What is Ripple (XRP) | Whitepaper Summary

What is RIPPLE (XRP) | Whitepaper Summary


Ripple is a decentralised technology that acts as a crypto and digital payment network for financial transactions. It specifically does not use Blockchain Technology but instead uses a more distributed consensus ledger consisting of validating servers and crypto tokens (called XP).

Ripple is an open-source protocol, specifically designed to enable fast and cheap transactions between two parties, disregarding the involvement/requirement of intermediaries. Ripple was released in 2012, co-founded by David Schwartz, Jed McCaleb, and Arthur Britto.

It is a peer-to-peer platform which allows seamless transfer of fiat money, cryptocurrency, commodities, or other units of value. It is a global payments network and includes major financial institutions and international banks among its customers. The Ripple Network does not run on either the PoW (Proof of Work) or PoS (Proof of Stake) system.

It instead uses a consensus protocol in order to validate the financial transactions and close account balances. The Consensus helps in improving the global system by prevention of Double Spending. The consensus majorly works on an RTGS (Real-Time Gross Settlement) system, currency exchange, and remittance network.

An XRP Ledger Transaction in this system is confirmed within 5-7 seconds, with a minimum transaction fee of 0.00001 XP. There are very minimal chances of Crypto Transactions taking more than the required time, the possible causes for this may include the server being broken or failing, or it is waiting to process the transaction results.

Additional Read: Proof of Stake vs Proof of Work


In early 2011, the developers of Bitcoin observed the waste inherent in its mining. They decided to create a more sustainable and more distributed system to exchange value. Hence, initially, Ripple was labeled as “Bitcoin without Mining”.

In 2012, the developer-trio initiated working on XP Ledger, they were joined by Chris Larsen and the quad-group started the company NewCoin (renamed to OpenCoin and is presently called Ripple). The developers started working on creating a distributed ledger to solve the major fundamental limitations of BitCoin.

The ledger consisted of digital assets that would initially be known as “Ripples” (XRP would be the currency code) following the same naming convention as Bitcoin. At that time, the name Ripple was meant for the open-source project, transaction protocol (Ripple Transaction Protocol/RTXP), the unique consensus ledger (Ripple Consensus Ledger), and the digital asset (known as “ripples).

The community simply called the digital asset by its currency code i.e., XRP. The Ledger was completed by June 2012. Once it went live, approximately 80% of the XRP was gifted to a new company that was meant to build use cases for the digital asset (Newcoin > Opencoin). Today, Ripple has drafted a use case leveraging the XP Ledger and XRP for cross-border liquidity management.


XRP is the native crypto, on the XRP Ledger public blockchain, for the suite of products developed by RippleLabs. XRP is pre-mined, which means that all the 100 billion tokens have been mined already, and no new tokens are being mined now. So, the only source of deflation in XRP is the transaction costs and sending XRP to accounts for which no one has a key.

Unlike Bitcoin, Ethereum, and other prominent blockchains, XRP Ledger does not use PoW or PoS consensus mechanisms. It has its consensus protocol, called the XRP Ledger Consensus Protocol. Like any other consensus protocol, the aim of this Protocol is also to eliminate the problem of double spending i.e. if we have multiple transactions from the same account, our task is to decide the order in which these transactions occur so that the same digital money is not spent twice.

This validation of transactions in the blockchain is done by a set of nodes, also called the Unique Node List, who are expected to act independently and not collude with each other. If a majority of these nodes agree on a certain state, that state is adopted and added to the XRP Ledger History.

Thus, this mechanism brings a certain degree of centralisation to the blockchain. As multiple confirmations are not required by the ledger, it makes XRP faster and more efficient compared to other blockchains like Bitcoin. The XRP Ledger also has a decentralised exchange (which it claims to be one of the oldest), through which users can exchange XRP with other tokens.


XRP offers a viable alternative to existing traditional systems like banks for cross-border payments as transaction costs are extremely low, and transaction speeds are also very high. It can also be used as an effective medium for exchanging fiat currencies, as XRP acts as a bridge between the two. XRP can also be used for investment and a store of value, as it is deflationary.


  1. Incredibly Fast-Due to its unique consensus protocol, it takes very little time to validate transactions and update the ledger. It takes around 3-5 seconds to process a transaction, whereas banks and other cryptos like Bitcoin take hours and minutes to process the transactions.
  2. Low Transaction Fees – The cost to complete transactions on the Ripple network are incredibly low. A “drop” is 1 millionth of an XRP token, and the transaction fees are typically a few drops. This is thousands of times lesser than that of Bitcoin.
  3. Decentralised Exchange – The inbuilt decentralised exchange allows the exchange of different types of tokens, thus giving users the flexibility of buying and selling any type of token on its DEX.
  4. Sustainable – The XRP Ledger is a greener and more environmentally stable alternative to Bitcoin and other Proof-Of-Work blockchains, as the consensus does not require the validators to solve computationally expensive problems.
  5. Distributed – Currently, the XRP network has more than 150 validators across the globe.
  6. Scalable – Due to its low transaction costs and speeds, it is capable of handling large numbers of transactions, currently around 1500 per second.


As already mentioned above, a total of 100 billion tokens of XRP have been mined already. The founders divided the 20 billion tokens among them and gave 80 billion tokens to Ripple. The company behind XRP, Ripple, periodically releases the mined tokens into the network and as of July 2022, 48.34 billion XRP tokens are in circulation.

