Ripple (XRP): What is it, how does it work and what are its advantages


Ripple, Bitcoin, and cryptocurrencies are the focus of many investors and entities, in the same way as blockchain, since they can bring advantages in banking operations and develop innovations. Therefore, it is necessary to have knowledge and training about these systems and digital assets, to avoid scams and losses.

The Money Investors team is made up of financial experts dedicated to the world of investments and training, both for beginners, interested in obtaining quality information to know how to defend themselves in the world of finance, as well as advanced training for those who want to master the subject to a greater extent.

In this post, we are going to tell you about Ripple. What it is, how it works, what benefits it has for the user, what is crypto or cryptocurrency used in the structure and which company is responsible for its production and maintenance.

Ripple (XRP)

Ripple (Ripple Transaction Protocol) is a system designed to be used by banks to carry out currency exchanges, remittances and gross settlement. This system is managed by Ripple Labs, founded in 2012, and is the technology company in charge of developing the protocol.

Gross settlement systems are electronic transfer systems, in which the transaction is carried out between banks in real time and on a gross basis.

The idea of ​​the Ripple system is to replace old systems such as SWIFT, developed in 1972 and which has been used by the vast majority of banks until today. The Ripple protocol offers advantages, such as for example, a clear increase in the speed of transfers and improved tracking.

The Ripple system uses accounting technology similar to Bitcoin. If we compare with Bitcoin, Ripple’s technology is much faster and cheaper. However, this system is not decentralized like Bitcoin. Ripple’s network is closed and does not allow any user to join, which means that it is highly centralized.

Ripple XRP

XRP is a cryptocurrency that is used by the Ripple network, and it is commonly confused with its protocol. The XRP token can be sent with very low fees and with great speed. Still, this cryptocurrency is not necessary for the network to function, nor for banks to use it if they want to implement Ripple technology. In fact, between banks, XRP is not used for xCurrent communication.

Differences between Ripple and XRP

One of the factors that confuse Internet users is that they share the same name. When you look at Ripple making a profit, it is actually XRP, the cryptocurrency that RIpple issues. When we talk about the transaction protocol that is used between banks and companies, we refer to the Ripple transaction protocol.

Ripple Protocol

Let’s start with the RIpple transaction protocol. The Ripple protocol is based on a technology similar to that of Blockchain, but they have their differences. Ripple does not require mining and is based on a consensus network rather than being consumer-focused, unlike Bitcoin, which is focused on the common user.

Ripple is only used by banks and other large institutions. The general idea is to allow banks to transfer any asset, be it euros, dollars or any other asset. The protocol allows the transfer of assets almost instantaneously, which causes it to compete with systems such as the one currently used, Swift. If you have ever obtained Bitcoin by bank transfer, you will know how slow it is. First, you must notify the bank, and it will carry out the transaction to an account with a bank code, which may take between 2 and 3 days. In addition, this procedure involves various fees for the sender and the recipient.

Ripple seeks to revolutionize this procedure by providing almost instantaneous transactions, approximately in less than a second for institutions such as banks. In fact, it has already been adopted by large banking entities.

XRP – Ripple network cryptocurrency

When we talk about Ripple XRP, we mean the cryptocurrency that allows trading on the network and cannot be mined. This cryptocurrency is issued by Ripple Labs.

XRP has no assets or value of its own. That is, it is not linked to gold, for example, or to any currency. This cryptocurrency can be used as a virtual currency to mediate operations between institutions.

The main advantage is that it has very low transaction costs compared to Bitcoin.

xCurrent does not use XRP

xCurrent is a technology developed by Ripple Labs, whose operation is to allow the instantaneous transfer of values ​​between banks. This technology does not use the virtual currency XRP, but consists of an accounting ledger to record asset transfers using the currency chosen by the bank.

Is Ripple XRP centralized?

Earlier, we said that the Ripple system is not an open system. So is XRP centralized? XRP transactions can be confirmed quickly. This is because it is made up of very few validation nodes on the network. The XRP network is not open consensus, so it only needs a small number of validations before a transaction is verified or confirmed.

Some followers of XRP praise it for its low confirmation times, which do not reach a second, while detractors allude to the lack of resistance to censorship due to having a centralized architecture. XRP transactions can be reversed and accounts can be frozen, similar to traditional bank accounts.

Problems with Ripple

Currently, only less than 400% of XRP cryptocurrency is issued. The remaining amount is distributed among the creators of Ripple. Ripple Labs is the one who owns this percentage to be able to distribute it, when and how they wish. This can be interesting in contrast to decentralized modes. Ripple Labs has an important role in the distribution of XRP, as they are a company and this makes it different from Bitcoin since the leading cryptocurrency is fully decentralized and there is no central authority that controls it. Ripple Labs is registered in many countries and could be sued or kept in custody.


In this post, we have discovered the differences between Ripple and XRP, since they are usually a source of confusion among Internet users. When we talk about Ripple, we are referring to a transaction protocol, while when we speak of XRP, we are referring to the cryptocurrency used by the Ripple network.

Ripple, unlike other virtual currencies or cryptocurrencies, is centralized and managed by the company Ripple Labs, which allows it to be controlled by owning a real entity.

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