In January 2013, something special happened in the young crypto world: the Ripple protocol was launched with 100 billion XRP already created. No mining, no presale, no fair launch. Simply: boom, 100 billion exist.
The distribution was controversial from the start:
▫️80 billion went to Ripple Labs (then OpenCoin)
▫️20 billion were distributed among the founders
▫️0 for the community
Jed McCaleb, Chris Larsen, and Arthur Britto: three names that suddenly became paper billionaires. The crypto community was outraged. “Premined Scam” became the rallying cry of critics.
Ripple's explanation: XRP is not an investment vehicle, but a bridge currency for banks. The large supply would be necessary for global liquidity.
Billions of dollars flow daily through the financial system, thus equivalent amounts are required. Theoretically convincing, but practically difficult to manage in terms of public relations.
Today, the distribution of supply looks very different:
▫️In circulation: ~57 billion XRP
▫️Exchanges: ~5-7 billion
▫️Retail holdings: ~20-25 billion
▫️Institutional investors: ~10-15 billion
▫️Unknown/lost: ~5-10 billion
▫️Liquidity providers and market makers: ~5-7 billion
Ripple: ~41 billion XRP
▫️In escrow: ~39 billion
▫️Operational/reserve: ~2 billion
Founders' wallets: ~2-3 billion XRP
▫️Chris Larsen: ~1-2 billion
▫️Jed McCaleb: almost 0 (after years of sales)
▫️Arthur Britto: unknown (estimated at <1 billion)
The dynamics have fundamentally changed: from 80% control by Ripple to around 41%. And the trend continues.
In December 2017, Ripple took a significant step: it locked 55 billion XRP in escrow contracts. This involved 55 separate contracts, each with 1 billion XRP, released monthly over 55 months.
The mechanism is smart:
▫️1 billion XRP is released every month.
▫️Ripple can use at most that amount.
▫️Unused XRP returns to a new escrow contract for another 55 months.
▫️Everything is recorded on the blockchain, transparently and immutably.
In practice, Ripple only uses a fraction: between 200 and 300 million per month, the rest goes back to escrow. At this rate, the supply would last decades.
It's a clever solution to a problem they created themselves. The market knows exactly how many XRP can enter at most each month: no surprises, no massive sales. Predictability in an unpredictable market.
Few notice, but millions of XRP are likely lost forever:
▫️Forgotten private keys: in 2013 XRP had no value and few bothered to back them up.
▫️Exchanges hacks: Mt. Gox, Cryptopia, and QuadrigaCX had XRP; all were hacked or collapsed.
▫️Erroneous transactions: incorrect destination tags or non-existent accounts, impossible to recover.
▫️Deceased holders: without sharing their keys, their XRP disappears with them.
Conservative estimates suggest 5-10% of the supply is lost; the most extreme, up to 20%. This would equate to between 5 and 20 billion XRP permanently out of circulation: de facto deflation without a burn mechanism.
The future: Where is the supply headed?
▫️Scenario 1 – Continuous sales: Ripple continues to sell 200-300 million per month; in 20-30 years everything would be distributed.
▫️Scenario 2 – Accelerated expansion: increase in demand for liquidity (ODL), emptying the escrows in 10-15 years.
▫️Scenario 3 – Regulatory clarity: green light from the SEC, greater sales freedom in the U.S., IPO and Wall Street entry.
▫️Scenario 4 – Unexpected events: Ripple forced to burn or gift the entire supply. Unlikely, but possible.
The 100 billion XRP allow Ripple to grow quickly, fund developments, establish alliances, and work with regulators.
When a necessary evil turns into a strategic advantage
The irony: what started as a weakness has become a strength. Institutions don’t want surprises from mining, banks seek a predictable supply, and companies want a partner with resources. The 100 billion XRP offers all of this.
In 20 years, we could look back and see that Ripple's supply strategy was not the problem, but the solution. A plan that bet on pragmatism prevailing over idealism and that adoption could be more important than decentralization. Time will tell.
