XRP acts as a bridge between fiat currencies. Image: Shutterstock

Of all the digital assets on the market, XRP is the one that continues to turn heads. The digital asset’s value surged from $0.006 in January 2017 to $3.60 by the beginning of January 2018 — an increase of more than 59,000 percent. Through its holdings of XRP, Ripple is now one of the most valuable startups in the U.S., after Uber, Airbnb, Palantir and WeWork.

Yet, like all digital assets, XRP is often a source of confusion, mystery and speculation. So, let’s clear the picture with 10 things you need to know about XRP.

1.   XRP is the only digital asset specifically designed for financial institutions and payment providers

A lot of digital assets lack a clear purpose. They may be used to store value, purchase commodities or for consumer transactions, but were not created with a single explicit application in mind. By contrast, XRP is specifically about the transfer of value and built for enterprises, making it one of the few digital assets with a real, clear use case behind it.

2.  XRP is the most scalable digital asset

XRP is the fastest, most scalable digital asset. Its five-year track record of reliable technology and governance makes it ready for institutional and enterprise use. Since its inception, all ledgers have closed without issue. In addition, the XRP ledger handles 1,500 transactions per second, 24×7, and can scale to handle the same throughput as Visa.

While other digital assets have struggled to establish a strong use case, XRP is the best digital asset for payments — ultimately enabling the Internet of Value.

3.   It acts as a bridge between fiat currencies

Some digital assets, like Bitcoin, aim to replace existing government-backed currencies. XRP works with fiat currencies on more than 10 digital exchanges to help transfer value across borders quickly and efficiently. For example, a Mexican company who wants to pay a supplier in Korea today would either need to pre-fund an account in Korea or go through a foreign exchange provider like a bank. Both options are expensive and slow. With XRP, the company’s Mexican bank or local payment provider allows the company to make the payment instantly and on demand. With no account pre-funding or foreign exchange fees, XRP makes for a faster, cheaper settlement.

4.  XRP enables faster, cheaper and more reliable cross-border payments

XRP offers banks and payment providers a reliable, on-demand source of liquidity for cross-border payments. Today, it takes about three to five days to send money from one country to another through a bank, which usually involves high fees, the risk of the payment being delayed (or never going through altogether). Alternatively, businesses can pre-fund nostro accounts in the recipient’s country, which ties up capital. XRP is part of a solution that fixes all these shortcomings, with an average settlement time of 4 seconds, at a fraction of the cost. By allowing financial institutions to source liquidity on demand, in real time, without having to pay foreign transaction fees or pre-fund nostro accounts, XRP will help them to expand into new markets, lower foreign exchange costs and provide faster payment settlement for its customers.

5.  It’s part of an overall network solution for faster cross-border payments

Ripple is committed to solving the issues with cross-border payments and create an Internet of Value where we move money as efficiently as we exchange information. Our solution involves creating a common standard for payments and using XRP as the digital asset that will bring together currently disconnected ledgers and blockchains.

6.  XRP scales faster than Bitcoin

Bitcoin can process up to seven transactions per second, any of which can take more than two hours to clear. Compare that with a traditional payments service like Visa that averages 2,000 transactions per second and you can see that Bitcoin does not have the scalability to meet typical customer demands.

7.  It’s secure

The XRP Ledger is where XRP transactions occur and are recorded. It is an open-source code base that is supported by a community of trusted validators and a team of full-time engineers that actively develop and maintain the ledger. Since day one, we’ve made the XRP Ledger more resilient and resistant to a single point of failure by decentralizing it, a process that continues today.

8.  XRP is more sustainable than mined digital assets, like Bitcoin

Bitcoin is a mined digital asset, meaning that new coins are constantly created by huge datacenters processing complex math problems, or “proof of work.” This inefficient system demands massive amounts of electricity – the cost of producing one coin could power 3.67 U.S. homes for a day – and has been called “unsustainable.” XRP is not a mined digital asset so every single unit of the currency that exists now has already been created, with most owned by Ripple (55 billion of which was placed in escrow) and the rest held by companies and individuals.

9.  XRP is the future

It’s a question of WHEN, not IF, banks and other financial institutions begin using digital assets in their day-to-day business operations and it will be interesting to see who the winners and losers in the digital asset space will be. We’re confident that XRP will succeed because it has a purpose – enabling financial institutions to send money across borders quickly, cheaply, and easily – that is relevant to businesses and consumers everywhere.

10. It’s easy to buy

There are different ways to buy XRP depending on who you are. If you’re a financial institution, it’s best to contact Ripple directly. If you’re an individual investor, you’ve got many ways to buy – you can visit any one of the digital exchanges that lists XRP and do it that way.

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