The XRP currency is one of the most famous cryptocurrencies in the crypto market and is characterized by unique features compared to other currencies like Bitcoin or Ethereum. Here are the most important information about it:
1. What is XRP?
- It is the digital currency of the RippleNet network, developed by Ripple Labs in 2012.
- Aims to facilitate international financial transfers between banks and financial institutions at a low cost and quickly.
- Unlike Bitcoin, it does not rely on Proof of Work (PoW) technology, but uses a consensus mechanism called the XRP Ledger Consensus Protocol.
2. The difference between Ripple and XRP
- Ripple
(the company): is the company developing RippleNet technology, which provides payment solutions through banks.
- XRP
(the currency): are the digital assets used in the network to facilitate transactions.
3. Features of XRP
- Speed: Transactions occur in 3-5 seconds, compared to minutes or hours in other currencies.
- Low cost: Transaction fees are minimal (a fraction of a cent).
- Scalability: The network supports 1500 transactions/second (compared to 7 for Bitcoin).
- Institutional uses: Many banks such as Santander and Standard Chartered adopt it.
4. Criticisms and legal issues
- SEC lawsuit: In December 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple for selling XRP as an unregistered "security."
- Price impact: The announcement of the lawsuit caused a sharp drop in the price of XRP, but it regained some of its value after Ripple made progress in some sessions.
- In July 2023, the court ruled that selling XRP on exchanges is not considered a security, but selling it to institutional investors may be. This ruling was seen as a partial victory for Ripple.
5. Future uses of XRP
- If Ripple fully wins the case, it may witness broader adoption by banks.
- Projects like ODL (On-Demand Liquidity) use XRP as a bridge between currencies in international transfers.
6. Risks and challenges
- Centralization: Some have criticized Ripple for controlling a large part of the supply.
- Competition: The presence of projects like Stellar (XLM) may pose a challenge.
- Legal volatility: Any negative development in the case may affect the price.
• Summary
It is a digital currency with practical use in financial transfers, but it faces legal challenges that may affect its future. If it overcomes these issues, it could become one of the core currencies in the global financial system.
