At crypto.news, we handle all things crypto-related, from prices and project updates to regulations and relationships with traditional finance. Interestingly, one project straddles the line between cryptocurrency and traditional banking – Ripple. Follow us to get the latest on Ripple news and XRP price.
Ripple is both an open-source cryptocurrency and a digital payment network for the quick settlement of transactions. The blockchain underlying the network is known as the XRP Ledger. It uses the native token, XRP, as an intermediate for the exchange of different currencies. This allows for the speedy processing of transactions.
Ripple allows banks, exchanges, individuals and companies to send money globally using the Ripple blockchain. It reduces the time and cost it takes to transfer money between institutions. XRP is used for the quick conversion of currencies. Users can transfer fiat and cryptocurrencies seamlessly with near-instant settlement.
If a Ripple user wants to transfer their dollars to someone and have them receive it in euros, XRP acts as a bridge currency allowing instant settlement. The Ripple network will send the receiver the money straight away using the liquidity of the Ripple network. Liquidity is provided by market makers who allow for the exchange of different currencies.
Settlement using Ripple takes about 5 seconds and the network can process 1500 transactions per second. This makes it an attractive alternative to using banks where transfers and conversion can take days and incur high fees. Transactions incur a nominal fee in XRP tokens.
Transactions are verified using an independent network of validators that must reach a supermajority agreement on transactions. This distributed consensus mechanism allows for fast settlement of transactions. Ripple maintains a list of nodes with a history of honest behavior.
Ripple was founded by Chris Larsen and Jed McCaleb in 2012 under the name OpenCoin. In 2013 they rebranded as Ripple Labs and finally settled on Ripple in 2015. In 2013 co-founder Jed McCaleb left the company due to disputes over the roadmap of the company. He would go on to found Stellar, a payment network that uses the Stellar Lumens XLM cryptocurrency.
All 100 billion XRP tokens were issued at the launch, with 80 billion going to the Ripple company and 20 billion to the co-founders Chris Larsen and Jed McCaleb. The 80 billion tokens are being sold on a schedule to raise funds for the for-profit Ripple company.
Ripple has focused on attracting traditional financial institutions since its launch. However, entering the global payments market has attracted legal scrutiny. Ripple was fined in 2015 by FinCEN for violating bank secrecy. As part of their settlement, Ripple agreed to improve their anti-money laundering framework and increase the requirements for joining the network.
In 2016, Ripple obtained a BitLicense from the State of New York as part of its goal of attracting traditional financial institutions. A BitLicense is a business license for cryptocurrency companies in New York. It is a strict financial regulation that governs how a cryptocurrency can operate.
In 2020 the SEC filed a lawsuit accusing Ripple of raising $1.3 billion in unregistered securities by the sale of XRP tokens. The SEC claims that XRP tokens are a security rather than a currency. Ripple has denied this and the lawsuit is ongoing. The lawsuit is part of a wider movement by governments to regulate cryptocurrencies.