What Is XRP | XRP Ledger?
In 2012, the XRP Ledger (XRPL) was launched with its native digital currency, originally called "ripples" and later referred to by its currency code, "XRP." The name Ripple initially represented the open-source project, the consensus ledger (Ripple Consensus Ledger), the transaction protocol (Ripple Transaction Protocol or RTXP), the network (Ripple network), and the digital asset itself.
Developers David Schwartz, Jed McCaleb, and Arthur Britto completed the XRP Ledger code in June 2012. They sought to improve upon Bitcoin's limitations by creating a more sustainable, efficient, and payment-focused distributed ledger.
Upon the launch of the XRP Ledger, 80% of the XRP was gifted to a new company called NewCoin, which was later renamed OpenCoin. OpenCoin aimed to develop use cases for the XRP digital asset. Chris Larsen served as the CEO of OpenCoin, with Jed McCaleb as co-founder and CTO, David Schwartz as Chief Cryptography Officer, and Arthur Britto as an advisor.
Today, XRP and the XRP Ledger are widely used for cross-border transactions and remittances, providing faster, more cost-efficient, and more reliable solutions than traditional payment systems.
Who Are the Founders of the XRP Ledger?
The XRP Ledger (XRPL) was founded by three engineers: David Schwartz, Jed McCaleb, and Arthur Britto. They began developing the XRP Ledger in 2011 with the goal of creating a better alternative to Bitcoin that improved upon its limitations, focusing on sustainability, efficiency, and payment processing capabilities.
David Schwartz is a well-known cryptographer and currently serves as the Chief Technology Officer (CTO) at Ripple. Jed McCaleb is a prominent figure in the cryptocurrency world, having co-founded several other notable projects, including the Mt. Gox exchange and the Stellar Development Foundation. Arthur Britto is a software engineer and early contributor to the XRP Ledger project, who has since remained involved in various capacities.
The trio's work on the XRP Ledger led to the creation of the native digital asset, XRP, and the establishment of the company Ripple, which has been instrumental in promoting the adoption of the XRP Ledger and XRP in the financial industry.
What Makes XRPL Unique?
The XRP Ledger (XRPL) has several unique features that set it apart from other blockchain platforms and cryptocurrencies:
Consensus Algorithm: XRPL uses the Ripple Protocol Consensus Algorithm (RPCA) instead of the more common Proof-of-Work (PoW) or Proof-of-Stake (PoS) algorithms. RPCA allows for faster transaction confirmations and significantly lower energy consumption compared to PoW or PoS-based systems.
Speed: XRPL is known for its rapid transaction processing, with confirmation times typically within 3-5 seconds. This makes it one of the fastest blockchain platforms available, enabling near-instantaneous cross-border transactions.
Low Transaction Fees: XRPL boasts minimal transaction fees, usually a fraction of a cent. This makes it cost-effective for various use cases, including micropayments and remittances.
Scalability: The XRP Ledger can handle up to 1,500 transactions per second (TPS), making it more scalable than many other cryptocurrencies, including Bitcoin and Ethereum.
Environmental Sustainability: The consensus algorithm used by XRPL does not involve energy-intensive mining, making it much more environmentally friendly compared to PoW-based systems.
Built for Payments: XRPL was designed specifically for cross-border payments and remittances, with XRP functioning as a bridge currency for seamless conversions between different fiat currencies.
Decentralized Exchange (DEX): The XRP Ledger includes a built-in decentralized exchange that allows users to trade various assets, including cryptocurrencies and fiat-issued tokens, without relying on a centralized exchange.
These unique features make XRPL an attractive platform for various applications, particularly in the financial industry where speed, cost efficiency, and reliability are crucial. As a result, XRPL has seen increasing adoption by financial institutions and payment providers for cross-border transactions and remittances.
In 2013, OpenCoin rebranded to Ripple Labs, which has since been shortened to "Ripple." The rebranding aimed to align the company's identity more closely with the Ripple project and differentiate it from the digital asset, XRP.
Ripple Labs, under the leadership of Chris Larsen and other team members, sought to revolutionize the global financial system through the application of blockchain technology. However, unlike some early Bitcoin advocates, Larsen believed that blockchain should work in tandem with the existing financial system, rather than trying to overthrow it. He maintained that the most transformative innovations build on and improve previous ideas instead of replacing them.
As Ripple Labs evolved, it developed a use case for the XRP Ledger and XRP in the cross-border payments industry. The company's solutions leverage XRP and the XRP Ledger for liquidity management, enabling faster and more cost-efficient international transactions. Ripple continues to be a stakeholder and active contributor to the broader XRP Ledger community, fostering its growth and adoption.
