At the time of writing there are 1378 currencies and counting. That’s an insane amount of currencies that all want your money to drive their success and adoption. But lots of them are either outright scams or are just plain useless. Most are looking to be some sort of replacement for the banking system – or started that way. Or others are trying to do various things like be a decentralized internet or be the backbone of the internet of things. But one is not trying to change the status quo much, in fact it’s just looking to make it easier. Ripple or XRP is looking to hook up with the banks. Indeed, Xrp is neither a scam nor useless. It has a strong centralized company behind it, it is a fast and reliable coin, it has a stable and predictable monetary policy, and a very strong use case. And even more recently Xrp rose from around $0.20 all the way to a new all time high of $2.24, a 1020% gain.

So let’s dig in!

The Company :

Ripple is actually the name of the company behind the currency XRP. And the name Ripple isn’t the first iteration of the company, its changed the name a few different times. The original founder, Ryan Fudder, was trying to make a system where communities could easily create their own currency for online use and he created Ripplepay.com. But along the way Ryan bumped into two fellow crypto enthusiasts, Jeb McCaleb and Chris Jansen. Eventually, Jeb and Chris convinced Ryan to hand over Ripplepay to them. Now owning Ripplepay, Jeb and Chris continued their work on a new consensus algorithm which was faster and more efficient than bitcoin’s; then together they founded Opencoin. They released XRP for use in 2012. However, they were looking to increase development and after a series of funding rounds with venture capital firms Opencoin’s name was changed to Ripple labs in 2013. The company went through another re-branding in 2015 to what we know currently, Ripple. As Ripple changed, their basic mission changed a little as well.

The coin :

Ripplepay was originally developed for online communities to have their own currency. However, with the leadership of Jeb and Chris the objective and marketing for XRP has shifted. XRP now focuses on low cost and quick transactions. This makes it ideal for several groups of people namely banks, payment processors, and workers who are sending money to family members abroad or remittance payments.

XRP was designed primarily for banks and foreign exchange settlement. It’s easy to look at XRP as a currency for bankers and perpetuating the status quo. That is disturbing to a lot of old crypto enthusiasts who got involved because they wanted to destroy the old system. But while creative destruction is happening, making the old system better is a worthy cause too. Indeed, we can see why XRP is badly needed. Here are some stats:

Traditional settlement time takes 2+ days for foreign funds

International wires cost around $21 or more

4% fail to make it to the destination

12% of forex transactions result in error

The total costs across the board are near 1.6 trillion.

XRP aims to dramatically cut those times, costs, and errors to negligible amounts. With XRPs current performance we can see how much better and faster this system is in comparison to the traditional banking methods.

Payments settle in 3 seconds not 2+ days

It can handle the same amount of transactions per second as the Visa system.

Costs 0.0004 USD to move money on the network

Image taken from Ripple’s twitter

Ripple’s system even beats the majority of cryptos (all of the ones I’m familiar with) with speed and costs. There will always be a need for a fast and cheap way to move money across oceans and XRP currently holds the title for doing it most efficiently. Further, with backing from many venture capital groups and the network effects Ripple has built for itself, it doesn’t look like it’s going away soon.

Ripple’s Monetary Policy :

One point of concern among crypto followers is that its fairly centralized, which is in fact true. The full amount of Ripples are already in existence – 100 billion. There is no mining or inflation – in the long run. The breakdown goes as follows:

20 billion to creators 7 Billion was given by Chris to the Ripple foundation 9 Billion is in various stages of sell off by Jeb (Jeb has left Ripple for Stellar lumens) 4 Billion is unknown – likely owned by Chris or other creators

80 billion to Ripple Labs – broken down further 200 million given to charity 55 billion into an escrow for steady release into the market 24.8 billion for development and other uses



The escrow is released into the market at around 3% inflation rate per year until it’s all gone. However, the 100 billion is the total amount of XRP ever issued. The escrow is released slowly into the marketplace. This was to combat investor’s fear of a massive dumping by the Ripple foundation.

Further, XRP is deflationary in the long run. In order to process transactions on the network you pay your transaction fee of 0.00001 XRP but it’s burned by the network, gone forever.

Points of concern with Ripple and XRP. :

One major point of concern is that one of the founders, Jeb controls a large portion of the total supply, and is no longer with the Ripple. However, a simple google search can put this worry to rest. Jeb and Ripple have reached an agreement for the sale of his portion of XRP which is as follows:

Original article here:

“Jeb can sell 10,000 usd worth of XRP each week during the first year.” Then the terms and conditions outlay the further rules for Jeb’s sell off as follows:

“$20,000 per week during the second, third and fourth years, 750m XRP per year for the fifth and sixth years, 1bn XRP per year for the seventh year, and 2bn XRP per year after the seventh year.”

As this agreement happened when Jeb left Ripple in 2014 it’s safe to say that there is little to be concerned about as the market has already priced this in. The only real risk is that Jeb might do a mass sell off. But that would hurt his earnings and he would be in violation of his contract with Ripple meaning he’d face legal repercussions. Bad for all parties involved, the incentives just aren’t there.

Further this goes to show that Ripple is careful with the massive amounts of funds on hand. And they are not seeking to destroy their own wealth as demonstrated by the above example. They are focused on building a fast and efficient payment settlement solution for banks. They are not interested in creating a centralized scam coin.

A second point is that the banking customers that use Ripple’s platform do not have to use XRP to transfer money. It’s the cheapest and fastest option for them to do so. But Ripple’s platform does offer other alternatives.

Ripple’s team is focused more on getting banking customers and growing it’s platform first. Then it plans to position XRP as a cheap and efficient settlement currency rather than the IOUs the platform offers. But ultimately banks will only use XRP if it’s cheaper and faster than the other alternatives.

Conclusion :

Ripple and XRP came from a very low beginning but has since grown into the third – briefly second – largest coin by market cap. That is no easy feat. Further, XRP has one of the strongest use cases in the cryptospace, in my opinion. I know I’ll hurt the hardcore crypto-anarchy types but banks aren’t going anywhere. And Ripple has realized a market need and is playing to that niche. For the foreseeable future this is going to be a strong need. If we just look at remittance flows from the United States to other countries. It amounts to 133 billion in 2015. And that’s not the only use case for XRP either. As Ripple adds more banks to their accounts the value of XRP might continue to grow. Overall, this is likely a very good bet in the long run.

Disclosure :

I try to be as unbiased as possible with these articles. But I should state I hold some XRP. But it is a minority asset in my portfolio.

As always, do your own research and do not invest more than you can afford to lose. Best of luck.