Ripple XRP has spent more than five consecutive years ranking among the top ten cryptocurrencies in terms of market capitalization.
Ripple is a privately held technology firm with offices in significant cities throughout the globe, and is situated in San Francisco, California, in the United States. The business, which was once known as OpenCoin, changed its name to Ripple Labs in 2015 and has more than 500 employees as of 2020.
What is XRP and how does it work?
XRP is a native cryptocurrency that uses the XRP Ledger, which offers secure payment services globally with fast throughput and cheap transaction fees. The Ripple ecosystem resolves transactions by utilizing XRP tokens as opposed to time-consuming, expensive traditional money transfer platforms like SWIFT.
Through the gateway function of the network, XRP acts as a bridge currency to other currencies inside the Ripple ecosystem. It’s interesting to note that the network supports the transmission of both fiat money and cryptocurrency.
XRP uses the XRP Ledger Consensus Protocol to validate transactions, in contrast to other cryptocurrency networks that use either proof of work (PoW) or proof of stake (PoS) consensus techniques. By downloading and using the validation program, anyone can join the network as a validator. The network does, however, have a special node list of 35 trusted validators designated by Ripple who are in charge of validating network transactions. Each transaction must be approved by all of these validators in order to be successful. As a result of the Ripple corporation appearing to have significant control over the network, the network has come under fire for being too centralized. The network does allow users to make transactions without using validators selected by Ripple. To verify transactions, users can assemble their own list of trusted nodes. This makes it possible for the network to run without the involvement or even the existence of the Ripple corporation.
Instead of creating blocks, the XRP Ledger creates ledgers that are connected cryptographically. The confirmation time for each ledger is between 3 and 5 seconds, which is significantly faster than Bitcoin’s block duration of 10 minutes. Ripple does not offer incentives for creating new blockchain blocks. They contend that incentives have a tendency to distort validators’ conduct, whereas the motivation for validators ought to be to maintain the security, dependability, and integrity of the Ripple network.
What’s the difference between Ripple and XRP?
Global money transfers are handled via the payment settlement network called the RippleNet. The network’s corporate sponsor is called Ripple and native token of the Ripple network is a cryptocurrency called XRP. The fact that XRP serves as the fuel for each of these solutions unites them. XRP serves as the native currency that makes it possible for the ecosystem of digital payment services that make up Ripple to operate.
100 billion tokens were pre-mined before Ripple’s inception. In the beginning, Ripple received 80 billion of this supply of XRP. There are currently 50 billion of XRP tokens in circulation for end users, with around 50 billion kept by the Ripple firm in escrow accounts. Ripple unlocks 1 billion XRP every month from its escrow wallet as part of Ripple’s escrow policies.
Long-time owners of XRP have been troubled by shares owned by Ripple and its past leaders. Executives, both active and retired, have sold their shares, which causes declines in the price of XRP. The CEO of Ripple even said in an interview that the company’s ability to sell XRP on the open market is the primary reason it is profitable. Ripple is running a buyback program to support healthy markets and its new Line of Credit initiative in order to address this issue. According to a report from Ripple, the business has already bought XRP tokens worth $46 million off the market
As of July 18th, 2022, Former Ripple Labs founder Jed McCaleb has finally ended the eight-year dump of his XRP holdings. The last transaction marks the end of a 9 billion XRP sell-off after leaving Ripple Labs to co-found rival payment protocol Stellar in 2014.
Ripple versus U.S. Securities and Exchange Commission Litigation
The lawsuit, which claimed that Ripple raised more than $1.3 billion through illegal ways, was filed on December 22nd, 2020. In addition to Christian Larsen, the co-founder of Ripple, and Brad Garlinghouse, the company’s current CEO, the SEC lawsuit names them as defendants and points out that they profited significantly from the scheme.
The idea that XRP was not a registered security but was nonetheless made available to investors all across the world led the SEC to conclude Larsen and Garlinghouse raised money in an unlawful manner. The SEC further claimed that Ripple Labs used market services for non-cash transactions and paid for them with XRP in order to promote the sales of their tokens.
If the SEC prevails in the legal dispute, XRP will no longer be regarded as a currency but as a security and Ripple might have to leave the United States to continue its business operations. This might then establish a national precedent that leads to the classification of other cryptos similar to it as securities. Therefore, the lawsuit against Ripple is crucial for all parties involved in the cryptocurrency industry, including investors, developers of blockchain technology, and global lawmakers.
According to Atty. James K. Filan, the Ripple versus SEC lawsuit could end on or before March 31st of 2023.
Is XRP a good investment?
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Without a doubt, XRP is still “suppressed” at its current price because of the litigation still proceeding and might potentially cause anxiety for investors; although the legal battle against Ripple Labs will ostensibly come to a close soon. With major bank partnerships and the credibility as a financial organization, XRP may be a more dependable and steady investment than some other alt-coins. Furthermore, unlike some other cryptocurrencies where tokens are continuously minted and mined, XRP has a finite supply of coins. Given that XRP is a coin targeted at established financial organizations, the native token is also a smart investment for thematic investors in the financial sector. As a result, XRP would be an excellent option for anyone wishing to invest in the future of transactions and payments.
Rickie Sanchez is an article writer specializing in cryptocurrency news. Since late 2017, he has been actively investing in cryptocurrencies. He is enthusiastic about everything that has to do with crypto and he hopes that the readers of his articles in the years to come will gain a massive understanding of blockchain technology.