What is XRP? A plain guide to the token and the XRP Ledger

XRP is the digital token that runs on the XRP Ledger, a public blockchain built for moving money quickly and at very low cost. It was made to settle payments across borders in seconds, not days. Ripple, a United States payments firm, helped create it and still holds a large share. Here is what XRP does, where it came from, and what to watch.

What XRP actually is

As a cryptocurrency, XRP sits in the same broad category as Bitcoin (BTC) or Ethereum (ETH). It lives on the XRP Ledger, an open-source blockchain that launched in 2012. People often mix up three names. Ripple is the company. The XRP Ledger is the network. XRP is the coin that moves on it.

The name trips people up for a reason. Ripple went by other names in its early days, including OpenCoin, before it settled on Ripple. Keeping the company and the coin apart makes the rest of this easier to follow.

Built to do one job well, the ledger settles a transfer in a few seconds. The fee is tiny. Each basic transaction costs a minimum of 10 drops, which is 0.00001 XRP, a fraction of a cent at most prices. That fee is not paid to a miner. It is destroyed, which the network does to block spam. A bank wire can take days and cost tens of dollars. An XRP transfer clears in seconds for far less.

Where XRP came from

Three people developed the XRP Ledger between 2011 and early 2012: Jed McCaleb, Arthur Britto, and David Schwartz. All 100 billion XRP were created at once. No mining adds new coins over time. In 2012, 80 billion XRP went to the company now called Ripple, then named OpenCoin Inc. The founders kept 20 billion between them.

Ripple itself builds payment and settlement software that banks and money firms can use. XRP is one piece of that wider business, not the whole of it. That split matters, because the coin can trade on its own no matter how the company performs.

That concentration of supply worried people. So in 2017 Ripple locked 55 billion XRP in escrow. The escrow releases up to 1 billion XRP each month, and whatever the company does not use goes back in. The aim was to make the supply predictable, so the market could see how much new XRP might appear.

How the XRP Ledger works

Most blockchains you hear about use mining or staking to agree on what is true. The XRP Ledger does neither. It uses a trust-based model instead. Each server picks a list of validators it trusts. When enough of those validators agree on the same set of transactions, that set becomes the next official ledger. A new ledger closes every few seconds.

Validators are not chosen by Ripple alone. Most servers follow a recommended set of validators, called a unique node list, when they decide whom to trust. That shared list is how separate servers reach the same result without a central referee.

This design skips the heavy computing that Bitcoin uses. No rigs. No power-hungry farms. Running the network uses far less energy than mining, because nothing is racing to solve puzzles. The trade-off is that you rely on the honesty of the validator set. The network keeps running as long as fewer than one in five trusted validators is faulty. To fake a result, more than 80 percent of them would have to collude.

Here is a simple contrast. Proof of work pays miners to compete. The XRP Ledger pays no one to run a validator. The two main approaches other chains use are covered in this guide to proof of work versus proof of stake.

What people use XRP for

XRP has a few real uses on the ledger. The most talked-about is cross-border payment. A bank or a payment firm can turn one currency into XRP, send it across the world in seconds, then turn it into the local currency at the other end. That avoids parking cash in accounts around the globe.

A worker sending wages home is the kind of case XRP was pitched for. Move the money as XRP, convert it on arrival, and skip some of the slow banks in the middle. Whether it beats other options depends on fees and local access, which vary a lot by country.

Beyond payments, the ledger supports other tools. It has a built-in decentralized exchange where users can trade tokens directly. It can host stablecoins, which are tokens pegged to a currency such as the US dollar. It also supports tokenization, the practice of putting assets such as bonds or funds onto a blockchain. Its own documentation lists more features, including NFTs and basic lending tools.

Every account on the ledger must hold a small reserve of XRP to exist. That reserve stops people from clogging the network with empty accounts. So even a user who only holds other tokens needs a little XRP to operate.

XRP compared with Bitcoin

XRP and Bitcoin often sit in the same sentence, yet they were built for different jobs. Bitcoin is meant to be scarce digital money. It has a hard cap of 21 million coins, and new supply trickles out through mining. XRP arrived with its full 100 billion supply and uses no mining at all.

Speed and purpose split them further. A Bitcoin block is added about every 10 minutes, and a payment usually waits for several blocks before people treat it as final. An XRP Ledger payment settles in a few seconds. Bitcoin aims to be a store of value that no single group controls. XRP aims to move value between currencies cheaply. Neither is better in the abstract. They solve different problems.

Ripple's long fight with the SEC

No coin explainer is complete without the lawsuit. In December 2020, the US Securities and Exchange Commission sued Ripple, claiming it sold XRP as an unregistered security. The case ran for years and gripped the whole market, because the outcome could have set the rule for many other tokens.

A partial answer came in July 2023. Judge Analisa Torres ruled that XRP sold to the public on exchanges was not a security. Sales straight to institutional investors, she found, did break securities law. That split decision was the first of its kind for a major token.

Both sides appealed, then backed down. In August 2025, Ripple and the SEC dropped their appeals, which left the 2023 judgment standing. Ripple faced a civil penalty of $125 million and a permanent order against further unregistered institutional sales in the US, according to the final judgment reported by PYMNTS. Stuart Alderoty, Ripple's chief legal officer, said the fight was over and the company was back to business.

One thing the ruling did not do was settle the law for every other coin. It applied to XRP, under those specific facts. Regulators and courts are still working out how older securities rules fit digital assets.

Risks and open questions

XRP is not a risk-free asset. Its price swings hard, like most crypto. It can rise or fall by double digits in a single day, so money you cannot afford to lose does not belong here.

Ownership is another concern. Ripple and the founders started with most of the supply, and Ripple still holds a large stake in escrow. Critics argue that gives one company too much sway over the market. Supporters say the escrow schedule keeps the releases clear and limited.

A further question is how decentralized the ledger really is. Anyone can run a validator. In practice, many operators lean on a default trusted list, and Ripple has long been a visible name on it. The network has grown more independent over the years, though how far it has come is still debated. Rules outside the United States add more doubt, since each country can treat XRP differently and change its mind.

The ledger was also not built for complex smart contracts the way Ethereum was, so some kinds of apps simply do not run on it. That is a design choice, not a flaw, but it shapes what XRP is good for.

None of this is financial advice. XRP may suit some uses and some people. It may not suit you. Read the primary documents, check who you are trusting, and size any position to what you can afford to lose.