XRP and Ripple: Complete Guide
XRP is the native digital asset of the XRP Ledger (XRPL), an open-source, decentralized blockchain designed for fast, low-cost payments. Often discussed alongside Ripple — the company that created XRP and uses it in its cross-border payment solutions — XRP has been one of the most prominent and controversial cryptocurrencies since its launch in 2012.
This guide covers how XRP and the XRP Ledger work, the relationship between XRP and Ripple, the landmark SEC lawsuit and its resolution, and the state of the XRP ecosystem in 2026.
Understanding XRP, the XRP Ledger, and Ripple
It is essential to distinguish between three related but separate entities:
XRP
XRP is the digital asset — the cryptocurrency itself. It is the native token of the XRP Ledger and serves as a bridge currency for cross-border payments. XRP can be bought, sold, held, and used independently of Ripple the company.
XRP Ledger (XRPL)
The XRPL is the blockchain — the decentralized, open-source distributed ledger on which XRP operates. It was created in 2012 and has processed billions of transactions. The XRPL supports not just XRP but also custom tokens, a built-in decentralized exchange, and NFT functionality.
Ripple (Ripple Labs)
Ripple is the company — a fintech enterprise headquartered in San Francisco that uses XRP and the XRPL in its suite of payment solutions. Ripple is a for-profit company with investors, employees, and customers. While Ripple is the largest entity in the XRP ecosystem, the XRPL operates independently and would continue to function even if Ripple ceased to exist.
How the XRP Ledger Works
Consensus Mechanism: Federated Byzantine Agreement
Unlike Bitcoin (proof of work) or Ethereum (proof of stake), the XRPL uses the XRP Ledger Consensus Protocol — a form of Federated Byzantine Agreement (FBA):
- Each validator maintains a Unique Node List (UNL) — a list of validators it trusts to behave honestly
- Validators propose transaction sets for the next ledger version
- Through iterative rounds of voting, validators converge on a single agreed-upon set of transactions
- A new ledger version is finalized when at least 80% of trusted validators agree
This consensus process takes 3-5 seconds, making XRPL one of the fastest settlement networks in existence.
Key Design Features
| Feature | Description |
|---|---|
| Settlement time | 3-5 seconds |
| Transaction cost | ~$0.0001 (0.00001 XRP burned per transaction) |
| Throughput | 1,500 TPS |
| No mining/staking | Consensus-based validation, no block rewards |
| Pre-mined supply | 100 billion XRP created at genesis |
| Deflationary | Transaction fees are burned, reducing supply |
No Mining, No Staking
A unique characteristic of the XRPL is that there is no mining and no staking. All 100 billion XRP were created when the ledger was launched. Validators do not receive XRP rewards — they run nodes for the utility of participating in the network. This makes XRPL energy-efficient but also means that validator incentive alignment relies on the validators' own interest in maintaining the network.
Built-in DEX
The XRPL has a native decentralized exchange built directly into the protocol layer. Users can place limit orders and trade any issued asset on the XRPL without smart contracts. This DEX supports:
- XRP/fiat gateway token pairs
- Cross-currency payments (automatic path-finding through the order book)
- Token issuance (any entity can issue tokens on the XRPL)
Escrow and Payment Channels
The XRPL supports advanced features at the protocol level:
- Escrow: Time-locked or condition-based holding of XRP. Ripple uses escrow to manage its XRP holdings transparently — 55 billion XRP was placed in escrow with monthly releases of up to 1 billion XRP
- Payment channels: Off-ledger payment channels for high-frequency, near-instant transactions (similar in concept to Bitcoin's Lightning Network)
- Checks: Deferred payment instruments (like paper checks)
- Multi-signing: Native multi-signature support for accounts
XRP Tokenomics
Supply
- Total created: 100 billion XRP (at genesis, no more can ever be created)
- Circulating supply: Approximately 55-57 billion XRP (as of 2026)
- Ripple holdings: Ripple holds a significant portion of remaining XRP, with most locked in escrow contracts that release up to 1 billion XRP monthly
- Burned: Transaction fees are permanently destroyed, making XRP deflationary over time
Distribution
