Demystifying Ripple XRP: A Beginner's Guide

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Ripple is a privately held company that was created to provide seamless global payments between financial institutions and businesses. XRP, often mistakenly called Ripple due to its association with the parent company, is the native cryptocurrency of the XRP Ledger (XRPL), an open-source, distributed ledger created by Ripple.

In this beginner’s guide, we demystify what Ripple and XRP are, take a deep dive into the Ripple ecosystem, and show you how you can manage your XRP tokens with Trust Wallet.


The Evolution and Controversies of Ripple

Before we zero in on XRP and its role within the Ripple ecosystem, let’s briefly discuss the history of Ripple..

Ripple is a financial technology company that’s developing various products to solve global payment issues via its exchange, payment settlement, and remittance system. It also describes itself as a company that’s ‘Building the Internet of Value.’

Initially, Ripple started out as RipplePay - a decentralized digital currency exchange and payment solution - founded by Ryan Fugger in 2004, nearly five years before Bitcoin was founded. Fugger then sold RipplePay to Jed McCaleb, Arthur Britto, and David Schwartz in 2012. The three rebranded RipplePay to ‘NewCoin,’ which was then quickly changed to OpenCoin, a network for digital currencies. The new founders were then joined by Chris Larsen, who now sits as Ripple’s Executive Chairman and Co-founder, and in the same year, launched the XRP Ledger, which incorporated the XRP cryptocurrency.

In 2013, the company rebranded to Ripple Labs before rebranding to Ripple in 2015, as it’s popularly known today.

While Ripple was able to get some stability with its choice of brand name, the company and two of its executives found themselves in unchartered territory when the United States Securities Exchange Commission (SEC) sued it in 2020 over allegations that it was using its XRP token, an unregistered security, to raise funds.

In 2021, the judge ruling on the case handed Ripple a major victory by granting their motion to compel the SEC to provide evidence that it had classified XRP as security. While the case has been ongoing for over two years, it’s not yet known when a final ruling will be made.

Ripple and XRP Explained

It’s easy to confuse Ripple and the XRP, especially since the cryptocurrency XRP was previously also known as Ripple, with the ticker being XRP.

However, today XRP is the native asset of the XRP Ledger (XRPL). XRP is usually used interchangeably to refer to Ripple in the cryptocurrency sector, given its connection with its parent company, but they are not the same thing. Ripple is the company that has created XRP to build money transfer solutions for businesses and financial institutions.

While the XRP cryptocurrency is used to facilitate transactions within the Ripple ecosystem, the XRPL is used to record the transfer and ownership of the XRP token. It’s important to mention that the XRPL code was, in the beginning, only available to the company. It wasn’t until 2013 that the company made the code open-source, giving Ripple’s community some room to maintain the network.

Currently, you can buy XRP in Trust Wallet or use it as a means to make global payments.

Because of its high speed, low-cost, low energy consumption, high uptime, and scalability, XRP is considered an excellent choice for blockchain payments.

In addition, XRP consistently ranks among the top ten cryptocurrencies by market capitalization. The pre-mined digital currency has a maximum supply of 100 billion tokens.

Out of the 100 billion tokens, Ripple holds the largest share (nearly 50 billion tokens) in escrow. As of the time of writing, the XRP token had a total supply of over 99 billion tokens and a circulating supply of more than 50 billion tokens.

As a blockchain, XRP works differently than that of other cryptocurrencies. Many leading digital currencies, such as Bitcoin (BTC) and Litecoin (LTC), utilize the proof-of-work (PoW) consensus mechanism, meaning that they rely on miners to solve complex equations and verify transactions. In the XRP Ledger, however, things are different as the blockchain utilizes the Federated consensus mechanism to validate transactions.

Through the mechanism, XRPL verifies transactions via a consensus protocol where select independent servers, referred to as validators, have to agree on the sequence and outcome of XRP transactions. All servers process each transaction based on the same rules in the network. Any transaction that follows the set protocol gets approved automatically. However, if a mismatch occurs, the validators must stop and figure out what went wrong.

Limitations of Traditional Financial Systems and How Ripple and XRP Help

The Ripple ecosystem was designed with tools to disrupt international remittances and payments while still revolutionizing traditional financial systems.

