What is Ripple (XRP) and how does it work?

Global money transfers often face delays, high costs, and complexity. XRP addresses this challenge, offering near-instant, secure, and cost-effective transactions, redefining efficiency in international finance.

XRP is the native currency of the XRP Ledger, a distributed ledger designed for speed, efficiency and minimal fees. Acting as a bridge between different currencies and payment systems, it enables near-instant transactions at a fraction of the cost of conventional methods. For banks, businesses and individuals alike, this technology opens the door to a new model of global value transfer.

In this article we’ll explore what Ripple is, how the XRP Ledger functions, the advantages it offers compared with traditional networks and why XRP remains one of the most closely watched cryptocurrencies in the world.

Ripple emerged in the early 2010s, created by a group of developers who wanted to build a global payment network as an alternative to SWIFT, the international system banks use to transfer money. While SWIFT is reliable, it is also slow and expensive: an international wire transfer can take several days and generate significant fees. Ripple Labs, the company behind the project, set out to solve this problem by enabling transactions that are almost instant, secure and extremely low cost.

One of the most common sources of confusion is the difference between Ripple and XRP:

• Ripple is the company (Ripple Labs) that develops payment technologies for financial institutions.
• XRP is the native cryptocurrency of the XRP Ledger, the digital token used to facilitate and settle transactions.

To truly understand XRP, we need to start with its technological core: the XRP Ledger (XRPL).

A ledger is essentially a record book where all transactions are logged. The difference here is that this book isn’t kept in a single central office, it is distributed across a network of computers worldwide. This structure ensures transparency, security and resilience.

How it differs from Bitcoin’s blockchain

When people hear the word “crypto,” they often think of Bitcoin. Yet the XRP Ledger works in a very different way:

1. It does not rely on mining, unlike Bitcoin.
2. Transactions do not require massive amounts of energy.
3. Consensus between network participants is reached through a fast and efficient protocol.

The result is a system where transactions are confirmed in just a few seconds, at a cost of only fractions of a cent.

Let’s take a concrete example. Imagine you want to send money from Lugano to Tokyo. With a traditional bank transfer, the funds move from your local bank to a correspondent bank and possibly through several more intermediaries, before finally reaching Japan. Each step adds both time and cost.

With XRP, the process looks very different:

1. Your currency (for example, euros) is converted into XRP.
2. The XRP are transferred across the XRP Ledger and arrive at the destination in just a few seconds.
3. At the other end, the XRP are converted back into the local currency (yen).

The entire transfer is completed in less than five seconds.

XRP was designed with payments in mind, and its benefits stand out clearly when compared with traditional systems and even other cryptocurrencies:

1. Speed – transactions settle in 3–5 seconds, instead of the hours or even days required for a traditional wire transfer.
2. Ultra-low cost – fees are just 0.00001 XRP, a fraction of a cent.
3. Security – the network is decentralised and resilient against tampering.
4. Energy efficiency – no energy-intensive mining is required, unlike Bitcoin.
5. Scalability – the XRP Ledger can handle up to 1,500 transactions per second, far more than many other crypto networks.

What makes Ripple particularly interesting is its strong connection to the traditional financial world. Ripple Labs works with banks and institutions to streamline cross-border payments, making them faster and cheaper. Ripple has partnered with several central banks on CBDC pilot projects, exploring how its technology can support digital currency development. The long-term vision is that XRP, or similar technologies, could act as a bridge between different state-issued digital currencies, enabling smoother global transactions.

XRP is not only a technical tool but also a financial asset that can be bought and sold on exchanges.

The content in this article is provided for educational purposes only. It does not constitute investment advice, financial recommendations, or promotional material. Investing in digital assets carries a high degree of risk.