What is Ripple (XRP)?

what is ripple“The Goliath that Never Was”

The Ripple cryptocurrency is the third most valuable crypto coin by market capitalization, at the time of writing.

Ripple is different to a number of the other coins in that it’s focused on building out an infrastructure layer for financial institutions, and is widely seen as being the second most valuable behind Bitcoin.

The aim of Ripple is to create a system for banks whereby they are able to accept & manage payments through a completely decentralized system (using blockchain technology).

Whilst the Ripple token is the form of trading mechanism with this system, not much emphasis is placed upon it. Rather, a company has been established to facilitate the adoption of the infrastructure layer for banks. This has given investors the opportunity to actually balance the “price” of the currency against something of value (unlike most of the other coins).

Founded in 2012, Ripple was one of the first altcoins to be created after Bitcoin (even pre-dating Ethereum by 1 year). Due to the independent nature of the platform, Ripple has been favoured by banks as a closing mechanism due largely to its improved security and absence of fees.

What is Ripple?

Ripple is somewhat unique in the crypto world, as its development began in 2004 (before blockchain or Bitcoin was even conceived). Most of the new coins developed today are simply trying to join the Bitcoin gravy train, Ripple wasn’t.

The coin that everybody knows was released in 2012 after the team developed their transfer protocol (similar but independent to Bitcoin’s) and what they termed the “Bitcoin Bridge” – a mechanism through which their Ripple system could send, accept and manage transactions of any fiat currency sent to Bitcoin addresses (thus removing the main barrier to Ripple’s adoption – integration with Bitcoin’s infrastructure).

Due to the nature of their product (faster processing & lower fees), the team focused on the banking sector and financial institutions in 2014, after receiving money from several prominent venture capital firms.

Renaming themselves to “RippleLabs”, they became one of the few companies in the crypto space to be operating profitably and with their own underlying technology.

Despite their outsourcing of their Ripple software in 2013, the big benefit to Ripple’s take on the decentralized world is they actually are able to control the destiny of their infrastructure, addressing problems and providing centrally-created solutions.

Seen as a major boon over the likes of Bitcoin (whose primary weakness is its lack of central leadership), Ripple’s focus on the finance sector started to appear to be paying off, with adoption from a growing consortium of institutions from JPMorgan to Santander.

The most important thing to note about this is that it’s not got the same intent as Bitcoin. Ripple doesn’t want to be a currency but a means of transaction. BIG difference.

Whilst its market cap price doesn’t really reflect this difference to the leader, it’s touted as being the “one to watch” in the long run. Certainly more substance than Bitcoin.

Who created it?

What became Ripple was developed by Vancouver-based developer Ryan Fugger, who wanted to create his own currency exchange specializing in a completely decentralized money.

RipplePay.com was released in 2005 as an online financial service to provide secure financial payments. As a result of this, Fugger ended up meeting Jed McCaleb of eDonkey network,which was designed and built by Arthur Britto and David Schwartz.

All 4 men decided to start working together and eventually the idea of “OpenCoin” was created. This built on Fugger’s ideas and the Ripple Transaction Protocol (RTXP) was created, forming the basis for the “Ripple” digital currency.

After taking on funding and shifting their focus towards banking, the “RippleLabs” company was created as a vehicle through which their transactional infrastructure could be shared with paying clients. A rarity in the crypto world, and hailed as one of the key reasons why Ripple is a good bet moving forward, the focus on enterprise has opened doors that would have never existed otherwise.

The runner & management team is as follows:

  • Brad Garlinghouse
    • Brad is the current CEO of Ripple and a member of the Board of Directors. Prior to Ripple, Brad served as the CEO of file collaboration service Hightail. Previously, he was President of Consumer Applications at AOL from 2009 to 2012 and held various positions at Yahoo! from 2003 to 2009, including Senior Vice President. Brad formerly served as CEO of Dialpad Communications, held management positions at SBC Communications and @Home Network and was an advisor to Silverlake Partners. He currently serves on the Board of Directors of Animoto and OutMatch and has held board positions at Ancestry.com and Tonic Health.
  • Chris Larsen
    • Legendary Silicon Valley angel investor and company executive – Larsen is a Co-founder & Executive Chairman (previous CEO) of Ripple (not to be confused with the Ripple token), having successfully founded & lead online mortgage lender e-loan to a $1bn acquisition. A long-time advocate for privacy rights, Larsen has been a strong proponent of “decentralized” technology for a long time.
  • Ryan Fugger
    • The original mastermind behind what would become Ripple, Fugger worked on a local currency exchange system in Vancouver. He wanted to build a decentralized monetary system that could effectively empower individuals and communities to “create their own money”. He left Ripple in 2011 and now advises ICO’s.
  • Jed McCaleb
    • Programmer from the US responsible for developing eDonkey, Overnet and the Bitcoin exchange Mt.Gox. He was one of the principle founders & developers of Ripple.
  • David Schwartz
    • Chief Cryptographer at Ripple – as one of the original proponents of Ripple’s consensus network, he is often regarded as the brain behind the intellectual advantage that Ripple has over the plethora of other coins out there.

Whilst the team isn’t a hugely important factor with this type of setup, what’s vital to appreciate is that they’re designed around a central core of people with a common shared goal.

This is rare in the crypto space, and should be considered deeply when looking at the various coins available today.

Why Does It Exist?

The core reason why Fugger decided to jump on the crypto bandwagon was because he felt that it was not only conducive with his own ideas of a decentralized currency, but it also allowed him a more accepting market through which his work could be appreciated.

Before attempting to build and infrastructure layer for banks, the Ripple system was designed to solve several issues within the Bitcoin infrastructure, namely enhanced security, faster processing times and lower exchange fees.

The whitepaper for Ripple mentions the following…

While several consensus algorithms exist for the Byzantine Generals Problem, specifically as it pertains to distributed payment systems, many suffer from high latency induced by the requirement that all nodes within the network communicate synchronously.

In this work, we present a novel consensus algorithm that circumvents this requirement by utilizing collectively-trusted subnetworks within the larger network.

We show that the “trust” required of these subnetworks is in fact minimal and can be further reduced with principled choice of the member nodes. In addition, we show that minimal connectivity is required to maintain agreement throughout the whole network.

The result is a low-latency consensus algorithm which still maintains robustness in the face of Byzantine failures. We present this algorithm in its embodiment in the Ripple Protocol.

You’re able to view the Whitepaper in full here.


Whilst its coin price is low, the simple fact with this setup is that it’s been created with a large amount of infrastructure in the backend.

An enterprise outfit – Ripple – centrally managed community & technology infrastructure and completely focused team have made this the favoured long term pick from many involved in the crypto community.

As mentioned, the main predicator of its success lies on the number and depth of banking institutions who are using its settlement technology to improve their service. Notice, it’s not trying to be a “currency” nor is it trying to trick people into buying a worthless coin that does nothing.

The Ripple company is privately funded, actually has a balance sheet (who knew) and has received several sizeable investments from a number of respected Silicon Valley VC’s.

Whilst none of this is suggestive of success (only market adoption can do that), the point is that Ripple has a strong value proposition which the likes of Bitcoin and Ethereum have trouble matching. This is very important.

As such, when considering the overall adoption of Ripple, the following is clear – its transactions are steadily rising thanks to its wider adoption as an infrastructure layer for banks. The network is relatively healthy, and since it has central leadership, is able to fix and mitigate any potential issue the future may bring.

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  1. Great piece. Ripple might have a lot of haters, still we can’t take the fact that it was a solid project.

    Really enjoyed reading this article.


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