What Is XRP (XRP) and How Does it Work?

What Is XRP?

XRP is the native currency of the XRP Ledger. However, there are no mining processes involved to mint new units of XRP as of now. The pre-mined amount of XRP is currently 100 billion units! That being said, only a fraction of that is currently in circulation.

What Is the XRPL?

The XRPL is a payment protocol and network designed to enable fast, low-cost international money transfers. Unlike traditional blockchain systems, the XRPL operates on a consensus algorithm rather than proof of work or proof of stake. It's essential to differentiate between the XRPL, the open-source public decentralized blockchain, and XRP, the native digital asset that facilitates transactions on the network.

How Does the XRPL and XRP Work?

XRPL uses Federated Consensus as the validation system which requires 80% or more of the validators to agree to reach consensus, meaning that a new ledger is added to the overall history, and forward progress happens.

Challenges and Criticisms Regarding the XRP Ledger

Despite its strengths, the XRP Ledger faces several challenges. Concerns about centralization arise from the fact that the XRP Ledger Labs controls a significant portion of XRP. Additionally, the company has been entangled in legal issues and regulatory scrutiny, particularly in the United States. XRP's market volatility also presents risks for investors and financial institutions alike.

Of course, there has also been the hot topic of XRP directly going against what cryptocurrency stands for: decentralised currency. By being a single entity that controls several cryptocurrencies, there is the argument to be made that they are no different than the very system that cryptocurrency was created to destroy.

Future of the XRPL

With 10+ years of error-free functioning and enterprise companies as champions, XRPL has established reliability. Designed with sustainability in mind, XRPL is focused on creating new value for long-term growth, attracting companies and developers to solve real problems and generate real value now and into the future.

Closing Thoughts

XRP have established themselves as powerful tools in the world of cross-border payments. With their speed, efficiency, and growing adoption, they are well-positioned to influence the future of digital transactions, despite the challenges they face. As the cryptocurrency landscape evolves, XRP will likely remain at the forefront, driving innovation in the financial industry.