How is XRP a pioneering cryptocurrency?

XRP, prominent cryptocurrency from[{” attribute=”” tabindex=”0″ role=”link”>Ripple network, has faced the longest legal battle in crypto history. Yet, XRP Carved out a distinct niche in digital assets. It is the go-to medium for cross-border payments, offering users speed, cost-effectiveness, and scalability. Today, XRP 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 XRP became 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, its 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 started with RipplePay, a peer-to-peer (P2P) network created by Ryan Fugger in 2004 to allow direct transactions without middlemen. In 2011, Jed McCaleb, founder of the Mt. Gox exchange, a Bitcoin pioneer, alongside David Schwartz and Arthur Britto, started developing the XRP Ledger. McCaleb suggested creating a cryptocurrency network, leading to the creation of OpenCoin in 2012. This later became Ripple Labs. McCaleb teamed up with Chris Larsen to develop the XRP Ledger, which officially launched in 2012 with a total supply of 100 billion XRP.

Over 58 billion XRP are in circulation, while the rest are kept in escrow or given to the team. This pre-mined supply helps keep the Ripple network stable compared to cryptocurrencies like Bitcoin which relies on mining. The project was originally called the Ripple Consensus Ledger. But by 2013, it was renamed Ripple, and XRP became the token’s ticker, just like BTC for Bitcoin.

XRP’s Technological Edge: Speed, Scale, Sustainability

XRP uses advanced tech. The XRP Ledger is a decentralized blockchain built for enterprise. It settles payments in 3 to 5 seconds and handles 1,500 transactions per second. That’s far faster than Bitcoin’s 7 transactions per second and Ethereum’s current 15. Bitcoin has improved in speed since the introduction of the Lightning Network, whereas Ethereum recently had an upgrade but this didn’t address the speed of the network.

XRP’s Federated Byzantine Agreement (FBA) uses a network of trusted validators, selected by Ripple and community nodes, to confirm transactions without energy-intensive mining. An appeal to investors drawn to sustainability.

Fees are just $0.0002 per transaction, ideal for small or high-volume transfers. The ledger’s Payment Channels let many payments settle together, boosting capacity to tens of thousands per second. XRP also works as a bridge currency in RippleNet, speeding up conversions and cutting costs.

Thanks to these features and substantial corporate support, XRP stands out as a top cryptocurrency today.

Global Reach: XRP’s Financial Partnerships

Largely, XRP’s rise to the top is tied to its adoption by financial institutions worldwide, facilitated through RippleNet and On-Demand Liquidity (ODL) solutions. RippleNet, Ripple’s enterprise blockchain network, enables banks and payment providers to conduct cross-border transactions efficiently. This it does by leveraging XRP as a bridge asset for instant liquidity. This has eased remittances and international payments, where traditional systems often suffer from delays and high costs.

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

• American Express and Santander: Collaborated to power real-time, trackable cross-border payments for businesses, enhancing efficiency.

• MoneyGram: Utilized Ripple’s ODL to reduce transaction costs by 60% for global remittances, as reported in 2023.

• SBI Remit: Leveraged RippleNet for payments from Japan to Asia, recording a 28% increase in mobile app payments using Ripple in 2022.

• Bank of America and Euro Exim Bank: Uses RippleNet to offer faster payments to account holders across more than 80 countries, as of recent reports.

These partnerships have not only validated XRP’s utility but also expanded its reach, with institutions on all seven continents adopting the technology. Ripple’s focus on regions like the Middle East, with partnerships in Dubai, Egypt, and Africa, through collaborations like Onafriq for pan-African payment systems, gives you an idea of its global ambition. In 2023, Ripple secured a Major Payments Institution license from the Monetary Authority of Singapore, further scaling its services in Asia. More than 5 million wallets now hold XRP worldwide.