The XRPL Foundation was launched on September 24, 2020, as an independent, nonprofit organization dedicated to promoting the development and adoption of the decentralized XRP Ledger. Its mission is to support the growing community of developers, businesses, and other stakeholders who build and utilize the XRP Ledger for various applications.
The foundation received an initial donation of over $6.5 million from Coil, Ripple, and Gatehub, which helped fund its operations and support its goals. The XRPL Foundation focuses on various activities, such as:
- Providing technical support and guidance for the XRP Ledger community.
- Encouraging collaboration and innovation within the ecosystem.
- Promoting the adoption of the XRP Ledger across industries and use cases.
- Ensuring the long-term sustainability, security, and reliability of the XRP Ledger.
By fostering the growth of the XRP Ledger, the XRPL Foundation aims to facilitate the broader adoption of this innovative technology, which can lead to improvements in cross-border payments, remittances, and other financial applications.
How Many XRP Coins Are There in Circulation?
There are approximately 58.4 billion XRP tokens in circulation. However, it's essential to look the latest on-chain information for accurate, up-to-date numbers, as the circulating supply may change over time.
When XRP was created, a total supply of 100 billion tokens was generated. NewCoin , the company behind XRP, initially held the majority of the supply, with 80 billion XRP allocated to the company and the remaining 20 billion distributed among the founders.
To address concerns about Ripple's large XRP holdings and provide transparency, Ripple placed approximately 55 billion XRP in an escrow account in 2017. The escrow releases 1 billion XRP monthly, and any unused portion of the released amount is returned to the escrow account, extending the release schedule further. This mechanism ensures a predictable and steady supply of XRP into the market.
How Is the XRP Ledger Network Secured?
The XRP Ledger (XRPL) is secured using the Ripple Protocol Consensus Algorithm (RPCA), a unique consensus mechanism that differs from the traditional Proof-of-Work (PoW) or Proof-of-Stake (PoS) algorithms used by many other cryptocurrencies.
In the RPCA, a network of validator nodes participates in the consensus process. Validators are responsible for verifying transactions and maintaining the integrity of the ledger. The consensus process on the XRPL consists of several rounds in which the validators agree on the set of transactions to be included in the next ledger version.
Validator nodes continuously share candidate transaction sets with each other and work together to reach an 80% agreement threshold on the proposed transactions. Once this threshold is achieved, the transaction set is considered validated, and the ledger is updated accordingly.
Some key aspects of the XRPL's security include:
- Decentralization: The consensus process is decentralized, involving a diverse group of validators that helps prevent single points of failure or control. Anyone can run a validator node, further promoting decentralization.
- Validator Incentives: Validators on the XRPL are not directly incentivized through mining rewards or fees. Instead, they participate in the consensus process to maintain the network's security and reliability, which indirectly benefits them as users and stakeholders of the ecosystem.
- Unique Node List (UNL): Each validator maintains a Unique Node List (UNL) containing a set of trusted validator nodes. Validators use their UNLs to establish a quorum for the consensus process. The use of UNLs enhances the security and robustness of the network against potential collusion or malicious activity.
- Consensus Agreement: The RPCA requires an 80% agreement threshold among validators for a transaction set to be considered valid. This high threshold ensures that the network remains secure and resistant to manipulation or double-spending attacks.
The XRP Ledger's consensus mechanism offers a secure, fast, and energy-efficient approach to maintaining the integrity of the blockchain while avoiding the environmental and scalability issues associated with traditional PoW or PoS systems.
Ripple and the SEC
In December 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs Inc., its CEO Brad Garlinghouse, and its Executive Chairman and co-founder Chris Larsen. The lawsuit alleges that Ripple and its executives engaged in an unregistered securities offering by selling XRP tokens to investors.
The SEC claims that XRP should be classified as a security, similar to shares in a company, rather than a currency or commodity like Bitcoin or Ethereum. As a result, the SEC argues that Ripple should have registered XRP sales with the agency and complied with securities regulations when offering and selling XRP to investors.
Ripple, on the other hand, maintains that XRP is not a security but a digital asset or cryptocurrency, like Bitcoin and Ethereum. Ripple argues that the SEC's lawsuit is misguided and that the regulatory agency has failed to provide clear guidance on how digital assets should be classified and treated under securities laws.
The lawsuit has had significant implications for the XRP market, leading to de-listings from several major cryptocurrency exchanges and a decline in XRP's market value. The outcome of the case could have broader implications for the cryptocurrency industry, as it may establish a precedent for how digital assets are classified and regulated in the United States.
Ripple Wins SEC Lawsuit
The legal battle concluded on July 13, 2023, with Ripple emerging victorious. The court determined that while the institutional sales of tokens were in breach of federal securities laws, the programmatic sales were not. This landmark victory has provided crucial clarification within the realm of cryptocurrencies. For the most recent developments in this case, consider keeping up with the latest news sources or checking out recent legal documents.