What is XRP?

What is XRP?
david, schwartz, rippleRipple chief cryptographer David Schwartz (center).

Created in 2014, XRP is the native asset of the XRP ledger, developed by San Francisco startup Ripple. Ripple aims to use blockchain technology and XRP to improve cross-border payments1

Ripple’s products include xCurrent (a software that banks can use for cross-border payments), xRapid (for financial institutions to manage liquidity costs) and xVia (a user interface to make xCurrent and xRapid easier to use)2. XRP is used on xRapid to provide liquidity in cross-border payments that involve illiquid trading pairs3

The origins of XRP and Ripple trace back to Ripplepay, a peer-to-peer payment network created in 2004 by Ryan Fugger4. Fugger aimed to build a payments service that would create a network of interconnected individuals and strangers who could extend credit and exchange debt through the people they knew in the network5. McCaleb and Larsen were developing their own digital currency project around the same time and contacted Fugger, who subsequently entrusted the project to them6.

Ripple created 100 billion XRP tokens at the project’s inception, and, as of 2018, the company held approximately 60 percent of these tokens7.

In 2015, the Financial Crimes Enforcement Network (FinCen) fined Ripple and its subsidiary, XRP II, $700,000 for failing to register as a money services business (MSB) before selling XRP, in addition to failing to implement appropriate anti-money laundering procedures. Ripple eventually agreed to pay a $450,000 fine and to settle potential criminal charges resulting from the investigation8.

In 2018, several lawsuits were filed against Ripple that alleged that XRP should have been classified as a security because the company used the sale of the tokens to fund the Ripple ecosystem9. These lawsuits were filed due to investors losing money after XRP’s price drop1011.


XRP is used on xRapid to provide liquidity in cross-border payments that involve illiquid trading pairs12

Launch & issuance

1 billion XRP tokens were created at the launch of the project in 201213. In 2017, Ripple placed 55 percent of XRP’s total supply (55 billion XRP) into an escrow account, which would be able to sell 1 billion tokens a month for 55 months to investors.

At the end of each selling period, Ripple will return the unsold tokens to the escrow for distribution beyond the 55 months. The company has not historically sold 1 billion XRP per month, but approximately 300 million per month, according to data gathered from 2016 to 201814.

Network Design & Security Model

Ripple developed their own blockchain technology, the XRP ledger, to facilitate cross-border payments between various banking systems in the world15. The ledger is a decentralized network of peer-to-peer servers that helps power all relevant operations. The native token to this ledger, XRP, is intended to act as a bridge between currencies around the world16.

The XRP ledger uses the Ripple Consensus Algorithm, which differs from bitcoin’s proof-of-work and ethereum’s proof-of-stake mechanisms. This algorithm enables participants – trusted nodes – to have an overlapping set of trusted validators that all have to agree on which transactions happen in what order17.

Once all validators agree, a new block (called “ledger version”) is created. Once validated, the block’s content cannot be changed. This allows for all servers in the network to store a complete history of the ledger state18.

Monetary Policy & Crypto-Economics

The total supply of XRP is 100 billion tokens, all of which were created in 2012. The available supply will decrease over time as the network destroys the tokens to pay for transaction costs19.

At time of issuance, founders Chris Larsen, Jed McCaleb and Arthur Britto retained 20 billion XRP for themselves as compensation for starting the company20.

In 2017, Ripple placed 55 percent of XRP’s total supply (55 billion XRP) into an escrow account, with the account selling 1 billion tokens a month for 55 month to users. At the end of each sale period, ripple will return the unsold tokens to the escrow for distribution beyond the 55 months. 

Transaction Processing

According to Ripple’s XRP documentation, the ledger settles payments in under 5 seconds and can handle over 1,500 transactions per second. The minimum transaction fee is 0.00001 XRP, and tokens are destroyed as an anti-spam feature.

Additionally, transactions that destroy more XRP can move to the front of the transaction queue when there is a high volume of transactions being processed21. All transactions are done on ledger22


In order to access the XRP ledger, connected applications must run a JavaScript application programing interface (API). This ledger is an open source project23 and is written in C++24






White Paper 


XRP Ledger Documentation

Authored by John Metais

  1. https://www.ripple.com/company/
  2. https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=235707311
  3. https://www.coindesk.com/information/what-is-ripple
  4. https://www.coindesk.com/ripples-xrp-giving-third-largest-cryptocurrency-second-look
  5. https://classic.ripplepay.com/about/
  6. https://archive.fo/tNnfO
  7. https://www.coindesk.com/counterargument-value-proposition-ripples-xrp-token
  8. https://www.coindesk.com/fincen-fines-ripple-labs-700000-bank-secrecy-act
  9. https://www.coindesk.com/third-ripple-lawsuit-claims-xrp-is-a-security
  10. https://www.coindesk.com/investor-sues-ripple-and-alleges-xrp-is-a-security
  11. https://www.coindesk.com/another-investor-lawsuit-claims-xrp-security
  12. https://www.coindesk.com/information/what-is-ripple
  13. https://www.coindesk.com/counterargument-value-proposition-ripples-xrp-token
  14. https://www.cnbc.com/2018/01/16/why-ripple-is-not-cashing-out-its-xrp-holdings.html
  15. https://xrpl.org/index.html
  16. https://xrpl.org/xrp-ledger-overview.html#the-digital-asset-for-payments
  17. https://xrpl.org/xrp-ledger-overview.html#fast-efficient-consensus-algorithm
  18. https://xrpl.org/xrp-ledger-overview.html#fast-efficient-consensus-algorithm
  19. https://xrpl.org/xrp-ledger-overview.html#censorship-resistant-transaction-processing
  20. https://www.ripple.com/company/
  21. https://xrpl.org/xrp-ledger-overview.html
  22. https://xrpl.org/xrp-ledger-overview.html#responsible-software-governance
  23. https://github.com/ripple
  24. https://github.com/ripple/rippled