It’s hard to imagine that even with the technological advancements made in the 21st century, transferring funds across borders remains such a challenging, costly, and lengthy affair. This restriction can be because of the use of outdated processes that slow the transfer functions due to the absence of proper communication channels between payment providers. One such messaging system is the Society of Worldwide Interbank Financial Telecommunication (SWIFT).

SWIFT is a messaging system used by banks and financial institutions worldwide to allow for international payments. However, it doesn’t clear or settle these transactions. Instead, banks have to rely on a third-party platform to clear and settle the transactions. This can make SWIFT quite inefficient, given the multiple transaction layers that have to be ‘unlocked’ for the funds to reach their final destinations.

This is where Ripple comes into play, as it utilizes blockchain technology to solve the inefficiencies of traditional banking infrastructures by allowing for cheaper and faster cross-border payments and remittances.

Ripple helps to solve these inefficiencies through the use of its payment network, RippleNet.

RippleNet is a set of tools designed to boost the global value transfer system for businesses and financial institutions. By using RippleNet, financial institutions such as banks can access a more cost-effective, fast, and streamlined option for processing cross-border payments. RippleNet is an alternative to the outdated SWIFT messaging system that seeks to change and quicken the transfer of funds across borders while utilizing blockchain technology.

Ripple also utilizes XRP, which is cheaper, faster, and more energy-efficient to process both cryptocurrency and fiat currency transactions in a matter of seconds in its network while consuming less energy in comparison to other cryptocurrencies.

In addition, XRP is convenient for little-traded cryptocurrencies that may need a go-between medium of exchange to make their exchange cheaper. This is because XRP can be swapped at a low cost per transaction, unlike traditional wire transfers that charge high fees and take several days to settle.

The Ripple Network Deep-dive

The Ripple ecosystem, at its core, is made up of two components; the XRP Ledger and RippleNet.

The XRP Ledger, as we’ve already mentioned, is used to record the ownership and transfer of the XRP token. On the other hand, Ripple utilizes RippleNet to process transactions on the XRP Ledger for both banks and financial institutions in a flawless manner that anyone can verify.

Using the XRP Ledger (XRPL), Ripple can process around 1,500 transactions per second at a fraction of the cost that traditional financial systems charge. This is what makes it attractive to businesses, as they can receive international remittances in a matter of seconds. But we cannot discuss XRPL’s successes without expounding more about RippleNet.

Besides being a set of tools, RippleNet is a currency exchange, remittance network, and real-time gross settlement (RTGS) system.

RippleNet is made up of three payment solutions referred to as xCurrent, xRapid, and xVia. Initially, Ripple marketed each of the three payment offerings separately. However, in late 2019, it unified all three products and promoted them under the RippleNet umbrella to increase the utilization of the XRP cryptocurrency to send money.

  • xCurrent is a payment system for banks that’s a ‘replacement’ for the SWIFT system used by banks to process international remittances. Using xCurrent, banks can communicate in real-time, resulting in instantaneous cross-border settlements. xCurrent supports fiat currencies and doesn’t need the use of XRP, the Ripple network’s native currency.

  • xRapid works in a similar manner to xCurrent. However, unlike xCurrent, xRapid uses XRP cryptocurrency instead of fiat currencies. This is because XRP provides the needed liquidity for cross-border transactions while eliminating the need for banks to have foreign currency bank accounts in other banks to process foreign exchange payments.

  • xVia is a solution used in the RippleNet ecosystem to enable customers to connect and merge the xCurrent and xRapid services through its application programming service (API).

But how exactly does RippleNet enable the connection between various financial institutions?

Ripple can connect the ledgers or records of two or more banks through RippleNet using the Interledger protocol, a blockchain standard for payments across various payment networks. This eliminates middlemen from the system, allowing two or more connected systems to communicate directly, resulting in reduced costs and time taken to process cross-border payments.

Whenever one of the connected banks initiates a transfer, Ripplenet will, by default, find the fastest way to transfer the funds and calculate the transaction costs, usually fractions of a penny.

Basically, RippleNet helps to provide high transaction speeds, transparency, and liquidity management for financial institutions. This way, businesses can rapidly expand their services and access new markets.

Managing XRP With Trust Wallet

You can use a crypto wallet like Trust Wallet to store, send, receive, and trade XRP.

