Ripple and XRP story

by | Jan 27, 2020 | 0 comments

The Ripple protocol is multifunction. Both payment  system and money transfers network, it allows free, real-time and  secured transactions. XRP is its native crypto.

This article is for beginners in the field of Blockchain and cryptocurrencies. The information cited below is voluntarily simplified. If, however, you feel attacked for an article with a higher reading difficulty, do not hesitate to change the cursor in the box below. 🙂

Difficulty of the article:


Also named Ripple Transaction Protocol (RTXP),  Ripple is a system for  :

1/ real time payment (RBTR)

2/ an exchange place where one can realize currency transactions

3/a money transfer network

Launched in 2012, the  Ripple network aims to permit « global low cost, real time, secured financial transactions for any size without chargeback». Ripple is both  an Open Source distributed Internet Protocol , a  consensus ledger and also a native crypto currency called  XRP. Ripple relies on a public opened and shared (ledger) data  base that uses a consensus algorithm allowing payments, exchanges and money transfers. That works whatever the payment unit is  (fiat or crypto currencies, raw materials or any other unit of account).

  It is used by banking  groups as Santander, UBS, Unicredit and also Crédit Agricole for organizing offshore clients money transfers. But the first bank that has adopted  Ripple was the German on-line bank Fidor Bank

  Among all validators, we can find different corporates, Internet access providers and the  MIT


Ripple Genesis

The former Ripple Payment protocol  (Ripplepay) has been imagined in 2004 by a Canadian IT developer  (Ryan Fugger )with the target of producing secured payment options to the ‘on line’ community through a global network.

This first step  wa s the beginning of a story  before the design of a new system led by the eDonkey network’s founder  Jed McCaleb and two other developers (Arthur Britto and David Schwartz).In May 2011, they all started to develop a new digital payment system  in which the transactions were verified by a consensus, instead of doing it by a mining process (as with Bitcoin). This new version aimed to consume less electricity than Bitcoin and generate transactions much quicker. End  2012, joined with several other specialists (Chris Larsen and some others) the team has co founded OpenCoin (reappointed Ripple Labs later in 2013) that started to develop a new Payment Protocol, named Ripple Transaction Protocol (RTXP)

As it is designed  by Ryan Fugger at the beginning, the protocol can get around the traditional banking system  fees and transactions time lags. Furthermore, any type of assets (fiat currencies, Gold, airlines miles,….) can be traded through Ripple.

 In order to maintain the network security, Ripple is based on a common ledger managed by an automatic and independent  validation servers network that constantly compare transactions. Servers can be owned by all participants, banks and market makers included.

In October 2013, Ripple Labs continued on the basis of a more advanced partnership ( ZipZap), the relationship having been perceived as a threat by the major money transfers companies, and firstly by Western Union.


A  specialty : banking and financial transactions

Since the beginning , Ripple was adopted by a growing number of financial institutions for proposing an alternative money transfers offer. The protocol  allows cross border money transfers for private clients, Corporates and banks. Following the first adoption by Fidor Bank in Munich, Ripple Labs started ( end 2014) to work with the global payment service   Earthport, combining the Ripple software with the payment services system led by Earthport (presence and running in 65 countries). Earthport clients are banking corporations as Bank of America and HSBC.

End April 2015, Western Union announced  that they are going to experiment Ripple. One month later, Commonwealth Bank of Australia   announced the same experiment too.

In 2015,on the basis of a banking secrecy  law breach and breach of the legal additional elements of the Financial Crimes Enforcement Network, Ripple Labs receives a $ 700 000 fine. The company quickly corrects the operational  procedure in order to be compliant with an agreement that permits XRP trading operations and that permits « Ripple Trade » business by recorded money services only (MSB).The improvement also contained anti money laundering transactions ‘on line’ monitoring and enhanced the transactions analysis.  

June 13, 2016, Ripple obtained  a virtual money license from the New York Financial Services State Department, becoming the fourth company with a « BitLicense ».

