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XRP is a cryptocurrency that runs on the Ripple XRP Ledger, a blockchain created in 2012 by Jed McCaleb, Arthur Britto, and David Schwartz. It has lost more than 50% of its value since the beginning of the year.

XRP can be purchased as an investment, as a coin to exchange for other cryptocurrencies such as Bitcoin, or to fund transactions on the Ripple payments system, which Britto and McCaleb developed as an alternative to the leading money-transfer network SWIFT.

The history of XRP?

The people behind XRP are well-known figures in the cryptocurrency world, including Jed McCaleb, the founder of Mt. Gox, Chris Larsen, the founder of eLoans and several fintech businesses, and Arthur Britto, Stefan Thomas, and David Schwartz.

Ripple created the blockchain technology that underpins XRP payments. The XRP Ledger (originally known as the Ripple Open Payments System) was founded in 2012 by crypto enthusiasts and entrepreneurs who envisioned a faster international payment system.

When the ledger was created in 2012, the developers set a cap of 100 billion XRP on the token and gave 80 billion to a company called Ripple.

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The company then put 55 billion XRP in escrow accounts to ensure that the supply of XRP remained stable.

Initially, the ledger used digital assets known as “ripples,” and it used the same currency code as it does today, XRP. The Ripple Consensus Ledger, the Ripple Transaction Protocol, the Ripple Network, and the cryptocurrency used in the ledger, XRP, comprised the network.

Ripple (the payment system) has evolved into RippleNet, a federation of all of its products and services that facilitates global transactions and allegedly lowers payment costs. The network is still powered by the XRP utility token.

What IS XRP?

Ripple is a digital payment platform that uses blockchain technology and a native cryptocurrency to make global transactions faster and cheaper. It is available for purchase on several international cryptocurrency exchanges or as a reward for staking XRP on the blockchain; however, exchanges in the United States do not list Ripple. The Ripple XRP ledger’s native token, XRP, is used to improve currency conversion and international financial transfers.

Ripple’s XRP Ledger platform also functions as a decentralized exchange, allowing XRP to be traded directly with peers.

XRP is intended primarily as a settlement layer—the payment method—for international banking transactions, but it is also regarded as a cryptocurrency by the community. Based on blockchain technology, XRP functions as a sort of informal money transfer network.

The XRP consensus algorithm relies on trusted sub-networks that are part of a larger validator node spread across geographies—to reach an agreement on transactions. Each node in a Ripple network trusts the nodes on its Unique Node List (UNL). The goal of this design is to create a consensus mechanism that a small group of bank-owned servers can use to confirm XRP transactions.

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How to buy XRP

Step 1: Choose an exchange or broker

Both a crypto exchange and a crypto broker can assist you in purchasing XRP, but the two are not the same.

A cryptocurrency exchange is a platform where buyers and sellers can trade cryptocurrencies. A broker acts as an intermediary between you and the exchanges.

If you’re new to investing and need to use a fiat currency (sterling in the UK) to buy crypto, make sure you choose an exchange that accepts it.

If you choose a broker instead, be aware of its rules regarding moving your assets off a brokerage platform, as some brokers do not allow you to do so. If you wanted to keep your XRP in a crypto wallet for added security, you wouldn’t be able to do so.

Step 2: Choose where to buy XRP

Because XRP is traded globally, you have several options for purchasing it. Crypto buyers frequently visit centralized exchanges. They are easier to use than decentralized exchanges, but they are more vulnerable to hacking because they are managed by a central entity. XRP can be purchased on the centralized exchanges listed below:

Decentralized exchanges, such as peer-to-peer transactions, can be less expensive but more difficult for new buyers to navigate because they require more technical experience. They are, however, less likely to be hacked because there is no single entity to attack. Decentralized exchanges such as Uniswap, PancakeSwap, and IDEX can be used to buy or sell XRP.

Step 3: Select a payment method

Typically, you can purchase cryptocurrencies with cash or cryptocurrency.

Cash: Most exchanges accept fiat currencies such as US dollars. Platforms differ in how they operate, including which currencies they support, so it’s important to research the one you choose carefully. Some have a minimum deposit requirement, accept only a limited number of fiat currencies, or charge a conversion fee on cash deposits.

Platforms also differ in terms of how you can deposit money into your account, but some common methods include ACH transactions from banks, wire transfers, and debit cards.

You may notice a credit card purchase option. However, using high-interest debt in this manner can be especially risky. If your crypto investments lose value and you are unable to repay your principal, you may be forced to pay exorbitant interest payments.

Cryptocurrency: If you already own cryptocurrency, you could exchange some of your existing assets for XRP. If you want to own multiple cryptocurrencies without investing more money, this is an option.

However, not all exchanges accept all cryptocurrencies, and some cryptocurrencies cannot be traded with one another, so be aware of those restrictions as you plan to buy. Furthermore, exchanges charge different fees depending on what you’re buying and how you’re buying it.

Step 4: Buy and store XRP

Find the XRP currency on your chosen exchange and enter the amount you want to invest.

Cryptocurrencies like XRP, unlike bank accounts that hold fiat currency, are not covered by the Financial Services Compensation Scheme (FSCS). This means you’d be out of luck if your XRP were stolen, you misplaced your access codes, or the exchange or broker went bankrupt.

While a broker may not allow you to choose where your XRP is stored, an exchange may provide an integrated crypto wallet, but you are free to store it in wallets elsewhere – whether ‘hot’ or ‘cold’.

Hot wallets are stored online, which makes them more convenient but also makes them more vulnerable to hackers.

External storage devices such as hard drives or solid state drives are examples of cold wallets. They are arguably more secure, but if you lose your own access codes, you may never be able to access your assets.

Whatever option you select, you may be charged a fee to export your XRP to an external wallet.

The future of Ripple

Ripple published its quarterly market report in December 2022, discussing the ongoing battle with the SEC as well as recent developments. The outcome of the SEC ruling will determine much of Ripple’s future success, but it is unclear how long the case will last. Ripple describes it as a “…campaign of regulation by enforcement without providing market clarity.”

In the fourth quarter, the company launched On-Demand Liquidity in France, Sweden, and Africa, eliminating the need for pre-paid accounts at payment destinations; Peersyst, a blockchain solutions developer, released its side chain for Ethereum, allowing defi apps to launch on the XRP Ledger.

Through a pandemic and subsequent economic turmoil, Ripple has remained focused on its overarching goal of providing a fast global payment system. However, if the company continues to churn out solutions to problematic systems, it is likely to continue its current course unless the outcome of the SEC ruling is extensive enough to cause the company to collapse.

Alternative ways to invest in XRP

Another way to invest in cryptocurrency is to purchase stock in a company that uses or owns cryptocurrencies and the blockchain that powers them. If the company is under regulatory scrutiny, you may believe this is a safer way to invest.

Nvidia (NVDA), for example, is a maker of graphics processing units used by cryptocurrency miners. Meanwhile, PayPal (PYPL) allows users to buy and sell select cryptocurrencies.

Conclusion

Ripple (XRP) is a blockchain payment solutions company and cryptocurrency that aims to accelerate global payments in an era where clearing payments can take days. Ripple is the company behind the blockchain, network, and ledger, and XRP is the blockchain’s native cryptocurrency.

XRP cannot be mined, but it can be rewarded for participating in the blockchain, purchased, or received as payment. You can keep your XRP and hope for gains, or you can use it to make a purchase or exchange it for another cryptocurrency or fiat currency.

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