What Is XRP & Should I Own XRP?
XRP is a digital currency launched in 2012 with the aim of allowing large money transactions to be processed quickly and securely.
The company behind the currency is Ripple, who provide the infrastructure on which XRP runs.
Money can be transferred between individuals or financial institutions over the Ripple network. There is a maximum supply of 100 billion coins, with one billion thought to be released every month.
Ripple owns approximately 60% of the coins, which they can release as and when to control the currency’s supply and demand.
How Does XRP Ripple Work?
One of the main differences between XRP and other cryptocurrencies is that XRP does not use blockchain to validate transactions but a blockchain-like network.
How XRP works is more centralised, employing a network of validating servers in offices around the world overseen by Ripple.
Whereas Blockchain technology requires a network of individual computers acting as ‘miners’ to validate transactions and introduce new coins, XRP uses Ripple’s own XRP Ledger Consensus protocol.
The centralisation of the validation process using company owned servers is how XRP transactions can be faster than other digital currencies. According to Ripple, financial payments can be made in under 4 seconds, a distinct attraction for those looking for faster, less costly ways to transfer money.
The potential of XRP has been recognised by a number of the world’s top banks and financial institutions such as American Express, Barclays and MoneyGram who use its network. In 2016 alone XRP signed a partner contract with 20 banks.
XRP is viewed primarily as a payment processor and currency exchange. The way it deals with currency is one of the elements which distinguishes XRP from other digital currencies. One of its stated aims is to make currency transactions easier and cheaper. This is why its partnership with banks is key.
XRP supports every fiat currency as well as other cryptocurrencies. This works well with traditional currency exchanges such as dollars to euros, but can also be applied to more complex transactions.
Even in a globalised world some currencies need to be converted to dollars before they can be transferred in to a further currency. This can prove costly due to commission charges on each conversion, but by using XRP as an interim neutral asset the costs of such currency transactions could be significantly reduced.
What Are the Use Cases for XRP?
The payment processing industry and bridging fiat currencies for institutions are two of the primary use cases for XRP. Ripple will aim to extend its use beyond the world of digital currencies, helping businesses like banks, payment providers and insurers attract more clients through a reliable, quicker and cheaper transaction processing network.
Unlike other digital currencies XRP was not originally designed for individuals to use as a way to pay for goods and services.
It was designed for financial institutions to transfer money from country to country. However, there are now debit cards issued by Visa or MasterCard which allow you to use XRP to pay for items in-store or online.