What Is Ripple (XRP)?

Introduction to Ripple

Ripple is a technology company that specializes in developing payment solutions powered by the XRP Ledger (XRPL). XRPL is an open-source, decentralized blockchain network, with XRP as its native token, enabling fast and low-cost cross-border transactions.

Ripple’s products allow banks, fintech firms, and digital organizations to achieve instant payment, settlement, and receipt of funds using XRP, as well as to issue and manage digital assets. Ripple’s solutions encompass cross-border payment infrastructure, stablecoin frameworks, and enterprise-grade custody services.

XRP is publicly traded, and its use cases extend beyond Ripple’s own products. Ripple is one of many contributors to XRPL and holds a portion of escrowed XRP assets to ensure transparent and orderly distribution of tokens.

Development Timeline

Ryan Fugger first proposed Ripple’s concept in 2004, creating the initial prototype, RipplePay, as a decentralized digital currency system. The system officially launched in 2005 to provide secure global payment solutions.

In 2012, Fugger handed the project to Jed McCaleb and Chris Larsen, who together founded the U.S. technology firm OpenCoin. From then on, Ripple evolved as a protocol focused on providing payment solutions for banks and financial institutions. In 2013, OpenCoin was renamed Ripple Labs, and in 2015, it became Ripple.

How Ripple Works

XRP Ledger (XRPL)

Ripple’s products run on XRPL, a public, open-source blockchain designed for fast, efficient transactions. Unlike Bitcoin and Ethereum, XRPL does not rely on mining or staking. Instead, it uses a unique consensus method called the Ripple Protocol Consensus Algorithm (RPCA).

Transactions are validated by a network of independent nodes. When 80% of trusted validators reach consensus, transactions are typically confirmed within 3–5 seconds, with very low fees. While anyone can operate a validator node, Ripple maintains a specific list of trusted validators (UNL) for institutional use.

Ripple Payment Products

Ripple offers two primary cross-border payment solutions: RippleNet and On-Demand Liquidity (ODL). These products are designed to enhance traditional payment systems by delivering faster settlement, lower costs, and greater transparency.

RippleNet

RippleNet is Ripple’s global payment network, providing a modern replacement for the traditional nostro/vostro account model. It enables financial institutions to track and settle international payments in real time.

RippleNet connects partners via a streamlined API and operates in the cloud, greatly reducing technical complexity. Ripple manages system maintenance, upgrades, and security, making it easier for financial institutions to onboard and operate.

On-Demand Liquidity (ODL)

ODL is Ripple’s liquidity solution that leverages XRP to eliminate the need for pre-funded accounts. Financial institutions no longer need to hold foreign currency in target countries; they can utilize XRP on demand to settle payments.

For instance, a transfer from Japan to India could work as follows: Japanese yen is exchanged for XRP, sent over XRPL, and then converted to Indian rupees upon receipt. The process typically takes just seconds, and neither the sender nor the recipient needs to hold XRP directly. This reduces capital costs, boosts efficiency, and enables 24/7 payments.

XRP Token

XRP is the native asset of the XRP Ledger and serves multiple roles within Ripple’s infrastructure and the broader XRPL ecosystem.

Bridge Currency: XRP can act as a bridge between various fiat currencies, enabling fast and low-cost cross-border transactions without pre-funded accounts.

Transaction Fees: Each transaction requires a small amount of XRP, which deters spam and helps maintain network performance.

Liquidity Provision: XRP is used in the built-in decentralized exchange (DEX), automated market makers (AMMs), and cross-chain swap systems across XRPL.

Escrow and Delegation: XRPL’s native escrow function allows issuers to secure assets and create time- or condition-based transfers for on-chain financial use cases.

Issuance and Distribution

XRP was launched in 2012 with a fixed total supply of 1 trillion tokens, all issued at inception. There is no mining or staking, and the supply remains constant.

At launch, 800 billion XRP were allocated to Ripple Labs to support network development and adoption, with the remaining 200 billion distributed to the project’s founders and early contributors.

In 2017, Ripple locked 55 billion XRP in on-chain escrow to ensure predictable and transparent supply management. Up to 1 billion XRP are released from escrow monthly, with unused tokens returned to the end of the schedule.

As of December 2025, approximately 35.6 billion XRP remain in escrow. All releases are governed by XRPL’s built-in protocol rules, making the process fully automated and transparent.

Regulatory Challenges

Since 2020, Ripple has faced a legal dispute with the U.S. Securities and Exchange Commission (SEC), which alleged that Ripple sold XRP as an unregistered security. This lawsuit created significant uncertainty for XRP, leading some platforms to delist the token.

In 2023, a U.S. judge ruled that XRP traded on public exchanges is not a security, but Ripple’s sales to institutional investors violated securities laws. Afterward, the SEC’s appeal was unsuccessful, and charges against Ripple’s executives were dropped. Ripple was fined $125 million, far less than the $2 billion initially sought by the SEC. Both parties agreed to stop appeals, officially ending the case.

These rulings set a major precedent in digital asset regulation, helping clarify the legal status of XRP and similar assets under U.S. law.

Conclusion

Ripple and XRP exemplify blockchain technology’s real-world impact on enhancing cross-border payment efficiency and liquidity management. Built on the XRP Ledger, Ripple’s products deliver faster settlements, lower costs, and improved efficiency over traditional systems.

As the native asset of XRPL, XRP plays a vital role in enabling transactions, serving as a bridge currency, fee token, and on-chain liquidity tool. Despite regulatory hurdles, including the SEC lawsuit, Ripple continues its global operations and contributes to the evolution of the XRPL ecosystem.

FAQ

What Is Ripple?

Ripple is a cryptocurrency used within the blockchain network, enabling fast, secure transactions with low fees. It can be used for everyday payments and investing in the decentralized financial system.