in case you missed…

Navigating the world of cryptocurrency can be exciting, but also confusing with so many different digital assets available. If you’ve heard about XRP and want to understand the basics, you’re in the right place. This guide is designed for the XRP beginner, explaining what it is, how it works, and touching upon recent developments involving Ripple, the company most closely associated with XRP.

What is XRP?

XRP is a digital asset native to the XRP Ledger (XRPL), which is a decentralized, public blockchain technology designed for speed and efficiency, particularly in payments. Think of XRP crypto as a digital token that can be sent directly between people or institutions very quickly and cheaply, without needing a traditional bank in the middle. It was created to facilitate faster and more affordable cross-border payments compared to traditional systems like SWIFT.

XRP vs. Bitcoin: Key Differences

While both are cryptocurrencies, XRP differs from Bitcoin in several ways:

• Speed & Cost: XRP transactions typically confirm in 3-5 seconds and cost fractions of a cent. Bitcoin transactions take longer (minutes to hours) and can be more expensive, especially during network congestion.
• Consensus: Bitcoin uses “Proof-of-Work” (mining) which consumes significant energy. The XRP Ledger uses a different consensus mechanism involving trusted validators, making it much more energy-efficient.
• Supply: All 100 billion XRP tokens were created at the start, with a portion released periodically into the market. Bitcoin has a limited supply of 21 million, released gradually through mining.

Who Created XRP? The Role of Ripple

XRP was created by developers who later founded the technology company Ripple (originally called OpenCoin). While Ripple utilizes XRP in some of its products (like its On-Demand Liquidity service, now called Ripple Payments) and holds a significant amount of XRP, it’s important to note that XRP and the XRP Ledger are distinct from the private company Ripple. The XRPL is open-source and operates independently. Think of it like this: Ripple is a company building solutions, and XRP is a digital asset that can run on the independent XRP Ledger technology, which Ripple leverages. Ripple XRP are often mentioned together because of this close historical and operational relationship.

How Does XRP Work? The Technology Explained

As mentioned, XRP runs on the XRP Ledger (XRPL). Unlike Bitcoin’s blockchain which relies on energy-intensive mining, the XRPL uses a unique consensus protocol. A network of independent validator nodes compares proposed transactions and agrees on which ones are valid and should be added to the ledger. If enough validators agree, the transaction is confirmed – usually within seconds. This design makes the XRPL highly scalable (capable of handling many transactions) and efficient.

Ripple’s Recent Moves: Standard Custody and Hidden Road Acquisition News

Even as a beginner trying to understand what is XRP, it’s helpful to know about major developments involving Ripple, as they can impact the broader ecosystem. Recently, Ripple has made significant strategic acquisitions:

What is Standard Custody & Trust?

Standard Custody & Trust Company is a regulated financial institution specializing in secure digital asset custody services. Custody means safely storing assets on behalf of clients, which is crucial for large institutions like banks that need to ensure the security and compliance of their digital holdings. Ripple completed its acquisition of Standard Custody in June 2024, gaining important regulatory licenses and strengthening its ability to serve institutional clients.

Who is Hidden Road?

Hidden Road is a modern, global prime broker. Prime brokers provide specialized services – like trading execution, clearing, financing, and custody – primarily to institutional clients such as hedge funds and asset managers, across various asset classes including cryptocurrencies and traditional assets. Ripple very recently announced its agreement to acquire Hidden Road.

Why is this news relevant for XRP beginners?

These acquisitions signal Ripple’s ambition to build comprehensive infrastructure for institutional finance using blockchain technology. By acquiring Standard Custody Ripple secured regulated custody capabilities. The planned Hidden Road Ripple acquisition aims to integrate services essential for large-scale institutional trading and investment in digital assets.

For an XRP beginner, this news matters because:

1. Infrastructure Building: Ripple is creating the tools and regulated pathways needed for major financial players to potentially use its technology and, by extension, potentially increase the utility of assets like XRP in the future.
2. Bridging Finance: These moves aim to connect traditional finance with the crypto world, potentially driving broader adoption and legitimacy for digital assets and blockchain solutions.
3. Long-Term Vision: It shows Ripple is focused on expanding beyond simple payments into a wider range of financial services for institutions, which could strengthen the ecosystem surrounding the XRP Ledger.

Common Uses for XRP

While designed initially for cross-border payments and currency exchange, XRP can also be used for:

• Fast micro-payments: Due to low transaction fees.
• Tokenization: Representing other assets on the XRP Ledger.
• Decentralized Finance (DeFi): Though the DeFi ecosystem on the XRPL is newer compared to platforms like Ethereum.

How to Buy XRP

If you’re interested in acquiring XRP, the most common way is through cryptocurrency exchanges. These are online platforms where you can trade traditional money (like USD, EUR) or other cryptocurrencies for XRP.

To buy XRP:

1. Choose a reputable cryptocurrency exchange that lists XRP.
2. Create and verify your account.
3. Deposit funds (fiat currency or another crypto).
4. Place an order to buy XRP.

Once purchased, you’ll need a digital wallet to store your XRP securely. Wallets can be software-based (“hot wallets” connected to the internet) or hardware devices (“cold wallets” kept offline for extra security). Remember to research wallet options carefully.

Is XRP a Good Investment for Beginners?

This is a common question, but one without a simple answer. Investing in any cryptocurrency, including XRP, carries significant risk.

• Volatility: The price of XRP, like most cryptocurrencies, can be highly volatile, meaning it can change rapidly and unpredictably.
• Regulatory Uncertainty: Ripple has been involved in a long-standing lawsuit with the U.S. Securities and Exchange Commission (SEC) regarding the classification of XRP. While there have been developments, regulatory clarity remains a key factor influencing XRP.
• Market Factors: Prices are influenced by overall market sentiment, technological developments, adoption rates, and broader economic factors.

This guide is not financial advice. Before investing in XRP or any asset, it’s crucial to do your own thorough research (DYOR), understand the risks involved, assess your own risk tolerance, and consider consulting with a qualified financial advisor. Never invest more than you can afford to lose.

Conclusion

XRP is a unique digital asset designed for speed and efficiency, particularly in payments, operating on the energy-efficient XRP Ledger. While distinct from the company Ripple, its ecosystem is heavily influenced by Ripple’s activities, including recent strategic acquisitions like Standard Custody and Hidden Road aimed at bolstering institutional adoption. For beginners, understanding the basics of what is XRP, its technology, and the surrounding context is key. Remember that the crypto market is volatile, and thorough research is essential before considering any investment.

Disclaimer: This information is for educational purposes only and should not be considered financial advice.