Ripple issues one of the largest cryptocurrency networks on the market. It has a maximum supply of 100,000,000,000 XRP coins and works to make cross-border transactions faster and cheaper for financial institutions.
Because of its consensus mechanism, it’s a more environmentally friendly option compared to other coins, such as Bitcoin. It’s able to do this while being an excellent option for transferring small and large amounts of money across borders.
If you’re interested in learning how to buy Ripple and the background of this company and coin, we’ll share must-know information before you make your purchase.
Ripple has a long history in the short lifespan of cryptocurrency. The foundation for its conception began in 2004 by software developer Rayan Fugger. If you’re familiar with crypto’s history, this is before Satoshi Nakamoto even shared the Bitcoin blockchain with the world, which occurred in January 2009.
Needless to say, Ripple (called Rippleplay at the time) wasn’t a formal cryptocurrency in 2004. Instead, it was a precursor to blockchain technology, allowing its customers to make transactions between currencies from anywhere in the world.
Rippleplay eventually gave way to OpenCoin, after Jed McCaleb purchased the company in 2013. At this point, Nakamoto had released his white paper on Bitcoin, and McCaleb had already founded the cryptocurrency Stellar.
Harnessing his experience from Stellar, McCaleb and his co-founder Chris Larsen forked Ripple, turning it into the Stellar Lumens cryptocurrency network. At this time, the public could purchase XRP coins.
Shortly after, they renamed OpenCoin to Ripple Labs, Inc. At the same time, they released the Ripple Network’s code to become open source.
Perhaps unsurprisingly, Ripple Labs yet again underwent a name change. In 2015, they officially changed the name to Ripple, where it’s maintained this now well-recognized name ever since.
It’s common for people to confuse the words Ripple and XRP, as many crypto enthusiasts use them interchangeably. Let us set it straight for you—Ripple is the company and network. On the other hand, XRP is a crypto token that allows people to exchange money between various currencies and networks.
Nevertheless, don’t worry if you continue to confuse the words. Most people do, and anyone in the crypto space will know what you mean, regardless of whether you use the word Ripple or XRP.
What Is Ripple (XRP)?
Ripple made waves in the cryptocurrency world because of its goal to work with what so many crypto companies are running from—financial institutions. It does so by helping banks and other finance companies get on-demand sourcing liquidity quickly and at low rates.
Even so, Ripple maintains cryptocurrency’s core values. Namely, it’s a decentralized blockchain that has open-source and permissionless qualities.
What makes Ripple stand out is its ability to process transactions in as little as three seconds. You can expect a transaction to take up to five seconds if there’s a lot of network congestion.
Customers who partner with RippleNet can take advantage of XRP liquidity. Doing so is advantageous for the following reasons:
- Creates smoother international transactions
- Doesn’t require pre-funding
- Low exchange fees
- Money settles instantly
RippleX is another platform on the Ripple network, but it’s geared towards developers. By harnessing the open-source code of RippleX, developers can use XRP’s technology for use cases, including:
- Peer-to-peer services
Ripple’s goal is to fix the lengthy and expensive process of payment settlement asset exchanges like the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
With traditional fiat, people must rely on systems like SWIFT to send and receive money between different currencies. As you may have experienced, a SWIFT wire transfer can often take upwards of one week or longer.
That said, you don’t have to be a bank to benefit from Ripple’s potentially profitable future. Instead, you can buy Ripple coins (XRP) on Knaken as an investment.
Although Ripple encountered an issue with the Securities and Exchange Commission in December 2020, XRP enthusiasts saw it as a time to buy Ripple at a discount, given its promising future. A popular way for people to buy Ripple is to make purchases on a weekly or monthly basis so they can dollar-cost average their way into a position.
How Does the Ripple Network Work?
You now know that Ripple is the network and XRP is the native cryptocurrency token that people use to make digital payments. But interestingly enough, Ripple doesn’t use a proof-of-work (PoW) or proof-of-stake (PoS) mechanism.
Instead, its network runs off a consensus mechanism.
It does so by distributing its information to a series of servers owned by traditional banks. These banks then confirm the transactions and check the account balances on the Ripple network.
Unlike some cryptocurrencies, like Bitcoin, which require complicated and energy-consuming mining methods, XRP is a pre-mined token. As a result, it can offer quicker conversions for its customers (which are primarily large banks and financial services).
The advantage of using a consensus mechanism is that it reduces the chances of double-spending. That means if a user tries to start a $1,000 transaction with multiple gateways (assigned to every currency) that $1,000 won’t be able to slip through into each gateway.
Instead, whichever gateway system processes the $1,000 first will receive the payment. The Ripple network will delete the other open transactions. Amazingly, Ripple can do this in five seconds or less, and the transaction never goes to a centralized authority that has to make a decision.
Furthermore, any transactions that happen on the Ripple network are accessible to the public. Nevertheless, users don’t have to worry about their data being compromised—only the transactions appear to the public, not the names or ID of the people or businesses that made those transactions.
As a result, Ripple is a more trustworthy banking system for financial institutions.
Other benefits of using the consensus mechanism include:
- Energy efficiency
- Cheaper to process than many other cryptocurrencies
- Faster than Bitcoin (a few seconds compared to minutes)
You might be wondering—just how cost-efficient is Ripple?
By processing a transaction on the Ripple network, you can expect it to cost as little as 0.00001 XRP. At the time of this writing, one XRP costs just over 77 cents. The bottom line? It’s incomparable with the massive fees that banks charge for cross-border transfers.
Ripple also simplifies fiat to XRP conversions and vice versa. That’s not a quality that many other cryptocurrency coins have, as they require you to exchange your fiat for a crypto coin like USDT (Tether) before being able to purchase a cryptocurrency from an exchange.
The fact that Ripple can perform all of this in seconds while handling sometimes millions of transactions, is what makes it so attractive to financial institutions.
Can You Stake XRP?
Staking is the concept of allowing the cryptocurrency coins you hold to work as transaction validators. In return, you’ll receive a commission, paid in the cryptocurrency you’re staking.
In order to stake a cryptocurrency, it must be under the proof-of-stake network. Since Ripple doesn't operate on this consensus mechanism, staking your XRP coins isn’t possible.
That said, you might be able to earn annual percentage rate (APR) awards by keeping your XRP in certain wallets.
Buy Ripple With iDEAL
iDEAL is an easy method to use for buying Ripple on Knaken. To get started, choose “XRP Ripple” as the coin you want to purchase.
Then, type in the amount of money you want to invest in Ripple (not the number of coins). Let Knaken know your email address so they can send you the confirmation, choose “iDEAL” as your payment method, and select “I agree with the requirements.”
From there, hit “Buy” and Knaken will process your transaction. Just like that, you’ll be the proud owner of Ripple coins.
You can then either hold on to your XRP coins for the long-term, buy Ripple with iDEAL on Knaken when you get some extra cash or take profits when the XRP price rises above your by amount.