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What Are the Top 3 Things People Get Wrong About XRP?

XRP may be one of the most widely misunderstood cryptocurrencies in the world. XRP used to hold firm the #3 spot in the cryptocurrency world, so what happened to it? What is XRP? And what do people get wrong about it?

Ripple (XRP) is a cryptocurrency created by Ripple Labs. It’s design intent is to ease the facilitation of payments across international borders. Currently, it can be very expensive to send cash across the world, XRP seeks to make that process cheaper. While this is a use-case that the everyday person might not encounter, it is very useful for a number of entities. Namely, it’s a fantastic use-case for people and institutions sending large amounts of money around the world. It is also for people who have to send money back to their home country who are working abroad.

Here’s a look at the three biggest misconceptions about XRP:

Ripple (XRP) Logo

1) Ripple is Not Necessarily XRP

Ripple Labs might have created the XRP currency, but Ripple Labs itself does not actually own XRP. XRP is its own independent cryptocurrency that anyone can buy. Ripple acts as a platform that transfers XRP around to the world, but it is not the token itself. But this is where the waters start to get a little muddy and unclear.

Ripple holds around 48 billion XRP in escrow, which the company claims it cannot at-will touch, but can regulate and release conditionally to keep the market stable. Ripple Labs holds 6.4 billion XRP tokens themselves, in addition to the ones in escrow. This quirky handling of XRP is a part of why the SEC has opened a lawsuit against Ripple Labs. However, even in the worst case and Ripple Labs becomes insolvent because of SEC actions, XRP as an independent currency will still exist.

2) XRP is only for institutions

Financial institutions, namely banks, are big fans of XRP, not necessarily for the token, but for the platform it trades on, which can still be used to trade dollars and euros and other traditional currencies on. XRP has a strong adoption with over 800 institutions picking it up, alongside SWIFT, a large body that facilitates exchange across borders which has over 11,000 institutional members. If XRP really wants to go to the moon, it’s going to need a reason for the token to trade, and not simply the use of it’s network.

XRP might be an institutional favorite, since it has a strong use case for strengthening financial network infrastructure. However, it does have use cases beyond large scale operations. XRP has a tested, high throughput network that can handle even large transactions in seconds, with a network rated at 1500 transactions per second. This is fantastic if you need to send a one or many transaction quickly. Secondly, this could be a blessing for immigrant workers who are sending money to their home country. XRP enables transfers at a reduced cost compared to many financial institutions and saves the need for credentials and other official bureaucracy that immigrant workers may either have to wait on or not have altogether. All in all, it’s a general time saving token, with or without the institutions attached to it.

3) XRP Uses Blockchain Like Other Cryptocurrencies

Unlike many other cryptocurrencies, XRP does not make use of a blockchain to validate it’s ledger. XRP is a common ledger that is run by a network of independently owned validation nodes. These nodes are constantly comparing transaction records in order to achieve consensus about the common ledger. Because of this system of reaching consensus, XRP does not use proof-of-work or proof-of-stake to reach consensus. Instead, the nodes have to achieve a majority vote on ledger status. Once consensus is achieved by this majority vote, the nodes apply the change to the common ledger.

It is because of this unique tech solution that XRP lends itself well to financial institutional adoption. XRP differs from Bitcoin this way, in that XRP has a different design philosophy than Bitcoin. Bitcoin was the product of cypherpunks and other activists that sought to create a fairer playing field in the world of finance, while XRP is very much intended for institutional adoption and lends itself to centralization more so than other cryptocurrencies which make use of the blockchain.


So what are the three things people get wrong about XRP? That it is part of Ripple Labs as a company, which it is not, XRP is part of its own independent network. While XRP has a strong use case for institutions and banks, it’s not necessarily the only one and it’s particularly useful for workers that cross national borders. Finally, XRP does not run on a blockchain, it runs on a common ledger, managed by independent validation nodes. Because of XRP’s design philosophy of leaning into centralization, rather than against it, XRP’s validation method was designed to be institutionally friendly and not go against the grain of traditional finance. Compared to other cryptocurrency projects such as Bitcoin, which were designed from the ground up to dethrone traditional finance.

It is also worthy to note that currently, Ripple Labs holds 48 billion XRP supply in escrow, and an additional 6.4 billion held. XRP has a supply of 100 billion XRP, which were created all at once and no more can be created. This method of centralization has been the topic of debate and has peaked in a lawsuit with the SEC. While even in the worst case, XRP is an independent network and will survive if Ripple Labs liquidates as a company, however the company has a concerning amount of control of the platform, even if it is supposedly an independent network.

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Michael Brown

About the Author

Michael Brown

Michael Brown is the acting Chairman of community based thought collective, Subcultural Research Lab. His interest in Crypto began while studying industrial engineering in Dartmouth, Nova Scotia. His passion lies in geopolitics, social phenomenon, and the exchange of data. You can find Subcultural Research Lab at

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