Crypto Currencies

Ripple Explained - Chapter 1: What is Ripple (XRP)? The new star among the crypto currencies?

22/07/2019 | 4 min read

Vontobel now offers investors access to the crypto currency «Ripple». But what is Ripple (XRP)? In six chapters, we want to give you high-quality knowledge about the exciting topic of «Ripple».

Everybody's talking about crypto currencies. Bitcoin, Ethereum and Ripple are the best known. But what exactly is Ripple? Ripple is often referred to as a «Bitcoin competitor» or «bank coin». But why? What is its success story? Can it keep up with the other crypto currencies? We explain what is hidden behind the crypto currency Ripple.

Ripple (XRP) is third largest crypto currency 

According to CoinMarketCap, Ripple (XRP) is the third largest crypto currency in the world in terms of market capitalization. With a market capitalization of over USD 14 billion*, it is behind Bitcoin (USD 187 billion*) and Ether (USD 24 billion*). The price of XRP is currently USD 0.32* according to Kraken, which is SEK 3.00*. XRP has not experienced the extreme performance of Bitcoin, but has seen a price rally in recent years and especially in 2018. The rise in its value can be explained on the one hand by the general crypto-currency boom and on the other hand by the cooperation with many well-known financial institutions.

Ripple's vision: Payment transactions to become faster and cheaper

The Ripple Network (RippleNet) is a digital payment network for banks with the aim of making international payment transactions between banks more efficient and cost-effective. It is a system dedicated to payment traffic between different currency areas and tries to make inefficient payment corridors efficient, according to the online portal Cryptolist. It is designed to connect the world's financial systems and enable a secure transfer of assets such as fiat money, funds, etc. in real time. The aim of the Ripple founders is simple: to radically reduce transaction costs in the global transfer of funds and securities. They have developed the RippleNet network to make transactions possible in a matter of seconds and with almost no fees.

There are two separate units in the Ripple universe: 1. the payment network «RippleNet» and 2. the actual currency in the payment network «XRP».

Ripple collaborates with banks

Money should be transferred safely from A to B. The Ripple system is mainly used by and between banks. Together with these banks, Ripple is constantly improving the system. The system is open and was initially designed to fit the infrastructure of the banks. Payment processes should thus be able to be standardized in the future. Ripple published in its whitepaper: «By joining Ripple’s growing, global network, financial institutions can process their customers’ payments anywhere in the world instantly, reliably and cost-effectively. Banks and payment providers can use the digital asset XRP to further reduce their costs and access new markets.» With offices in San Francisco, Rio De Janeiro, New York, London, Sydney, Zurich and Luxembourg, Ripple has more than 200 customers in 40 countries.

Santander, UBS and the Swedish SEB Bank are already clients. American Express also wants to use the system for international payments. Ripple will thus become the flagship that the crypto industry needs in order to be perceived by the public not as «gambling» but as a practical technology.

Ripple is not another Bitcoin   

Ripple's developers take a different approach than competitors such as Bitcoin or Ethereum. While they want to create a completely new monetary system free of state control to allow transfers without the influence of banks, Ripple wants exactly the opposite: The Ripple founders work together with banks to use Ripple as a payment network. It wants to become the "Bitcoin for banks". While Bitcoin is used by the end customers themselves to transfer payments, Ripple is a technology that runs in the background: Users do not necessarily notice that they are using Ripple indirectly. Instead, the project is aimed at large institutions such as payment service providers, financial institutions and banks, according to BTC-Echo. Ripple is therefore not a crypto currency, but the company behind XRP.

Bitcoin wants to change WHAT we pay with. Ripple wants to change HOW we pay.

At the beginning «Ripple» Labs created 100 billion coins

In 2012, the founders created a maximum number of 100 billion XRP, of which 43 billion are in circulation. «Ripple Labs» (the company behind Ripple) retains the rest for self-financing, over which it has sole control. In the long run, more coins are distributed to the users. However, Ripple has not yet announced the exact number. Ripple Labs wants to keep a small amount of coins for itself in order to earn money by increasing the value of the currency. Ripple Labs has a strong interest in value appreciation as this is an important source of revenue for the company. Its primary business objective is therefore a widespread distribution of XRP. In contrast to other crypto currencies (e.g. Bitcoin, which is mined decentrally by its users in complex computing processes), one cannot «mine» new currency units, i.e. create them. Because all XRP tokens are already created and the protocol rules dictates this.

What will Ripple's future look like?

Ripple's increase in value and important collaborations with companies such as American Express suggest a positive future for Ripple. Not only more and more users, but also important, internationally operating companies are gaining more and more confidence in the crypto currency. The medium-term prospects of success are assessed positively by crypto experts, especially since Ripple cooperates with banks and could therefore be used a lot in the foreseeable future. Ripple therefore has the potential to become the new star among the crypto currencies.

*As of 22.07.2019


This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the securities, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the sole binding sales documents for the securities. It is recommended that potential investors read these documents before making any investment decision in order to fully understand the potential risks and rewards of deciding to invest in the securities. The documents and the key information document are published on the website of the issuer on and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information contains an indication of past performance. Past performance is not a reliable indicator of future results.

This document and the information contained in it may only be distributed or published in countries where such distribution or publication is permitted by applicable law. As stated in the relevant base prospectus, the distribution of the securities mentioned in this information is subject to restrictions in certain jurisdictions. This advertisement may not be reproduced or redistributed without Vontobel’s permission.


Stay updated

Subscribe to receive information about structured products

Your personal data will be processed to provide information as per Vontobel Privacy Policy.

newletter overlay image

Stay updated

Subscribe to receive information about structured products

Your personal data will be processed to provide information as per Vontobel Privacy Policy.

Vontobel Markets – Bank Vontobel Europe AG and/or affiliates. All rights reserved.

Please read this information before continuing, as products and services contained on this website are not accessible to certain persons. Of importance are the respective prospectuses which are attainable from the issuer: Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, DE-60323 Frankfurt am Main, Germany, as well as from this website.