The initial distribution of XRP has been a point of contention:
- 80 billion XRP was allocated to Ripple Labs
- 20 billion XRP was allocated to the three co-founders
- Ripple has gradually sold, donated, and distributed XRP over the years while placing most in escrow
Escrow Mechanism
In December 2017, Ripple locked 55 billion XRP in a series of escrow contracts on the XRPL:
- 55 escrow contracts of 1 billion XRP each
- One contract expires each month
- Unused XRP is re-escrowed for a future month
- This provides transparency and predictability to XRP's supply schedule
Ripple's Products and Services
RippleNet (Ripple Payments)
RippleNet (rebranded as Ripple Payments) is Ripple's flagship product — a global payment network connecting financial institutions:
- Banks and payment providers use RippleNet for cross-border transactions
- On-Demand Liquidity (ODL): Uses XRP as a bridge currency to enable instant settlement without pre-funded nostro/vostro accounts
- Processing: Handles billions of dollars in cross-border transactions
How ODL Works
Traditional cross-border payments require banks to maintain pre-funded accounts (nostro/vostro accounts) in destination currencies. This locks up capital and is expensive. ODL uses XRP to eliminate this requirement:
- Source bank converts local currency to XRP
- XRP is transferred to the destination country in seconds
- XRP is converted to the destination currency
- Total settlement time: seconds instead of days
This model saves financial institutions significant capital that would otherwise be tied up in pre-funded accounts.
Ripple CBDC Platform
Ripple offers a Central Bank Digital Currency (CBDC) platform built on private XRPL-based ledger technology. Several central banks and governments have explored or piloted CBDC solutions using Ripple's technology.
Ripple USD (RLUSD)
Ripple launched RLUSD, a US dollar-denominated stablecoin, to complement its payment network and provide a stable asset for institutional use on the XRPL and Ethereum.
The SEC Lawsuit
Background
In December 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen, alleging that XRP sales constituted unregistered securities offerings. The lawsuit sent shockwaves through the cryptocurrency industry and caused XRP's price to plummet. Major U.S. exchanges delisted XRP.
Key Rulings
The case produced several significant rulings:
July 2023 — Summary Judgment (Judge Analisa Torres):
- Institutional sales of XRP (directly to sophisticated buyers): Constituted unregistered securities offerings
- Programmatic sales on exchanges (to retail buyers): Did not constitute securities offerings
- Other distributions (employee compensation, developer grants): Did not constitute securities offerings
This ruling was groundbreaking — it established that a digital asset is not inherently a security but can be sold in a manner that constitutes a securities offering, depending on the context.
Resolution
The SEC's case against Ripple reached resolution, providing much-needed regulatory clarity for XRP and the broader cryptocurrency industry. XRP was re-listed on major U.S. exchanges, and institutional interest renewed. The case set important legal precedents for how digital assets are classified under U.S. securities law.
Impact on the Industry
The Ripple case has had far-reaching implications:
- Established that secondary market sales of digital assets are not necessarily securities transactions
- Provided a framework for analyzing digital asset sales under the Howey Test
- Influenced how other cryptocurrency projects structure their token distributions
- Contributed to ongoing regulatory clarity efforts in the United States
XRP in 2026
Institutional Adoption
With regulatory clarity in the United States, XRP has seen renewed institutional interest:
- Major exchanges have re-listed XRP for U.S. trading
- Financial institutions are evaluating and deploying ODL
- Ripple has expanded partnerships in Asia, the Middle East, and Latin America
- XRP ETF discussions have emerged following the precedent set by Bitcoin and Ethereum ETFs
XRPL Ecosystem Growth
The XRPL ecosystem has expanded beyond payments:
- AMM (Automated Market Maker): Native AMM functionality added to the XRPL
- NFTs: XLS-20 standard for native NFTs on the XRPL
- Sidechains: EVM-compatible sidechains bring smart contract functionality
- DeFi: Growing DeFi ecosystem with lending, borrowing, and yield products
- RLUSD: Ripple's stablecoin adding liquidity to the ecosystem
Hooks
