Will XRP Ever Take Off? Understanding the Difference Between XRP and Ripple

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Will XRP Ever Take Off? Understanding the Difference Between XRP and Ripple
In recent months, XRP has struggled to replicate the strong performance of Ripple, its parent company. Photo Credit: Oracle

According to February 2018 industry figures, XRP is the third largest cryptocurrency with a market capitalization of about $39 billion. Like bitcoin, ethereum and most of the major crypto coins, it is a blockchain technology conceived to function as a distributed open source internet protocol and decentralized digital asset.

XRP is so often mistaken for Ripple, its much older parent company which actually functions as a platform or peer-to-peer network that connects banks, financial institutions, payment providers, digital asset exchanges to interchange money all over the world seamlessly.

According to ripple.com the difference between the two closely connected but separate entities comes down to this; Ripple is a technology company dedicated to providing seamless cross border payment solutions, while XRP is an open source digital asset or token built on the XRP ledger network which is analogous to Ethereum and its digital token ether. So basically, XRP is the native currency of the Ripple network.

Will XRP Ever Take Off? Understanding the Difference Between XRP and Ripple
Ripple is a Real Time Gross Settlement system (RTGS) built on a distributed open source consensus ledger built to facilitate cross-border money transfer operations.
Photo Credit: cryptocoinnews

Remarkably, the fortunes of the two entities have taken widely different turns in recent times. While Ripple enjoyed what is arguably its best quarter at the start of 2018, XRP on the other hand, suffered what is perhaps its worst quarter following the crash of bitcoin last December.

All of this, Ripple executives say, demonstrates the fact that the company’s fortunes are not tied to XRP and the coin is sufficiently decentralized even though Ripple continues to hold more than 55 percent of all the 100 billion pre-mined XRP tokens.

“It is endlessly frustrating to me that people are unable to distinguish the fact that XRP and Ripple are separate things,” Ripple chief market strategist Cory Johnson said at a crypto summit in June. “I mean, no one calls Exxon Mobil, oil. Exxon Mobil has a vested interest in seeing that oil is successful, but that doesn’t mean it’s the same thing.”

xRapid, one of Ripple’s payment solutions that allows users or businesses to conduct cross-currency transactions in 3 to 5 seconds has been embraced by several leading banks and financial institutions including American Express, Standard Chartered, Santander and MoneyGram.

Ripple’s payment solutions, mean that the XRP tokens can be transferred real-time across the world instantly and safely, reducing costs associated with international money transfers. Nevertheless, it has not succeeded in winning over everyone within the cryptocurrency industry, many of whom say that it is not sufficiently decentralised or insulated from a third party influence.

As a result of these, Coinbase, one of the largest and most respected digital exchanges in the world has repeatedly snubbed appeals to list XRP on its highly coveted platform citing regulatory concerns about its decentralised status. Indeed, all of the top 5 cryptocurrencies, except XRP are listed on Coinbase.

Some analysts believe this may have contributed to impact negatively on XRP’s price index which could benefit in no small way from massive visibility that comes with getting listed on the America’s biggest digital exchange.