XRP Global money transfer

XRP is a cryptocurrency aiming to increase the speed and reduce the cost of transferring money between financial institutions. Underpinning Ripple's xRapid product, an on-demand liquidity solution, XRP is used as a bridge currency for financial institutions exchanging value between multiple fiat currencies. XRP is the native token of the XRP Ledger, an open-source cryptographic ledger powered by a peer-to-peer network of nodes.

Background

Founded in 2012 by Chris Larsen and Jed McCaleb, Ripple (Formerly known as Opencoin) is a technology company that develops the Ripple payment protocol. Ripple enables banks, payment providers, digital asset exchanges, and corporations to send money globally using blockchain technology. Leveraging the prior work of Ryan Fugger, in 2012 Ripple created the XRP Ledger (formerly known as Ripple Consensus Ledger), an open-source cryptographic ledger powered by a peer-to-peer network of nodes. XRP is the native asset of the XRP ledger.

In 2004, Ryan Fugger founded RipplePay, a financial technology company aiming to create a peer-to-peer payments network. Separately, in 2011, a team of Jed McCaleb began the development of a new consensus network for digital currencies that would ultimately become the XRP Ledger. Later Chris Larsen, David Schwartz, and Arthur Britto, would join the project, and in 2012 McCaleb and Larsen approached Ryan about RipplePay. After discussion with the RipplePay community Ryan handed over the project to McCaleb and Larsen, and in September 2012 they founded Opencoin (re-branded to Ripple Labs in 2013).

In 2013 Ripple released XRP, a native token on the Ripple Consensus Ledger. At launch, it created 100 billion XRP tokens of which 80 billion tokens were allocated to the company and 20 billion were given to the three founders. Over the course of 2013, Ripple would raise over $7.5 million from some of the most prestigious venture firms in the united states. Later that year Jed McCaleb would leave the company over internal disputes around the company's vision and would ultimately go on to found Stellar.

After the initial release of the XRP Ledger, Ripple focused its efforts on getting financial institutions to use the ledger to process remittances. Entering the cross border payments market led to regulatory scrutiny, with FinCEN fining Ripple Inc for violating the bank secrecy act in 2015. As part of the remedial plan related to the fine, Ripple Inc agreed to enhance the anti-money laundering capabilities of the XRP protocol and stricter permissioning requirements were added for additional participants to join the network.

To further enhance the credibility of XRP as a partner for traditional financial institutions, Ripple obtained a BitLicense from the State of New York in 2016. The upside of these enhancements and engagement with regulators was it gave XRP the capability to more deeply integrate with the traditional financial system.

Today XRP's primary use is as a bridge currency underpinning Ripple's xRapid product, an on-demand liquidity solution. xRapid allows financial institutions to exchange value between fiat currencies through a network a digital asset exchanges that use XRP as a bridge currency for its liquidity.

To date Ripple has raised over $120 million in venture funding, and XRP is one of the largest cryptocurrencies in the world by market capitalization. Ripple and its founding team own the substantial majority of the XRP supply of which Ripple the company programmatically sells on a quarterly basis. Since 2016 Ripple has sold over $1.1 billion worth of XRP and XRP sales remain Ripple's dominant source of revenue (and controversy).

Technology

XRP's foundation is a shared public ledger used by network participants to exchange value globally. A supermajority of validators is required for the network to arrive at consensus to validate transactions initiated across the network.

Ripple Inc, has focused on integrating user verification protocols so network participants are able to define which users they trust and how much they trust them. This has the effect of causing transactions to “ripple” across the network. Because if two users without a direct relationship initiate a transaction across the network. It ripples outward finding a path linking the users together from their trusted relationships to complete the transaction.

For users just getting started, Ripple Inc. maintains a unique node list users can select by default representing validators with a history of reliably operating on the XRP network.

Cross-currency transactions typically take 3 – 5 seconds to process across the ledger. Once initiated, XRP’s pathfinding algorithm identifies the quickest least expensive way to complete the transaction. Generally, for the pathfinding algorithm to work optimally, a large number of market makers need to be operating on the network so sufficient liquidity is available to efficiently complete transactions.

To encourage the development of a robust ecosystem around the ledger, XRP maintains a variety of APIs to help nodes and other third parties interact with it based on the REST API standard. Invoicing and wallet solutions allow businesses to incorporate it as a payment option for their customers.

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