In August  2016, SBI Ripple Asia announced  the creation of a Japanese banking consortium within a new Ripple technology payment network. The consortium is officially  launched October 25, 2016 with 42 banks . In July 2017, 61 Japanese banks joined the group, forming more than 80 % of the total banking assets owned in Japan.

September 23, 2016, Ripple announced the creation of the first cross banking global payments’ group, based on the distributed financial technology. In April  2017, the Global Payments Steering Group (as named or GPSG)network members are the following: Bank of America Merrill Lynch, Canadian Imperial Bank of Commerce, Mitsubishi UFJ Financial Group, Royal Bank of Canada, Santander, Standard Chartered, UniCredit and Westpac Banking Corporation.

October10, 2017, Ripple announced  numerous partnerships with more than  hundred financial institutions. Those banks or payment services providers are now using the  Ripple technology for offering to their clients a real time global payment service.


The company has also created its own crypto currency  named XRP. By using it, you allow financial institutions to transfer money at a very low cost (negligible fees) and almost instantly.

As said,  XRP is the Ripple network  native crypto currency. XRP units are currently divisible by 6 decimals,  the shortest unit being named a ‘drop’ with  1 million drops equivalent to  1 XRP.

100 billion  XRP have been created   during its genesis and no more can and will be created ever.

As with Bitcoin, the system  was designed to make XRP a scarce asset  with a decreasing number of available Units. As unlinked with any third party for exchanging money, XRP is the only Ripple network’s  currency without any counter part risk. Other Ripple network’s currencies are debt underlying (liabilities), and the Ripple network users are not obliged to pay with XRP, (if you consider XRP as a store of value or as medium of payment).However, each Ripple account needs a minimum size of  20 XRP.

Over the 100 billion XRP that have been created, 20 billion of them have been stored and withdrawn by the founders ( the same people that founded Ripple Labs). They gave the remaining 80 % of the total existing XRP to  Ripple Labs, those XRP units being destinated as an incentive for market makers to improve liquidity.

 In March 2015, 67% of the original  80% that was owned by Ripple Labs, were still retained by the company..

In May  2017, in order to soothe  concerns about the XRP supply, Ripple was engaged to sell  55 billion XRP (88% of the total assets) under secured collateral . It allows to use up to 1 billion XRP every  month and give back the unused coins quantity under an additional one month contract.

 At the current price of $ 0.2333 (as of 01/20/2020), the XRP market capitalization is about USD 10 billion .

About the editor…

A passion : Economics, behavioural finance and emerging digital assets

Yves started his career in the asset management in 1986 where he worked at different positions as manager of equity funds and diversified funds. at Crédit Commercial de France and later, at Barclays group in Paris. In 1998, he took the lead of equity funds and diversified funds, then of the whole fund management business at the French team of the Dutch Robeco group  before joining Natixis Asset Management in 2012 as Director of the Equity Investment business unit. Yves left Natixis AM in 2018 to start as an independant player for professional investors and corporates (advisor and fund raiser).

He likes to engages in sports that test his endurance like running and swimming, Yves is also fascinated by social sciences, and more specifically by history and economics. But this is the economics mechanisms behavioural aspect and the markets behavioural analysis that are a constant source of thought and discussion. Since few years, the blockchain issue and emergence of crypto assets is a new field of passion and opportunities for him.

Yves Maillot

Financial markets and asset management

Yves Maillot

Financial markets and asset management

Understand ICO, STO and IEO

The ICO is a financial innovation that constitutes an important step in the transformation process triggered by the blockchain. It turns things up and down and especially the traditional relationship to property.In this article, for a second time, we are also going to analyse STO and IEO.

Real assets tokenization : use case in the real estate

Among all real assets, properties are very good candidates for tokenization, a mechanism that will facilitate democratization of investing on those assets. Because tokenization allows becoming a real estate owner for only a few hundred euros, without any loan.

Share This