain, buy it, or receive it as payment. You can hold your XRP and hope for gains, use it in a purchase, or exchange it for other crypto or fiat currency.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our
warranty and liability disclaimer for more info. As of the date this article was written, the author does not own XRP.