The XRP tokens enter circulation when the company, Ripple, decides to sell tokens. In 2017, Ripple transferred 55 billion tokens to an escrow account, from which it could sell around 1 billion tokens each month. Thus, the amount of supply in the network is now predictable, and the blockchain is more transparent.

Following the launch of XRP in 2012, its most significant rise came in 2013 when its price became almost 11 times in 15 days. After that, the price remained constant until 2017 (till when Ethereum came into the picture), at around $0.01. It then rallied 500 times to go from under a cent to three-and-a-half dollars.

XRP Price reached its highest price on Jan 4, 2018, when it traded at $3.92. Due to the current lawsuit against Ripple by SEC, the token has seen almost no growth since 2018, currently at $0.36. However, the coin is still among the top 10 in terms of market cap($17.24 billion as of July 2022).

Additional Read: Ripple Price Prediction


XRP/USDT | Source: Tradingview


Ripple stands out from other companies because of its distributed ledger. Ripple’s ledger technology allows banks to exceed the pre-defined expectations and compete with payment providers that are starting to take business from them. More competition is great, especially for end users. Ripple’s algorithm seeks the best possible path for currency exchange (to minimize the exchange rates). We shall now look for competitors, which specifically work in these regards.

    Stellar was once a part of Ripple (not anymore). It is the direct competitor of Ripple in a very true sense. The reason for this is exactly because Stellar does the same pathfinding of best cross-asset combinations. The major difference lies in their root algorithms.
    A Seoul-based Blockchain Technology specifically used as a payment infrastructure provider. It has been identified as the “value-transfer pathfinder” cross-border of the Internet of Money. It has segregated financial levels, streamlining the internet of money.
    It is identified as a new system that has come to help the lives of many people with its comprehensive and high security networking, helping in management with its high performance. It has been majorly used in Financial Services, but recently its services are being extended to other industries as well. They have been working on decentralising the Ledger creation.
    It identifies as a global payment network provider, currently building a consortium of banks providing minimal exchange rates. It has built a Federated Ledger (a hybrid of Centralised and Decentralised Ledgers), to expand its payments settlement solution to the blockchain.


Since its listing, Ripple has worked in a progressive direction, to improve the reliability, scalability, and security of distributed XRP Ledger. There have been some amendments along the way which are listed as DepositAuth Amendment – it lets an account reject any money inflow due to transactions by other accounts.

Checks Amendment – allows users to create deferred payments, which can be canceled by the recipients. In December 2018, Ripple fixed an issue that could prevent peers from successfully bypassing the specified connection limits. It also improved the logic which was previously used to determine the preferred ledger in sub-optimal network conditions. In 2019, it improved the robustness of a configured validator list retrieval by imposing a 20-sec timeout.

They have also worked in continuous integration, testing, and building pipelines for financial transactions. To increase global access and equity, Ripple is working towards building an inclusive, streamlined, sustainable financial system. It works with existing independent financial institutions, governments, and central banks to ensure optimised solutions which are secure and compliant.

These businesses are helping expand into hard-to-reach markets, access alternative liquidity solutions, and generate new revenue models which are solely crypto based. Ripple is committed to a low-carbon future for the crypto industry. Hence, The XRP Ledger is the first global carbon neutral blockchain, enabling more efficient and sustainable markets. Together, working with these partners, Ripple is working to transform a global financial system to meet the everyday needs of everyone, everywhere.

Additional Read: Crypto Investing Strategy


Although the XRP token has had a hit in value, the problem Ripple sets out to solve is of good use in the long term. Currently, cross-border transactions between countries through SWIFT(Society For Worldwide Interbank For Financial Telecommunication) require high transaction costs and take days to process, and even then due to legal troubles there is a risk of transactions failing midway.

With Ripple, we get faster, safer, cheaper cross-border transactions not just for people but for banks as well who want to exchange money in their respective currencies. Its one-of-a-kind consensus protocol, although compromising a bit on decentralisation, offers better performance than Ethereum, and Bitcoin on this particular problem.

Ties with large institutions like American Express have given Ripple large reserves, and thus it overcomes a lot of obstacles small projects could not. Over time, with Ripple onboarding bigger clients, the validator set would also increase, thus increasing its decentralisation.


Use this three-step process to buy your first XRP token using the CoinDCX, crypto investment app.

  • Sign Up for the CoinDCX account: Enter a valid email address and a user name on the sign-up page. Once the Email Id has been verified, set a strong password to secure your account.
  • Verify the account: You need to complete your KYC, to buy XRP token on the CoinDCX platform. All you need to do is upload the documents and your account will be set up in 15 minutes.
  •  Buy XRP: After the account has been verified, you can deposit any amount of fiat currency you are comfortable with and start your crypto journey!

Additional Read:

USDC Whitepaper Summary

USDT Whitepaper Summary

Disclaimer: User Generated Content – Original Content created by a member of BITS Pilani, under the consultation of Dr. Amit Dua, Assistant Professor, Computer Science Department, BITS Pilani, Pilani Campus in association with CoinDCX. The views and opinions expressed within this post belong solely to the author.
Author: Aarya Attrey, Dewang Sharma


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