There are ardent XRP supporters who genuinely think that Ripple represents the future of decentralized finance and cross-border settlement, despite the fact that Ripple has its detractors. Our goal in this Learning and Insights guide is to provide you a quick overview of the origins, function, advantages, drawbacks, and key figures of Ripple and its native cryptocurrency, XRP.
Ripple's Origins and Impact: A Journey Through the Ripple Effect
In order to simplify financial transactions, developer Ryan Fugger built a platform called Ripplepay in 2004. This platform is where XRP's roots can be found today. Fugger's concepts were expanded upon by Jed McCaleb, Arthur Britto, and David Schwartz in 2012 to establish Opencoin, afterwards known as Ripple Labs. The ownership of Ripple.com, which was formerly held by the telecoms firm Ripple Communications, underwent a significant change in late 2012 when Ripple Labs took it.
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| Ripple.com in April 2013. |
The objective was to create a network for remittances, currency exchange, and real-time gross settlement using the cryptocurrency XRP as a bridge asset. XRP was created to provide stability, scalability, and speed. Compared to Bitcoin (BTC), transactions are settled in 3 to 5 seconds, and the network can support 1,500 transactions per second, significantly more than Bitcoin's 7 transactions per second.
With a 100 billion coin supply and 99,988,438 coins now in use, XRP is more plentiful than less used cryptocurrencies like BTC. With a market valuation of over $25 billion and 99 billion XRP in circulation, XRP is now the sixth-largest cryptocurrency. The distribution of XRP, which is held by around 5 million different addresses, is top-heavy; the top 10 accounts possess 11% of the supply, and the top 100 holders control 33% of the entire supply.
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| XRP/USD 1M chart via Bitstamp from 2017 to 2023. |
Ripplenet, a network of banks and financial institutions that use XRP for international payments, is still being developed and promoted by Ripple Labs. This, according to Ripple, enables safe, quick, and almost cost-free international transactions. Despite being the person who founded Ripple, McCaleb left the company in 2013 to co-found the Stellar Development Foundation and the XRP fork, XLM.
Brad Garlinghouse, the CEO of Ripple, is joined by David Schwartz, the CTO, Monica Long, the senior vice president of marketing, and Kristina Campbell, the chief financial officer, as well as other executives. The basic objective of XRP is to help institutions using Ripplenet make cross-border payments by facilitating liquidity, fast settlement, and cheaper fees. The financial institutions Earthpoint, Fidor Bank, Bank of America, and HSBC are just a few of them that have used Ripple's services.
Ripple's legal issues in the Regulatory Battle
Some contend that it is highly centralized and that Ripple has too much control over the production of XRP. It is possible to view the occasionally contentious but wildly popular cryptocurrency from an informed perspective by being aware of its history and current environment. Even though it's new to many investors, XRP is one of the first cryptocurrency projects and has been in development for well over a decade. However, Ripple has been involved in a legal dispute with the American securities authority for a while, and in the summer of 2023, things have taken an interesting turn.
The U.S. Securities and Exchange Commission (SEC) sued Ripple Labs and its officials in December 2020 on the grounds that they sold XRP to retail customers in order to raise more than $1.3 billion through an unregistered securities offering. Ripple argued that XRP is sufficiently decentralized to be regarded as a commodity rather than a security, which set off a contentious legal dispute. As the case has lasted into 2023, there is a great deal of doubt regarding XRP's regulatory status in the US.
The legal dispute between Ripple Labs and the Securities and Exchange Commission (SEC) of the United States about the sale of XRP coins resulted in a partial success on July 13, 2023. Judge Analisa Torres of the U.S. District Court ruled that some of the SEC's claims might go to trial while dismissing others. The SEC, meanwhile, is contesting the partial victory Ripple Labs obtained in its court case. A judge approved the SEC's request to appeal the case on August 24, 2023.
What do you think about the past of XRP and Ripple? Post your ideas and viewpoints on this topic in the comments area below.