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XRP: The Digital Asset for Payments

Updated: Apr 7, 2020

Key Facts

Name: XRP

Ticker: XRP

Consensus algorithm: XRP Ledger consensus algorithm and "trusted" validators

Native blockchain: XRP Ledger

Release date: 2013

Supply: 99.992 billion

Official website:

What is XRP?

XRP is a digital asset native to the XRP Ledger.

Anyone with a cryptographic key and an internet connection can receive, hold, and send XRP to anyone else. XRP's creators have developed it to be a desirable bridge currency that can facilitate trades in any other currency. XRP has many properties which make it an appealing asset for many other use cases, too:

Censorship-Resistant Transaction Processing: No single party decides which XRP transactions succeed or fail, and no one can "roll back" a transaction after it completes. As long as those who choose to participate in the network keep it healthy, they can send and receive XRP in seconds.

Fast, Efficient Consensus Algorithm: The XRP Ledger's consensus algorithm settles transactions in 4 to 5 seconds, processing at a throughput of up to 1500 transactions per second. These properties put XRP at least an order of magnitude ahead of other top digital assets.

Finite XRP Supply: When the XRP Ledger began, 100 billion XRP were created, and no more XRP will ever be created. (Each XRP is subdivisible down to 6 decimal places, for a grand total of 100 quadrillion (10^17) drops of XRP.) The available supply of XRP decreases slowly over time as small amounts are destroyed to pay transaction costs.

Responsible Software Governance: A team of full-time, world-class developers at Ripple maintain and continually improve the XRP Ledger's underlying software. Ripple acts as a steward for the technology and an advocate for its interests, and builds constructive relationships with governments and financial institutions worldwide.

Secure & Adaptable Cryptography: The XRP Ledger relies on industry standard digital signature systems like ECDSA (the same scheme used by Bitcoin) but also supports modern, efficient algorithms like Ed25519. The extensible nature of the XRP Ledger's software makes it possible to add and disable algorithms as the state of the art in cryptography advances.

Modern Features for Smart Contracts: Features like Escrow, Checks, and Payment Channels support cutting-edge financial applications including the Interledger Protocol . This toolbox of advanced features comes with safety features like a process for amending the network and separate checks against invariant constraints.

On-Ledger Decentralized Exchange: In addition to all the features that make XRP useful on its own, the XRP Ledger also has a fully-functional accounting system for tracking and trading obligations denominated in any way users want, and an exchange built into the protocol. The XRP Ledger can settle long, cross-currency payment paths and exchanges of multiple currencies in atomic transactions, bridging gaps of trust with XRP.

The Decentralised XRP Ledger

The XRP Ledger is a decentralised cryptographic ledger powered by a network of peer-to-peer servers and is the home of XRP, which is designed to bridge the many different currencies in use worldwide.

Decentralisation is a sensitive topic for crypto-enthusiasts, particularly in relation to the XRP Ledger and the role played by Ripple. But by simply looking at the definition of decentralisation, Ripple runs

Issued currencies and the ability to "freeze" assets on the XRP Ledger

XRP is the only native asset on the XRP Ledger and is required in order to conduct transactions on the XRP Ledger. XRP is counterparty-free, meaning that when someone holds XRP, they are not holding a liability, they are holding the actual currency, XRP. This foes to the very heart of the 'security token' debate.

Due to this fact: XRP cannot be frozen by any entity or individual.

All non-XRP currencies can be represented in the XRP Ledger as issued currencies. These issued currencies are tracked in accounting relationships, called "trust lines," between addresses. Issued currencies are typically considered as liabilities from one perspective and assets from the other, so the balance of a trust line is negative or positive depending on which side you view it from. Any address may freely issue (non-XRP) currencies, limited only by how much other addresses are willing to hold.

In certain cases, to meet regulatory requirements, or while investigating suspicious activity, an exchange or gateway may want to quickly freeze non-XRP issued currency balances. The freeze feature only applies to issued currencies. Because no party has a privileged place in the XRP Ledger, the freeze feature cannot prevent a counterparty from conducting transactions in XRP or funds issued by other counterparties. No one, not even Ripple, can freeze XRP.

How does the XRP Ledger compare to other blockchains?

The XRP Ledger's biggest difference from most cryptocurrencies is that it uses a unique consensus algorithm that does not require the time and energy of "mining", the way Bitcoin, Ethereum, and almost all other such systems do.

Instead of "proof of work" or even "proof of stake", The XRP Ledger's consensus algorithm uses a system where every participant has an overlapping set of "trusted validators" and those trusted validators efficiently agree on which transactions happen in what order.

As of early 2018, the amount of electricity the Bitcoin network uses per transaction is more than a family home in the USA uses in an entire day, and confirming the transaction takes hours. A single XRP transaction uses a negligible amount of electricity, and takes 4 or 5 seconds to confirm.

Furthermore, each new "ledger version" in the XRP Ledger (the equivalent of a "block") contains the full current state of all balances, so a server can synchronize with the network in minutes instead of spending hours downloading and re-processing the full transaction history.

XRP Ledger Transaction Fees

The XRP Ledger is a decentralized ledger, secured by cryptography and operated by a distributed peer-to-peer network of servers. This means that no one party, not even Ripple, can require a fee for access to the network.

However, the rules of the XRP Ledger include several types of fees, including neutral fees which protect the ledger against abuse. These neutral fees are not paid to anyone. There are also several optional ways that users can collect fees from each other, both inside and outside the XRP Ledger.

  • Transaction fee/cost - a miniscule amount of XRP destroyed to send a transaction. This cost scales with the load of the network, which protects the peer-to-peer network from spam. The current minimum transaction cost required by the network for a standard transaction is 0.00001 XRP. It sometimes increases due to higher than usual load.

