Digital assets have been in the spotlight for many years, primarily because of the Bitcoin (BTC) news. However, BTC is just one crypto among many others.
XRP is one of the most famous and, at the same time, complex digital assets. Since the company launched in 2012, XRP has undergone several iterations.
In this article, we will discuss the well-known asset, define its ways of usage, and make a brief comparison with BTC. Let’s dive into it!
What is Ripple
Ripple is the organization behind the XRP token. Nowadays, the business mainly focuses on facilitating cross-border crypto payments and crypto liquidity and introducing central bank digital assets that meet its security standards.
The Ripple platform was developed in 2012 by Chris Larsen and Jed McCaleb. They created it with a plan to revolutionize the global infrastructure used for digital transactions, settlements, and exchanges of financial assets.
Traditional financial institutions supported the project. Few institutions, such as Standard Chartered Bank and American Express, use the company’s products.
What is XRP
XRP is a digital asset primarily built for international transactions and currency exchange. When Ripple just launched, XRP powered its cross-border payment network. Since then, Ripple has updated this to allow clients to use the network with currencies other than XRP.
How is XRP used
Commonly, there are two methods of its use: as an intermediary currency and for international transactions. Let’s discuss both of them!
As an intermediary currency
There are many cases where you can’t exchange one currency directly for another. Thus, first, it must be exchanged for an intermediate currency. Typically, it happens with USD. Imagine you need to convert dollars to euros. You can first exchange money for XRP and then use it to buy euros instead of exchanging at a bank. This option will be much faster and cheaper.
For international transactions
Ripple has long touted the high transaction speeds of its XRP cryptocurrency as an alternative to regular bank transfers, which can take days and carry high fees.
How is XRP different from BTC
There are several significant distinctions. Let’s discuss all of them one by one.
First, XRP is a centralized currency, while BTC is not. The centralization allows faster processing of transactions since it does not require confirmation of work. Instead, it relies on a small network of nodes to validate every transaction. It may involve more risk, although Ripple says it is taking steps to ensure the security of its crypto coin.
Moreover, unlike BTC and many other cryptos, XRP does not use decentralized consensus mechanisms such as Proof-of-Work or Proof-of-Stake. Instead, XRP relies on a network of validator nodes that verify and approve all transactions.
Besides, new BTCs are continuously mined. But the maximum coins’ number is limited to just 21 000 000. In turn, XRP has a maximum coin supply of 100 billion coins. 50% of them are in circulation.
Even though the entire batch of XRP was generated at the time of its launch and will not be generated again, the much more limited supply of BTCs makes this coin more valuable. That’s why in September 2022, Ripple price is about $0,4–0,5 while BTC costs $18 000–20 000.
Is XRP investment a good idea
A safe investment is a myth. Cryptocurrencies, in particular XRP, are highly fluctuated. Every potential investor must understand what is at risk. Thus, before making any decision, you must study all the available information, including Ripple news and XRP predictions.
XRP is an interesting upcoming cryptocurrency gaining momentum in the financial sector due to its ability to contribute to cross-border payments and currency exchange. It’s faster than BTC and could potentially offer a better method for making international payments.