Trust Wallet is an easy-to-use, multichain, self-custody crypto wallet that people can use to manage their crypto assets and access Web3. As the most trusted crypto wallet, you use Trust Wallet to easily store and manage over 10M+ crypto assets, including non-fungible tokens (NFTs), across 70 blockchains, all under one roof. With over 60M+ downloads, you get full custody of both your private keys and digital assets.

Below is a step-by-step guide on how you can buy, send, and receive XRP tokens using Trust Wallet.

Getting Started With XRP on Trust Wallet

To begin managing your XRP tokens in your Trust Wallet, you must first download the Trust Wallet app on your device and create an account. Trust Wallet is compatible with both Android and iOS devices. In addition, Trust Wallet is also available as the Trust Wallet Chrome Extension if you’d like to use it on your desktop.

For this guide, we’ll download Trust Wallet using an Android device. To start, go to the Google Play Store of your Android smartphone, search for ‘Trust Wallet’, and click on ‘Install’. You can also do this on an iOS device by downloading the app on your Apple store.

Once successfully installed in your smartphone, open the Trust Wallet app and click on ‘Create a New Wallet’.

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Proceed to accept the wallet’s ‘Terms and Conditions’ and ‘Privacy Policy’, then click on ‘Continue.’

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Next, create your six-digit password. This will help to provide your crypto assets and wallet with an extra layer of security. Trust Wallet will require that you back up your 12-word secret recovery phrase. You should never share your secret phrase with anyone, as you could lose all your digital assets stored in your Trust Wallet. With Trust Wallet, you can choose to back up your recovery phrase manually or via your Google Drive.

For the purposes of this guide, we’ll back up our Trust Wallet account manually. To do this, click on the ‘Back up Manually’ option and tick the warning boxes provided.

Next, Trust Wallet will display your 12-word recovery phrase after you’ve checked the boxes. Write down the secret recovery phrase in the exact order shown and click on ‘Continue’, then confirm the secret phrase by keying in all 12 words in the order presented. Once you click on ‘Done,’ you will have successfully created your Trust Wallet account, which is now ready to be used.

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Now, let’s take a look at how to buy XRP tokens using Trust Wallet.

Before you can buy the XRP tokens, you will first need to activate the XRP token in your wallet. To do this, click on the icon on the right-hand corner of the Trust Wallet app, search for XRP and click on the slider icon to enable the XRP token in your Trust Wallet.

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Next, click on ‘XRP’, and then on ‘Buy XRP’.

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Next, enter the amount of XRP tokens you want to buy and click on ‘Next.’ Please note that the minimum amount of XRP you can buy on Trust Wallet is $50.

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Trust Wallet will then redirect you to one of its third-party on-ramp providers once you click on ‘Next’ with the best market rate for XRP at the time of purchase. Tap on ‘Next’ on the purchase screen and follow the instructions given by the app. You will then be required to add your personal and card bank details to complete the transaction.

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Once your transaction is successful, your XRP tokens will be deposited into your Trust Wallet. Please note that the transaction can take a few seconds to a few minutes. Now you’re ready to send and receive XRP tokens using Trust Wallet.

To send XRP, ask the recipient to send you their XRP wallet address by going to their crypto wallet, clicking on ‘XRP,’ then ‘Receive,’ and sharing their XRP wallet address with you.

Next, go into your Trust Wallet app, search for XRP, and click on ‘Send’

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Paste the recipient’s wallet address and enter the amount of XRP tokens you want to send, then click on ‘Continue’.

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Next, review and confirm the details of your XRP transaction. Remember, you need to have enough XRP tokens in your wallet to cater to the network’s transaction fees. Once the transaction is successful, your recipient will receive their XRP tokens in their crypto wallet.

To receive XRP, open the Trust Wallet app, click on ‘XRP,’ and then ‘Receive.’ Next, copy your XRP wallet address and share it with the sender.

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Once your sender has your wallet address, they can initiate the transaction by going to their crypto wallet or exchange account and following the steps above on how to send XRP tokens. Once the network confirms the transaction, you will receive the XRP tokens in your Trust Wallet.

Wrapping Up

While the Ripple team and people using the network are awaiting the verdict of its case with the SEC, the XRP is available on Trust Wallet for anyone looking to manage XRP, or make payments using the leading cryptocurrency.

Download Trust Wallet to securely store and manage your XRP tokens today.

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