Creation of XRP

XRP was created in 2012 by Jed McCaleb, Arthur Britto, and David Schwartz. They were joined by entrepreneur Chris Larsen in founding Ripple Labs, originally called OpenCoin. Unlike Bitcoin, which was mined into circulation, XRP’s entire supply of 100 billion tokens was pre-mined at launch. Ripple Labs retained a large portion of tokens to fund operations and incentivize adoption.

Ripple’s purpose was distinct from Bitcoin’s. Instead of being a decentralized replacement for money, XRP was designed to act as a bridge currency for cross-border payments, aiming to make global money transfers faster, cheaper, and more efficient than existing banking systems like SWIFT.

How XRP Was Built

XRP’s technology differs significantly from Bitcoin and Ethereum. It uses the Ripple Protocol Consensus Algorithm rather than Proof of Work or Proof of Stake. Validators are chosen participants that maintain the network and confirm transactions quickly without mining. Transactions settle in about 3-5 seconds, and the network can handle roughly 1,500 transactions per second, far quicker than SWIFT. Since there is no mining, XRP consumes far less energy than Bitcoin’s Proof of Work systems. Supply is capped at 100 billion XRP with no new coins created. A small amount of XRP is burned as a transaction fee, which creates slight deflationary pressure over time.

Philosophy Behind XRP

While Bitcoin was created as a decentralized, anti-establishment alternative to banks, XRP’s philosophy is more pragmatic and oriented toward working with banks and financial institutions. Ripple Labs positioned XRP as a tool to modernize finance by solving inefficiencies in global payments, particularly the delays and high fees of cross-border transfers. This alignment with traditional finance has been both a strength, through adoption by banks, and a source of criticism due to concerns about centralization.

Utility of XRP

XRP is primarily used within Ripple’s network of products and protocols. As a bridge currency in RippleNet’s On-Demand Liquidity service, it can connect two fiat currencies in real time and remove the need for banks to park cash in advance in foreign accounts on both sides of a payment route (nostro/vostro accounts). Financial institutions can use XRP to settle international transactions faster and at lower cost than many traditional systems. It also provides liquidity in markets with limited currency pairings. Beyond institutional use, XRP is widely traded by retail investors on global crypto exchanges.

What Makes XRP Attractive as an Investment

Speed and low fees make XRP one of the faster and cheaper major digital assets for transfers. Ripple has built collaborations with institutions and payment providers across Asia-Pacific, Europe, and Latin America. In 2023, Ripple secured a partial legal win against the US Securities and Exchange Commission (SEC), with a court ruling that XRP itself is not a security when sold on exchanges, which reduced legal uncertainty for investors. XRP also targets a clear use case by improving cross-border settlement systems that move trillions of dollars each year.

Criticisms and Detractors

Critics argue that because Ripple Labs holds a large share of the XRP supply and influences validator selection, the network is less decentralized than Bitcoin or Ethereum. That concern was amplified by the SEC lawsuit from 2020 to 2023, which created regulatory uncertainty in the United States and led to exchange delistings, some of which were later reversed. Even with partnerships across banking and payments, adoption of XRP in core cross-border rails remains limited. At the same time, XRP competes with other payment solutions, including Stellar, stablecoins, and central bank digital currencies.

 XRP Technology and Protocols

RippleNet is a global payments network built on Ripple’s technology, where XRP can serve as the settlement asset. Underneath it sits the XRP Ledger (XRPL), a decentralized public blockchain that records XRP transactions and supports smart contracts to a limited extent. To link these systems with banks, other blockchains, and traditional ledgers, Ripple developed the Interledger Protocol, an open standard that lets value move across different networks. Together, RippleNet, XRPL, and Interledger form a stack designed for faster, interoperable payments.

The Future of XRP

XRP could grow as a settlement layer for cross-border payments if Ripple continues to expand partnerships with banks and remittance providers. The partial court victory in 2023 improved investor confidence, but ongoing appeals and regulatory scrutiny will shape XRP’s path in the United States and internationally. At the same time, developers are exploring new uses for XRPL, including tokenization, NFTs, and DeFi applications, though adoption is still modest compared with Ethereum. 

The rise of central bank digital currencies could complement XRP by expanding digital settlement options, or it could diminish its role if CBDCs (Central Bank Digital Currencies) become the preferred standard for cross-border payments.

Summary

XRP is a digital asset designed to integrate with banks rather than replace them, offering a faster and cheaper alternative to legacy payment systems. Built in 2012 by Ripple Labs, it uses a unique consensus protocol instead of mining, which enables high throughput and energy efficiency.

Its appeal comes from real-world utility in cross-border payments, institutional partnerships, and recent regulatory progress. Detractors emphasize centralization risks, competition, and uneven adoption. XRP’s future will depend on regulatory clarity, deeper integration with global finance, and its ability to remain competitive as CBDCs and rival blockchain payment solutions evolve.