Ripple is one of the oldest and most discussed projects in the crypto industry. It is often confused with the XRP token, but there is an important distinction between them. Ripple is a private company developing solutions for cross-border payments, while XRP is a digital asset used in these solutions. This connection has been the source of both significant attention and major issues.
Origins: from RipplePay to a global blockchain
The history of Ripple began long before Bitcoin. Back in the early 2000s, the RipplePay project was aimed at decentralized payments between people. In 2012, Ripple Labs relaunched the idea on blockchain rails, focusing on fast international transfers between banks and fintech companies. Their goal is to replace slow and expensive SWIFT transfers with digital, almost instant transactions.
Tokenomics: pre-mine, escrow, and circulation
Unlike most cryptocurrencies, XRP is not mined. All 100 billion tokens were created at launch. Part of them was distributed to founders, the team, and Ripple Labs. This led to criticism: too much centralization, too strong an influence of the company on the market.
To ease tension, Ripple locked 55 billion XRP in escrow contracts and releases them at a rate of 1 billion per month, if needed — and the leftovers are returned. Thus, the supply is regulated by predetermined rules, but is still perceived as 'manually managed'.
SEC vs Ripple: a crypto precedent
In 2020, the SEC filed a lawsuit against Ripple, claiming that XRP is an unregistered security. This initiated one of the loudest legal battles in the crypto world, which was closely followed by everyone.
In 2023, the court partially sided with Ripple, stating that retail trading of XRP does not violate securities laws. This was an important precedent for the entire industry. However, the process is not yet fully complete, and Ripple remains under close scrutiny from regulators.
The role of XRP in the ecosystem
XRP is used in RippleNet products, especially in On-Demand Liquidity (ODL) — a solution that allows banks and fintechs to conduct cross-border payments without the need to hold fiat in each country. A bank in Mexico can receive pesos by sending XRP from a bank in the USA, literally in seconds.
In addition, XRP is supported by dozens of exchanges, is used in various DeFi solutions, and remains one of the most liquid cryptocurrencies in the world.
Interesting fact
XRP became the first cryptocurrency that the American Securities and Exchange Commission (SEC) faced on such a scale. The outcome of this case could affect the regulation of the entire industry.
