What is Ripple and XRP ? Simple explanation

Written by Sushanth Kumar Reddy Kura | Published 2 years ago | 9 min read


With our current banking system in order to transfer money across the borders it is a very slow and time taking process. Swift, western union etc are some of the systems that are very slow and expensive used by financial systems around the world. Also different banks are connected to different type of networks. Due to this a single transactions has to go through many banks before it reaches the destination.

Common Cross Border Transaction.

Suppose if Bank A wants to send the money to Bank B that it doesn’t have any direct relationship with, the money has to go through several intermediary banks searching for common network connection. 

Each bank along the way charges fee for the transfer. This process is very slow and also expensive.In some cases bank transfers may also involve currency conversions. For example if you want to transfer the money from UK to India the intermediary banks only deal with US dollars.Due to this reason first the Euro has to be converted to the dollar and dollar has to be converted to INR again.This makes the money transfer process hard and expensive.

Ripple wants to change this by allowing people to transfer money through a one common network across the world.

What is Ripple and RippleNet?

Ripple wants to make the payments easier by allowing users to transfer the money across the borders with minimal fees.

Just like internet has a protocol HTTP to transfer information , Ripple’s Ripplenet has its own protocol called RTXP for moving value or money across the world. Ripplenet works based on the set of protocols called Ripple transaction protocol or RTXP. The network consists of set of computer or nodes called as Validators. 

Ripple Transaction Validators

These Validators are spread in different parts of the world and each validator consists information on who owns what. Validators make sure that every transactions is being made in the Ripplenet follows the RTXP rules. Like any one can run a Bitcoin node in the same way anyone can run a Validator in the ripple to help maintain the network.

Ripple’s Distributed Protocol

In order to transfer the funds between two parties, Ripple’s protocol will automatically connect the two parties to a third party agent or chain agents that trust both of them in order to complete the transactions.

So, this eliminates the need of trust between the two parties to make a transaction.

What is XRP?

Often people confuse between XRP and Ripple. 

Basically, Ripple is a fintech company that was involved in development of XRP Ledger and XRP is a digital asset built for making payments that run on XRP Ledger.

So, if a bank wants to transfer the money across the borders it can simply convert it into XRP and transfer it to the destination bank eliminating lot of messy conversions in between them.

Payments moving across the ledger in XRP settle in about 4 seconds compared to Bitcoin which takes 60 mins and Ethereum takes around 2 mins.

Transactions speeds of Ripple, Ethereum and Bitcoin.

Also XRP can handle 1500 transactions per second, 24X7, and also claims to handle the same throughput as Visa. Currently the network transaction fee of XRP is around $0.0000024. XRP can be divided into 6 decimal points and the smallest unit is called Drop.

0.000001XRP = Drop 

XRP wallets require a minimum balance of 20 XRP deposit. This is done in order to prevent ]the spamming of the Ripple network by opening large no. of accounts.

Can XRP be mined ?

No, XRP can’t be mined. People often hear about bitcoin mining and assume that every cryptocurrency is mineable.

Basically, it is not true. Mining in Bitcoin is done in order to confirm the transactions on the Blockchain. In case of XRP the transaction verification follows a completely different process. When a XRP transaction is broadcasted to the network the Validators who maintain the network decide whether the transaction is valid or not through voting.

If a transaction is approved by more than 80 percent of the Validators present in the entire network then the transaction is said to be valid and updated in Ripple Ledger.

There is no compensation offered to Validators unlike bitcoin miners who receive bitcoin for verifying transactions. When Ripple labs started they pre-mined a total of 100 Billion XRP. According to Ripple’s protocols these will be the no. of tokens that will ever be created.

Xrp price is said to slowly increase over the time due to the decrease in supply. This is done by destroying or burning the transaction fees attached to each transaction.

XRP Token Distribution:

  • 7 Billion XRP are held by Ripple Labs.
  • 40 Billion XRP have been sold to companies and individuals. Out of which 20 Billion XRP were given to the founders.
  • Remaining supply of 53 is kept in a smart contract that releases about 1Billion XRP per month to the Ripple Labs until all of the supply will be reached.


  • Ripple was founded by Chris Larsen, Jed McCaleb. 
  • Bradley Garlinghouse is the current CEO of the Ripple.
  • It is one of the most popular cryptocurrency and has a very strong community backing it. 
  • Ripple currently stands at 4th position in the cryptocurrency market coming after Bitcoin, Ethereum and USDT with a market cap close to 9$ billion. 

Quick summary:

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