Hooks are a smart contract-like feature for the XRPL that allows lightweight, custom transaction logic. Unlike full smart contracts on Ethereum, Hooks are designed to be:
- Lightweight and efficient
- Impossible to create infinite loops (bounded computation)
- Directly integrated with the XRPL's transaction processing
XRP Compared to Other Payment Cryptocurrencies
| Feature | XRP | Bitcoin (Lightning) | Stellar (XLM) | Solana |
|---|---|---|---|---|
| Settlement time | 3-5 seconds | under 1 second | 3-5 seconds | ~400ms |
| Transaction cost | under $0.001 | under $0.01 | under $0.001 | under $0.001 |
| Focus | Institutional payments | P2P payments | Financial inclusion | General purpose |
| Consensus | FBA | PoW + Channels | SCP (similar to FBA) | PoH + Tower BFT |
| Supply cap | 100B (pre-mined) | 21M (mined) | 50B (created) | Inflationary |
Security and Storage
Storing XRP
XRP can be stored in:
- XUMM (Xaman): The most popular XRPL wallet, supporting all XRPL features
- Ledger hardware wallets: Cold storage for maximum security
- Trust Wallet: Multi-chain wallet with XRP support
- Exchange accounts: Convenient but custodial
Account Reserve
The XRPL requires a minimum account reserve of 10 XRP (reduced from the original 20 XRP) to prevent spam account creation. Additional reserves of 2 XRP are required for each trust line (connection to an issued token) or other object owned by the account.
Seed Phrase Management
Like all cryptocurrencies, the security of your XRP depends on the security of your private keys and seed phrase. The XRPL uses its own key derivation scheme, but many wallets support BIP-39 compatible seed phrases.
Generate a secure seed phrase for your XRP wallet with the SafeSeed Seed Phrase Generator. Whether you are using XUMM, a Ledger hardware wallet, or another XRPL-compatible wallet, your seed phrase is the master key to your XRP. Store it securely and never share it.
FAQ
What is XRP used for?
XRP is primarily used as a bridge currency for cross-border payments. Financial institutions use Ripple's On-Demand Liquidity (ODL) service to convert local currencies to XRP, transfer it across borders in seconds, and convert it to the destination currency. XRP is also used for transaction fees on the XRPL and as a tradeable digital asset.
Is XRP the same as Ripple?
No. XRP is the cryptocurrency. Ripple is the company that uses XRP in its payment products. While closely associated, they are separate entities. The XRP Ledger is an open-source blockchain that operates independently of Ripple.
Is XRP a security?
A U.S. federal court ruled that XRP itself is not a security, but certain sales of XRP (specifically institutional sales with investment contracts) could constitute securities offerings. Secondary market purchases of XRP on exchanges were found not to be securities transactions.
How fast are XRP transactions?
XRP transactions settle in 3-5 seconds — significantly faster than Bitcoin (10-60 minutes) and Ethereum (12 seconds for L1, ~13 minutes for finality). This speed makes XRP well-suited for payment applications.
How many XRP exist?
100 billion XRP were created at the genesis of the XRP Ledger in 2012. No additional XRP can ever be created. Transaction fees are burned, making XRP mildly deflationary over time. As of 2026, approximately 55-57 billion XRP are in circulation, with much of the remainder held in Ripple's escrow accounts.
Can I stake XRP?
No, not in the traditional sense. The XRPL does not use proof of stake, so there are no staking rewards for holding XRP. Validators do not earn XRP for validating transactions. However, some DeFi protocols on the XRPL offer yield opportunities for XRP holders.
What is the XRP account reserve?
The XRPL requires a minimum of 10 XRP in every account as a reserve. This is a spam-prevention mechanism — by requiring a minimum balance, the protocol prevents attackers from creating millions of empty accounts to bloat the ledger. Each trust line or object owned by the account requires an additional 2 XRP reserve.
How does XRP compare to SWIFT?
XRP and Ripple's ODL aim to compete with SWIFT for cross-border payments. Key differences: SWIFT messages (instructions only, no settlement) take 1-5 business days; XRP settlements complete in 3-5 seconds. SWIFT requires pre-funded nostro/vostro accounts; ODL uses XRP to eliminate pre-funding requirements. However, SWIFT handles far more volume and has a much larger network of connected institutions.