Ripple’s XRP: What It Is, What It’s Worth and Should You Be Investing?

ripple coin xrp
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Cryptocurrencies have been in and out of the public eye for years now, mostly because of news around Bitcoin. However, Bitcoin is just one cryptocurrency among many. You can invest in myriad digital currencies designed for just as many different purposes — from supporting your favorite internet creators to paying your cell phone bill.

Ripple’s XRP is one of the more complicated cryptocurrencies to follow. Since the company launched it in 2012, XRP has gone through a few different iterations, which we will explore here.

What Is Ripple?

Ripple is not a cryptocurrency. It’s the company behind the XRP token. Ripple Labs Inc. describes itself as a “payment solutions company.” Today, it is primarily focused on using cryptocurrency to facilitate cross-border payments between countries.

To accomplish this, Ripple relies on its payment network RippleNet. That network consists of a collection of banks and payment providers that have signed on to use Ripple’s blockchain network for international payments.

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Ripple also manages the XRP Ledger, a network that facilitates payments through its XRP digital currency.

What Is XRP?

XRP is a cryptocurrency designed to be used for international payments and currency exchange. When Ripple first launched, XRP powered its cross-border payment network. Ripple has since updated this so that you can use the network with currencies other than XRP.

XRP Transaction Speed

XRP’s main selling point has always been its speed. Unlike Bitcoin, which often requires extended periods of time to complete a transaction, XRP transactions settle in seconds. That’s because XRP does not utilize the “proof of work” algorithm used by other cryptocurrencies like Bitcoin and Ethereum for validating payments.


XRP also works on a centralized infrastructure. Instead of being completely decentralized like many cryptocurrencies, XRP uses a network of validators to confirm transactions.

To be accepted as a validator for XRP payments, you have to be trusted enough to become part of Ripple’s Unique Node List. Currently, there are 36 active XRP validators. Ripple runs six of them.

Building Wealth

This network of independent network operators — or nodes — agrees concerning all outstanding XRP transactions every three to five seconds. It then publishes an updated version of the XRP Ledger. Ripple calls this the Ripple Protocol Consensus Algorithm.

Ripple has marketed XRP’s swift transaction speed since the beginning, centering it as a means to establish a more efficient infrastructure for international payments. Conventional cross-border transactions can sometimes take days and incur steep fines. According to Ripple, XRP takes a fraction of the time, cost and bureaucratic headache.

How Is XRP Used?

Currently, there are two main use cases for XRP.

  • Low commission currency exchange: There are many cases where one currency can’t be directly exchanged for another and must be changed to an intermediary currency first. Usually, that currency is the U.S. dollar. XRP can serve as an intermediary currency in the same way, but for less cost per transaction.
  • International transactions: Ripple has long touted its XRP cryptocurrency’s high transaction speed as an alternative to conventional wire transfers, which can take days and incur high fees.

People can also use Ripple’s payment network, RippleNet, to mint and distribute their own digital currencies that aren’t XRP for fast, inexpensive transactions.

According to the XRP Ledger website, use case proposals are in the works for NFT issuance, smart contract functionality and federated sidechains, which act as their own blockchains on the main network.

XRP vs. RippleNet

XRP’s relationship to RippleNet can be confusing.

RippleNet is Ripple’s cross-border payment network. It does not need XRP to function. RippleNet is a blockchain geared toward banking institutions that can be used to settle transactions like remittance payments, in addition to exchanging currencies.

Ripple claims that big banks like Santander use its service and that over 55 countries have signed on to use it. RippleNet also hosts over 120 currency pairs.

Liquidity Service

The only part of RippleNet that uses the XRP digital currency is its on-demand liquidity service. This service draws from a pool of digital assets to provide liquidity for transactions instead of pre-funding.

Australia, the Euro Zone, the United States, Mexico, the Philippines and Japan can currently use Ripple’s on-demand liquidity service.

How Is XRP Different From Bitcoin?

There are a few major differences between XRP and Bitcoin.

For example, while new Bitcoins are continuously mined, XRP has limited the number of units that will be produced. A batch of 100 billion XRP was generated at the time of its launch, and around 47.95 billion are currently in circulation.

XRP is also a centralized cryptocurrency, while Bitcoin is decentralized. The former’s centralization allows for quicker transaction processing because it doesn’t require proof of work. Rather, it relies on a small network of nodes to validate each transaction. This can entail greater risk, though Ripple says it takes steps to keep its digital currency secure.

Pros and Cons

The Good:

  • Ripple has been in the crypto game long enough to have gained the trust of several prominent financial institutions. That trust makes it a safer investment relative to other cryptocurrencies.
  • All the XRP tokens that ever will exist have already been created, and Ripple distributes them according to a predetermined schedule. That means no inflation.
  • As more financial institutions buy into Ripple and its products, the value of XRP could substantially increase.

The Bad:

  • Ripple’s centralized system does away with permissions and is more open to censorship than other cryptocurrency platforms. Since control rests in the hands of a small number of people, those people could potentially block transactions, similar to a regular bank.
  • Ripple Labs has a monopoly of ownership on the XRP token — it owns about 60% of the available supply.
  • The code is open-source, whereby it’s freely available to the public. That’s good for developers but could pose a risk if anyone were to hack it.

Should You Invest?

There’s no such thing as a completely safe investment. Cryptocurrencies in particular can be highly volatile. Every potential investor should understand that risk going in.

Value and Market Cap

XRP has a current value of $0.7033, with a market cap of $33.72 billion.

Good To Know

XRP has not entered mainstream use quite yet. The financial institutions that use Ripple’s network are still in the testing phase. While XRP has potential in the international payment space, it has yet to be thoroughly tested by large, mainstream banks.


XRP is an interesting cryptocurrency that’s been gaining momentum in the financial sector for its ability to facilitate cross-border payments and currency exchange. It’s faster than Bitcoin — taking a few seconds per transaction as opposed to an hour or more — and has the potential to provide a better method for completing international payments.

Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Feb. 24, 2022, and is subject to change.

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Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

About the Author

John Bogna is a freelance writer and photographer based in Houston, Texas. His background spans topics from tech to culture and includes work for the Seattle Times, the Houston Press, WebMD and Mailchimp. Before moving to the Bayou City, John earned a B.A. in Journalism from CSU Long Beach.

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