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Created in 2014, XRP is the native asset of the XRP ledger, developed by Ripple Labs, which uses blockchain technology to improve cross-border payments.
XRP is used on xRapid to provide liquidity in cross-border payments involving illiquid trading pairs. 100 billion tokens were created at the launch of the project in 2012. 80 billion were held by Ripple Labs to help with operations and liquidity, and the rest was awarded to the founders.
Ripple periodically puts more XRPs into circulation. In 2017, the company transferred the remaining 55 billion tokens into an escrow account, from where it could sell up to one billion tokens per month to investors. At the end of each sale period, unsold tokens are returned under warranty and redistributed for a subsequent sale period.
Between 2016 and 2018, the company sold around 300 million per month. In the fourth quarter of 2020, XRP’s sales declined further after Ripple stopped selling tokens on exchanges. The escrow account contained approximately 48.9 billion tokens in early 2020.
Ripple developed the XRP ledger to facilitate cross-border payments between banks around the world. The ledger is a decentralized network of peer-to-peer servers that powers relevant operations. XRP is the native token and is intended to act as a “bridge” between different fiat currencies.
The XRP ledger uses Ripple’s consensus algorithm, which differs from proof-of-work and proof-of-work mechanisms in that network participants are known and trusted by other participants. Unlike miners, they are not rewarded for network protection. Once the validators agree, a new block, a “register version”, is created and validated. The content of the block cannot be changed. This allows servers on the network to store a complete history of the ledger status.
To access the XRP ledger, connected applications must run a JavaScript application programming interface (API). This ledger is open source.
According to Ripple’s XRP documentation, the ledger settles payments in less than 5 seconds and can handle over 1,500 transactions per second. A small amount of XRP – about 10 drops (0.00001 XRP) – is destroyed to cover the transaction fees. The cost of the transaction is designed to increase, along with the network load, to discourage users from the network during peak periods.
