XRP and Ripple: Transforming Cross-Border Payments and the Future of Digital Finance

Many confuse the difference between XRP and Ripple and use the two names interchangeably when referring to the cryptocurrency. This is incorrect. Ripple was the name of the original open-source project which included XRP, the Ripple Consensus Ledger, the Ripple Transaction Protocol, and the Ripple Network. The founders Jed McCaleb, David Swartz, and Arthur Britto released the XRP and the XRP Ledger in 2012 and was later joined by Chris Larsen. Together they created the Opencoin company. The Opencoin company was later rebranded as Ripple Labs, which continues to support the open-source project. To summarize, Ripple refers to the company that developed the technology behind the XRP Ledger and broader network. XRP is a cryptocurrency that is native to the XRP Ledger. The XRP Ledger is an open-source blockchain designed to support the transfer of value, including XRP and other cryptocurrencies. 

Unlike many other blockchain networks, the XRP Ledger uses a consensus algorithm rather than mining, such as Proof of Work and Proof of Stake which are used by other major blockchains. Instead of miners competing to validate transactions, validators reach consensus through a voting process to agree on the order of transactions and confirm the integrity of the ledger. XRP on the other hand is the native cryptocurrency to the XRP Ledger and its primary use is to serve as a bridge currency for cross-border transactions. It is used to facilitate international transfers between different fiat currencies. When a bank wants to send funds across borders, they can use XRP as an intermediary to convert between currencies without needing of pre-funded accounts. XRP transactions typically have extremely low fees, often less than a penny, making it ideal for both large and small payments, especially considering microtransactions. Transactions using XRP are also very quick, settling in about 3-5 seconds compared to Bitcoin transactions which take up to 10 minutes.  

XRP and Bitcoin are similar in many ways but there are also significant differences. As mentioned earlier, the XRP Ledger does not use a Proof-of-Work which requires significant computational power to secure the network through mining, but instead uses a consensus algorithm which is both more energy-efficient and faster. Both Bitcoin and XRP have a fixed supply as there will never be more than 21 million bitcoin and 100 billion XRP. However, the way they are distributed is a bit different. XRP was pre-mined, meaning all 100 billion coins were created when the network launched in 2012. Ripple Labs retained a significant portion of the total supply, and locked some in escrow accounts to ensure a stable release of new tokens into the market. Bitcoin on the other hand is created through a process called mining where participants solve complex puzzles to validate transactions and in return are rewarded with newly created bitcoins. The issuance is also decreasing over time in a process called halving, where the amount of new bitcoin issued is cut in half approximately every 4 years to keep the supply scarce. 

Ripple’s progress with XRP highlights the potential for bold ideas to reshape long-standing financial systems. With the signing of the GENIUS Act by U.S. President Donald Trump earlier this year, the regulatory landscape for cryptocurrency has shifted, opening the door for greater adoption and clarity. As with any bold move in history, its success will depend on timing, execution, and global acceptance. The question remains: Will XRP seize this moment and become the bridge connecting traditional finance to the digital future?