  • Transfer fees - optional percentage fees that issuers can charge to transfer the currencies they issue to other addresses within the XRP Ledger.

  • Trust line quality - a setting that allows an account to value balances on a trust line at higher or lower than face value. This can lead to situations that are like charging a fee. Trust line quality does not apply to XRP, which is not tied to a trust line.

XRP Supply

While the decentralised system of validators provides XRP with some resistance to political factors, the rules of the XRP Ledger provide a simpler solution to hyperinflation: the total supply of XRP is finite. Without a mechanism to create more, it becomes much less likely that XRP could suffer hyperinflation.

The supply of XRP available to the general public does change due to a few factors:

  • Deflation - Sending transactions in the XRP Ledger destroys a small amount of XRP. Senders choose how much to destroy, with certain minimums based on the expected work of processing the transaction and how busy the network is. If the network is busy, potential transactions that promise to destroy more XRP can cut in front of the transaction queue. This is an anti-spam measure to make it prohibitively expensive to DDoS the XRP Ledger network. The transaction cost is not paid to any party: the XRP is irrevocably destroyed. Since no new XRP can ever be created, this makes XRP more scarce and benefits all holders of XRP by making XRP more valuable.

  • Account reserve amount - Each account in the XRP Ledger must hold a small amount of XRP in reserve. This is an anti-spam measure to disincentivize making the ledger data occupy too much space. XRP Ledger validators can vote to change the amount of XRP required as a reserve, to compensate for changes in XRP's real-world value. (The last time this happened was in December 2013, when the reserve requirement decreased from 50 XRP to 20 XRP .) If the reserve requirement decreases, XRP that was previously locked up by the reserve becomes available again.

Not just a digital asset for payments

If you hadn't realised already, XRP and the XRP Ledger has oodles of potential.

Besides XRP payments, the XRP Ledger has several advanced features that provide useful functions for building applications that use the Internet of Value to serve previously unknown or impractical needs.

Rather than running applications as "smart contracts" in the network itself, the XRP Ledger provides tools for settling contracts, while letting the applications themselves run anywhere, in whatever environment or container is appropriate. This "keep it simple" approach is flexible, scalable, and powerful.

  • Payment Channels allow asynchronous balance changes as fast as you can create and validate signatures.

  • Escrow locks up XRP until a declared time passes or cryptographic condition is met.

  • DepositAuth lets users decide who can send them money and who can't.A

  • Decentralized Exchange lets users trade obligations and XRP on-ledger.

  • Invariant Checking provides an independent layer of protections against bugs in transaction execution.

  • Amendments provide smooth upgrades to the existing feature set, so the technology can continue to evolve without fracturing the ecosystem or causing uncertainty around times of transition.

Ripple & The XRP Ecosystem

Often a relationship that causes high levels of toxic FUD to be spread, the relationship between XRP and Ripple has been (and will probably continue to be) a controversial one. This is particularly true online, where the debate rages between the crypto tribes (or "communities if you prefer) native to Twitter and other online platforms. For those purists that seem to have (for whatever reason) taken against XRP and Ripple, the relationship is too close.

But our view at BullsEye is the opposite: it is a relationship that should be cherished by investors and XRP enthusiasts alike.

Ripple acts as steward for the development of the XRP Ledger (but does not control it), and acts to advance XRP as a key contributor to what has been coined 'the Internet of Value': a world in which money moves the way information does today.

  • Ripple holds a large reserve of XRP in escrow. At the start of each month, 1 billion XRP is released from escrow for Ripple to use.

  • Ripple uses XRP to incentivise growth in the XRP Ledger ecosystem and sells XRP to institutional investors.

  • Ripple also sells XRP programmatically on exchanges, limited to a small percentage of overall exchange volume.

  • Ripple publishes sales figures quarterly in the XRP Markets Report. At the end of each month, any remaining XRP the company does not sell or give away is stored into escrow for a 54-month period.

The Future of XRP

In a bid to clarify its relationship with XRP and through its role as a steward of the XRP Ledger, Ripple is working hard to detangle itself from XRP by growing and strengthening the XRP ecosystem. After all, if the Internet of Value is to be realised other stewards of the XRP Ledger need to be established. Below are some of the initiatives underway which make use of XRP's features to help build the Internet of Value.


Xpring is a new initiative by Ripple that will invest in, incubate, acquire and provide grants to companies and projects run by proven entrepreneurs. Every entrepreneur will use the digital asset XRP and the XRP Ledger, the open-sourced, decentralised technology behind XRP, to solve their customers’ problems in a transformative way.

Ripple will continue to use XRP to help financial institutions remove friction from global payments. However, the characteristics of XRP and the XRP Ledger – superior speed, scalability and stability — make it perfect for entrepreneurs looking to solve problems across identity, trade finance, gaming and virtual goods, provenance, real estate, insurance, digital media and many other industries. Xpring’s entrepreneurs and companies will leverage XRP for use cases like these, among others.

More information of Xpring can be found here:

Coil - monetise your web content

Coil's model offers an alternative to the status quo of paid advertisements and selling the public’s attention to the highest bidders – a solution that will serve the people who aren’t being served well today. Coil's aim is to change the way you monetise content on the web using XRP.

Coil will use the Interledger Protocol to make the web a more vibrant market for apps and content, where everyone’s contributions are rewarded. Coil’s first product is a flat-rate subscription for consumers, which will allow them to support creators, breeze past paywalls, see less ads, and unlock additional features and content. Instead of building yet another proprietary platform, Coil will be the first company to pay out to any website using Web Monetization, a new standard for how browsers can pay websites using Interledger.

More information on Coil can be found here:




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