Please ensure Javascript is enabled for purposes of website accessibility

7 Facts You Might Not Know About Ripple

By Matthew Frankel, CFP® – Updated Apr 27, 2018 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

No. 1: Ripple isn't the currency's official name.

Ripple was one of the top-performing cryptocurrencies of 2017, up by a staggering 35,500% for the year. And as a relatively new player in the cryptocurrency space, Ripple isn't well understood by as many people as, say, bitcoin and Ethereum are.

With that in mind, here are seven facts that will help familiarize you with Ripple, how the cryptocurrency works, and its key advantages over other leading digital tokens.

Ripples on surface of water.

Image source: Getty Images.

1. Ripple isn't the cryptocurrency's official name

The cryptocurrency commonly referred to as Ripple is officially called the XRP. In other words, there's technically no such thing as buying "100 Ripple."

Ripple Labs is the name of the company that created the XRP token, and to be fair, Ripple is much easier to remember and a much catchier name, so that's why many people use the terms interchangeably.

On that topic, if you were ever wondering why bitcoin isn't generally capitalized, but cryptocurrencies like Ripple, Stellar, and others are, it's because bitcoin isn't the name of a company, while many other cryptocurrencies are.

2. Ripple offers three different products, and only one uses the XRP token

One interesting fact that even many Ripple owners are surprised to learn is that the company's flagship product, xCurrent, doesn't really use the XRP cryptocurrency at all.

xCurrent is designed to allow banks to transact with one another, and to provide compatibility between any currencies, not just cryptocurrencies. In fact, this is the product used in the well-known partnership with American Express and Santander.

The product that trades XRP through the xCurrent system is known as xRapid. This supposedly has several key advantages, such as making transactions even faster and opening up new markets, but it isn't being widely used yet.

3. You can't mine Ripple

Bitcoin's circulating supply gradually increases due to a process called mining, in which users pool their computing power to process transactions in exchange for newly minted "blocks" of tokens. Many other major cryptocurrencies also grow their supply through mining.

However, Ripple is different. All 100 billion XRP that will ever be created already exist, although not all are in circulation yet, which we'll get to in the next section.

4. Only about 40% of XPR tokens are in circulation

Although there are 100 billion XRP tokens in existence, the majority of them aren't in circulation yet. Ripple Labs owns about 60 billion XRP as of this writing, 6.25 billion of which are directly owned and 55 billion of which are in escrow accounts for future distribution. Over the next few years, 1 billion XRP will become available per month to be distributed. So, the circulating supply could increase dramatically in the coming years.

Based on the current XPR price of just under $0.80, the value of all XRP in circulation is $31.52 billion, making it the third-largest cryptocurrency by market cap. However, the combined value of all XRP in existence is almost $80 billion.

5. Ripple isn't meant to be a payment currency

One common misconception among people who are new to the cryptocurrency world is the idea that all cryptocurrencies are designed to be methods of payment. If this were the case, it would be tough to make the case that we need more than just bitcoin and perhaps a few others.

However, many cryptocurrencies, including Ripple, aren't designed to be payment currencies. In other words, it's unlikely that your favorite retailer will accept XRP tokens anytime soon, and Ripple Labs is just fine with that.

Instead, Ripple is a cryptocurrency designed as a method of payment transfer -- in other words, it's intended to move money from point A to point B more efficiently than current methods, such as wire transfers. How does it intend to do this? By being faster and cheaper than the alternatives.

6. Ripple's network is much faster than bitcoin's or Ethereum's

The average bitcoin transaction takes 81 minutes as of this writing, and has typically been in the range of 10 to 30 minutes in recent months. Ethereum transactions are significantly faster, but typically still take two minutes or more.

Ripple intends to become an instantaneous form of money transfer, and boasts transaction times of about four seconds, according to Ripple Labs' website. If you've ever tried to wire money internationally, you know that an instantaneous alternative could have a huge competitive advantage.

In addition to the speed, Ripple's network can handle significantly higher transaction volumes than other leading cryptocurrencies. Bitcoin and Ethereum can handle about three and 15 transactions per second, respectively, which creates a problem of scalability. Ripple's network, on the other hand, consistently handles about 1,500 transactions per second, and the company claims it can be scaled to handle 50,000 per second -- on par with Visa's network capabilities.

This is why several major financial companies, including American Express, Santander, and MoneyGram International, are currently testing out Ripple's technology.

7. Ripple's transaction cost is minuscule

One of the biggest obstacles facing other cryptocurrencies is the transaction cost. In the case of mined cryptocurrencies, these are fees paid to the miners as incentives for using their computing power to help process transactions.

Bitcoin transaction fees have become notoriously high, and spiked to well over $20 in late 2017 and early 2018. Currently, the average bitcoin transaction fee is about $1.15, according to, but this still makes bitcoin less practical for everyday payment transactions. Second-largest cryptocurrency Ethereum, which is (like Ripple) designed as more of a transfer mechanism, averages about $0.30.

Meanwhile, Ripple's average transaction fee is currently less than one penny, and peaked at $0.03 at the height of the cryptocurrency boom in early 2018.

A cryptocurrency with big real-world implications

Ripple has emerged as a major player in the cryptocurrency market, thanks to its impressive real-world traction and potential to change the way the world transfers money over long distances. However, it is a very different cryptocurrency from bitcoin and Ethereum in several important ways that investors should be aware of.

Matthew Frankel owns shares of American Express and owns Ethereum tokens. The Motley Fool owns shares of and recommends Visa. The Motley Fool has no position in any cryptocurrencies mentioned. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.