The XRP crypto, associated with the Ripple company, is a digital asset designed primarily to facilitate international money transfers.
1. Why XRP?
Today, sending money internationally through traditional banks is often:
• Slow (several days),
• Expensive (high fees),
• Inefficient (funds pass through several intermediaries).
XRP was designed to solve these problems by providing a fast, cheap, and reliable solution to transfer value between different currencies.
2. The role of XRP
XRP acts as a “universal gateway” for currencies:
• Imagine that you want to send euros to a person who needs to receive dollars.
• With XRP, euros are converted to XRP and then to dollars almost instantly. This eliminates middlemen (like correspondent banks) and reduces fees.
3. Speed and cost
• Fast transactions: XRP payments are validated in just 3-5 seconds.
• Low fees: The average cost of a transaction is very low (less than €0.0002 in XRP).
4. Technical operation
• Ripple Network (RippleNet): This is not a traditional blockchain like Bitcoin. RippleNet uses a technology called the Consensus Ledger, which allows multiple parties to validate transactions without miners.
• This makes XRP more environmentally friendly than Bitcoin or Ethereum, as it consumes less energy.
5. Decentralization, but with nuances
• XRP is often criticized for being less decentralized than other cryptos like Bitcoin. The majority of XRP was initially issued by Ripple Labs, giving the company significant influence over the ecosystem.
• Ripple also manages a large share of the total supply, although they have mechanisms to gradually release XRP into the market.
6. Use cases
The main uses of XRP include:
1. Banks and Financial Institutions: Several banks are using RippleNet to make their cross-border payments more efficient.
2. Cross-currency bridging: XRP is used to bridge currencies that do not have a direct market (e.g. connecting an exotic currency to the dollar).
In short, XRP is a crypto optimized for fast and cost-effective global money transfers. It stands out for its focus on financial institutions rather than the general public, while raising debates about its degree of decentralization.
I hope this little article was able to help the new ones who are passing by!😜