What is XRP? Supporting fast and low-cost international payments

XRP emerged in 2012 aiming to redefine the way we conduct payments. Many believe that Ripple Payments — the product that leverages XRP for cross-border transactions — has the power to disrupt conventional banking infrastructure for the better. How? By allowing funds to be sent internationally at exceptional speed and with minimal fees.

XRP is a digital asset that’s native to the XRP Ledger (XRPL) — an open-source, permissionless, and decentralized blockchain technology. XRP can settle transactions on the ledger in three to five seconds. It was built to be an alternative to Bitcoin.

Curious to learn more? Read on to explore the origins, features, and future potential of the XRP token.

TL;DR

• XRP is the native asset underpinning the XRP Ledger.

• The token is designed to enable fast and low-cost international money transfers as part of the XRP Ledger.

• XRP provides liquidity and the seamless conversion of currencies as part of the Ripple Payments service.

• Ripple has grown its reach and influence across new markets in 2023 as the company explores wider use cases for XRP.

What is XRP?

XRP is a digital currency. It's designed to enable fast and low-cost international money transfers as part of the XRP Ledger. The XRP Ledger has been adopted by individuals and financial institutions looking to access secure, fast, and low-fee transactions.

XRP began with the launch of the XRP Ledger (XRPL) in 2012, which aimed to build on what it perceived as the limitations of Bitcoin. XRP became the native digital asset underpinning the ledger. The XRP token was pre-mined during its early stages of development to create a maximum supply of 99.9 billion XRPs on launch. It had a circulating supply of 53.6 billion tokens as of November 2023.

How does XRP work?

XRP primarily enables transactions on the network. It also helps to protect the ledger from spam, and bridges currencies in the XRP Ledger's native decentralized exchange. Users must hold XRP tokens in a wallet in order to perform transactions on the network.

XRP was designed to be an alternative to Bitcoin — a digital currency. The token relies on the XRPL, a public ledger for storing transaction details. XRP differs from Bitcoin through its ledger. Where Bitcoin uses mining to validate and record new transactions, the XRPL uses a consensus mechanism based on the Federated Byzantine Agreement (FBA) model. This allows trusted validator nodes to reach consensus and maintain the transaction ledger quickly. With this process occurring approximately every three to five seconds, transactions are confirmed rapidly.

The group of trusted nodes that maintain the XRPL is known as the Unique Node List (UNL). By combining the FBA model and UNL, XRP avoids the need for energy-intensive mining, providing a more environmentally friendly system.

XRP use cases

XRP can be sent directly without needing a central intermediary, making it a convenient instrument for bridging two different currencies quickly and efficiently. It’s freely exchanged on the open market and used in the real world for enabling cross-border payments and microtransactions.

Financial institutions leverage XRP as a bridge currency to facilitate faster, more affordable cross-border payments around the world. Meanwhile, individual consumers use XRP to move different currencies around the world.

XRP is traded on more than 100 markets and exchanges worldwide. XRP’s low transaction fees, reliability, and high speed enable traders to use the digital asset as high-speed, cost-efficient, and reliable collateral across trading venues. As a result, traders can potentially seize arbitrage opportunities, while also servicing margin calls and managing general trading inventory in real time.

What might the future hold for XRP and XRPL?

Over a decade, XRPL has become a reliable foundation for many businesses. Developers are leveraging XRPL to build a diverse range of applications, from tokenizing assets and powering online games to securing assets and creating NFTs. As a community-driven platform, XRPL is attracting innovators who are solving real-world problems. With low transaction fees and energy consumption, XRPL could continue to grow and achieve widespread adoption.

Trading XRP? What to consider when choosing a platform

If you're considering trading XRP, choosing a reliable platform to buy and trade the cryptocurrency is essential. It might be helpful to consider the following factors when looking for a platform.

Security

• Security is paramount when it comes to dealing with cryptocurrencies. Look for platforms prioritizing robust security measures such as two-factor authentication, encryption, and cold storage of funds. Ensure that the platform has a good reputation for safeguarding user assets.

User-friendly interface

• Opt for platforms that offer an intuitive and user-friendly interface. A platform that's easy to navigate and understand will make your trading journey smoother, especially if you're new to cryptocurrency trading.

Liquidity

• Liquidity is a vital aspect to consider when choosing a platform. It refers to buying or selling assets quickly without causing significant price fluctuations. Platforms with high liquidity ensure you can execute trades efficiently at the desired prices.

Fees

• Different platforms charge varying fees for buying and selling XRP coins. Consider the fee structure of each platform, including deposit fees, withdrawal fees, and trading fees. Look for platforms with competitive fee rates that align with your goals.

The final word

XRP was designed to enable fast and cost-effective cross-border payments securely. The XRP Ledger (XRPL) is powered by a global community of builders, developers, creators, validators, and innovators. As such, the XRPL is constantly evolving with new features that align with the values of decentralization, security, sustainability, and scalability. XRP is the native token on the XRP Ledger, and you can trade it today with OKX.

This content, partially provided by XRP, either in this document or otherwise, is provided for informational purposes only. It is not intended to provide (i) investment advice or an investment recommendation; (ii) an offer or solicitation to buy, sell, or hold digital assets, or (iii) financial, accounting, legal, or tax advice. Digital asset holdings, including stablecoins and NFTs, involve a high degree of risk and can fluctuate greatly. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition. Please consult your legal/tax/investment professional for questions about your specific circumstances. Information (including market data and statistical information, if any) appearing in this post is for general information purposes only. While all reasonable care has been taken in preparing this data and graphs, no responsibility or liability is accepted for any errors of fact or omission expressed herein.

© 2024 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less of this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: “This article is © 2024 OKX and is used with permission.” Permitted excerpts must cite to the name of the article and include attribution, for example “Article Name, [author name if applicable], © 2024 OKX.” No derivative works or other uses of this article are permitted.