Ripple vs. XRP vs. XRP Ledger: Key Differences, Explained

·

Understanding the distinctions between Ripple, XRP, and the XRP Ledger (XRPL) is essential for anyone navigating the world of digital finance and blockchain technology. While often used interchangeably, these three entities serve different roles within the same ecosystem. This guide breaks down each component clearly, explores how they interact, and highlights their unique features, benefits, and challenges.

What Is Ripple?

Ripple is a financial technology company founded in 2012 by Chris Larsen and Jed McCaleb. Its primary mission is to revolutionize cross-border payments by offering faster, more efficient, and cost-effective solutions for banks and financial institutions.

At the heart of Ripple’s offerings is RippleNet, a global network that connects banks, payment providers, digital asset exchanges, and corporations. Unlike traditional banking systems that rely on intermediaries and can take days to settle international transfers, RippleNet enables real-time messaging, clearing, and settlement of transactions across borders.

👉 Discover how modern payment networks are transforming global finance.

One of Ripple’s standout innovations is On-Demand Liquidity (ODL), a solution that uses XRP as a bridge currency to facilitate instant cross-currency payments without the need for pre-funded nostro accounts. This reduces liquidity costs and increases transaction speed — a major advantage in international remittances.

Despite not being a cryptocurrency itself, Ripple holds a significant portion of the total XRP supply — around 38% — held in escrow and released gradually. This close relationship with XRP often leads to confusion between the company and the digital asset.

What Is XRP?

XRP is the native digital currency of the XRP Ledger (XRPL). Created by David Schwartz, Jed McCaleb, and Arthur Britto, all 100 billion XRP tokens were pre-mined at launch, with a portion allocated to Ripple to support development and adoption.

Designed for speed and efficiency, XRP transactions settle in 3 to 5 seconds with minimal fees — typically less than a penny. These characteristics make it an attractive option for high-frequency international payments, micropayments, and remittance services.

Unlike Bitcoin or Ethereum, which rely on energy-intensive mining or staking mechanisms, XRP operates on a consensus-based model that doesn’t require proof-of-work or proof-of-stake. This makes the network highly scalable and environmentally friendly.

Did you know? In late 2017 and early 2018, XRP briefly overtook Ethereum to become the second-largest cryptocurrency by market cap, ranking just behind Bitcoin.

While Ripple uses XRP in some of its solutions like ODL, the token itself is independent and can be used by anyone on the XRPL for payments, trading, or as a store of value.

What Is the XRP Ledger (XRPL)?

The XRP Ledger (XRPL) is an open-source, decentralized blockchain launched in 2012. It serves as the underlying infrastructure where XRP transactions occur and where developers can build decentralized applications (dApps).

Unlike many blockchains that rely on proof-of-work or proof-of-stake, XRPL uses the Ripple Protocol Consensus Algorithm (RPCA). In this system, independent validator nodes reach agreement every few seconds on the state of the ledger. A transaction is confirmed when at least 80% of trusted validators in a node’s Unique Node List (UNL) agree on its validity.

This consensus mechanism allows XRPL to process up to 1,500 transactions per second, with potential scalability to 50,000 TPS through optimization — making it one of the fastest blockchains available.

Did you know? The XRPL has supported over 60 million ledgers since inception, with near-perfect uptime and no major security breaches.

Key Features of the XRP Ledger

The XRPL goes beyond simple payments. It includes advanced functionalities that empower developers and users alike:

Decentralized Exchange (DEX)

The built-in DEX allows users to trade various assets directly on the ledger without intermediaries. You can issue tokens representing fiat currencies, commodities, or other cryptocurrencies and trade them seamlessly across unlimited currency pairs. Exchange rates are determined by supply and demand, enhancing liquidity and efficiency.

Tokenization

XRPL supports full asset tokenization. Developers can create stablecoins, represent real-world assets like gold or real estate, or mint NFTs — all natively on the ledger. With intuitive issuing and redemption functions, XRPL lowers the barrier to entry for asset digitization.

Payment Channels

For applications requiring frequent microtransactions — such as streaming services or pay-per-use platforms — XRPL offers off-ledger payment channels. These enable rapid transfers between parties, with final settlements batched and recorded on-chain later.

👉 Explore how blockchain-powered tokenization is reshaping asset ownership.

Building on the XRP Ledger

Developers looking to build on XRPL have access to comprehensive tools and resources:

An active community also provides tutorials, code samples, and support forums — making XRPL an accessible platform for both beginners and experienced developers.

In 2024, the XRPL Accelerator launched its first cohort of 18 innovative projects building on the ledger:

These initiatives signal growing momentum in decentralized finance (DeFi) and asset tokenization on XRPL.

The SEC vs. Ripple Lawsuit: A Turning Point

One of the most influential factors affecting XRP’s price and perception has been the legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC).

In December 2020, the SEC sued Ripple, alleging that XRP sales constituted an unregistered securities offering worth over $1.3 billion. The news triggered a sharp drop in XRP’s price — down about 12% within 24 hours.

However, in July 2023, a federal judge ruled that XRP is not a security when sold to retail investors on exchanges, though institutional sales were deemed unregistered. This partial win boosted market confidence and led to a significant price surge.

By August 2024, Ripple settled with the SEC for a $125 million penalty — far below the $2 billion initially sought. In October 2024, the SEC dropped all remaining charges against Ripple executives Brad Garlinghouse and Chris Larsen.

This resolution marked a pivotal moment for XRP’s regulatory clarity and long-term viability.

Frequently Asked Questions (FAQ)

Q: Is Ripple the same as XRP?
A: No. Ripple is a company; XRP is a digital currency used on the XRP Ledger.

Q: Who controls the XRP Ledger?
A: The XRPL is decentralized and community-governed, though Ripple operates some validator nodes. Efforts are ongoing to increase decentralization.

Q: Can I mine XRP?
A: No. All 100 billion XRP were created at launch. New tokens cannot be mined.

Q: Is XRP considered a security?
A: In July 2023, a U.S. court ruled that XRP is not a security when sold to retail investors — a major win for its legal status.

Q: What makes XRPL faster than other blockchains?
A: Its consensus algorithm (RPCA) eliminates mining delays, enabling settlement in 3–5 seconds with low energy use.

Q: How is XRP used in real-world payments?
A: Financial institutions use XRP through Ripple’s ODL solution to enable instant cross-border remittances without pre-funded accounts.

Challenges Facing Ripple and XRPL

Despite its strengths, the ecosystem faces criticism:

To thrive long-term, Ripple must expand its validator network, enhance transparency in escrow management, and foster greater community involvement in governance.

👉 Learn how next-generation blockchains are solving real-world financial challenges.