What is Ripple, and why are people curious about it? Will the history of Ripple be sung just like the bards do with epics and ballads? Or will it become a tragedy that one could only wish to forget?
Ripple is a fintech company that provides a real-time global payment transfer solution. The system runs on its own unique blockchain and allows fast and affordable transfer of funds to create an ‘Internet of Value’. It does so by using its core instruments — XRP, XRP Ledger, and RippleNet.
RippleNet is a global decentralized network that brings together a diverse ecosystem of payment players for the first time ever. But how did Ripple accomplish this? Who are the conductors behind this enchanting fintech orchestra?
The History of Ripple is a riveting tale, and like with any great story, one must always start at the beginning.
A Resounding Melody: How the History of Ripple Started
The history of Ripple starts with a simple dream that takes us back to 2004. Let us set the scene: a visionary named Ryan Fugger is working on a local exchange trade system in Vancouver. This man dreamed of launching a decentralized monetary system.
In 2004, he brought his dream to life. Finally, there it stood — a fine-tuned financial service which Fugger called the Ripple Project.
The Ripple Project sang to the tune of a secure payment provider. Users on the platform could transfer payments over a secure global network. It used a protocol for moving electronic coins via a peer-to-peer (P2P) technology. It worked by allowing issuers to confirm payment transactions.
The transfers, in turn, are untraceable to the issuer. Transfers are closely monitored and user identities are verified. All in all, the project was a sound P2P network that used personal credits to transfer funds over the internet.
Now, let’s skip ahead to 2011 and travel south of Vancouver, where we meet Jed McCaleb.
An engineer influenced by Bitcoin, McCaleb set off on a mission to build a digital currency system where transfers could be verified by members within its network. He wanted to build a system where mining was not an option. Instead, he dreamed of setting up a different consensus in its place.
Along with McCaleb were two other engineers — Arthur Britto and David Schwartz. These three geniuses worked in harmony until they struck the right chords. Together they began developing what would soon become the XRP Ledger. This Ledger was first launched in June 2012.
The team felt Bitcoin was lacking in many ways. They felt Bitcoin’s blockchain was wasteful both in terms of potential and energy. Instead, the engineers worked to offer something better — a service that provided a more solid foundation that would do what Bitcoin couldn’t.
They worked meticulously until they found a digital asset that was built particularly to ease global payment transfers. Later on, we would know this asset to be XRP.
Now with the coin and the ledger at the ready, all that was left was the network. Come August 2012, McCaleb convinced Chris Larsen to join the band. Together, the crew met with Fugger, and after many talks, Fugger agreed to pass the torch.
And so, in September 2012, Chris Larsen and Jed McCaleb stood center-stage as the co-founders of the new blockchain-based, global network payment platform — OpenCoin.
It is important to know that these names hold power in the Rippleverse. They were all brought together because they all believed in one shared dream. Each one of them worked to provide a brilliant global transfer payment solution.
While some of these figureheads moved on to different projects, there is no denying that together, their passion created the perfect melody. With them, the elder days in the history of Ripple have finished.
The First Note: Ripple Launches the RippleNet
In September 2013, Opencoin was renamed Ripple Labs and finally Ripple in 2015. After the first renaming, the conductors made the Ripple code open-source. This meant anyone could open and audit the code. Individuals could see the work behind the symphony for themselves.
This new platform could very well revolutionize the way of global finance as we know it.
The creators launched the Ripple Network (RippleNet) with the intent of bringing a truly decentralized ‘Internet of Value’. The idea came from wanting to provide a platform that allowed trading of anything of value over the internet.
When they took a hard look at the world, they noticed interoperability in the sharing of data and shipping, but not with money. Thus, XRP was born.
Third parties such as SWIFT and Moneygram were responsible for carrying out global transfer payments before Ripple arrived. Back then, moving value across the world came with a hefty price tag. The more third parties involved, the more the sender had to pay in the form of transaction fees.
Ripple would provide the opportunity of evading these fees. It offered the chance at a cheap frictionless transfer of money. It would cut off all the noise between the sender and the recipient. Users could enjoy a simple, scalable, and automatic way of moving value. They no longer had to familiarize themselves with ridiculous third party rules.
To hit the ground running, the project went through quite a few rounds of successful seed funding. The most notable sound found $200,000 in funds from Jesse Powell, the founder of Kraken exchange, in October 2012. The project went on to gain $1.5 million in April 2013 from other star players like Google Ventures for one.
The final round of funds took place in September 2016. This collected $55 million from Japan’s SBI Holding alone, who, in turn, gained a 10.5% stake in Ripple.
RippleNet is a cluster of ever-growing financial institutions. These entities are what makeup RippleNet. By 2017, RippleNet consisted of over 100 financial bodies on its blockchain. These ranged from banks to other payment providers and more. Together they brought instant, affordable, and efficient global transfer payment options to all their customers.
The network uses a protocol called RTXP to validate and move funds across the world. It narrows down the gap between assets and brings a flawless, frictionless harmony between different currencies.
RippleNet customers have the option of using IOUs or XRP directly to transfer their assets to any part of the world. But what allows RippleNet to accomplish this grand feat? We shall soon find out when we explore the beat of XRP on the XRP Ledger.
The Key Note: XRP and the XRP Ledger
Brad Garlinghouse, the current CEO of Ripple, called XRP the heartbeat of Ripple. When funds need to be transferred from one party to the other, the currency is converted to XRP and sent.
This eliminates the need to have middlemen. Initially, banks would switch between many currencies until the final transaction was made. With Ripple and XRP, that is no longer the case. Users can now save a fortune on transaction fees.
XRP is a fast and scalable cryptocurrency that helps the Ripple Network process global transfer payments. It takes up to four seconds to confirm a transaction. Also, Ripple claims to handle up to 1,500 transactions per second. While XRP is a cryptocurrency, it cannot be mined.
Mining occurs as a way to confirm transactions on some blockchains. However, on RippleNet, transactions are confirmed through a different process.
Ripple confirms XRP transactions on the network through a voting system. Validators maintaining the network make this decision. If more than 80% of the validators approve the transaction, then it becomes valid. Thus, when confirmed by the validators, XRP transactions made will be updated onto the XRP Ledger.
Each validator consults with its own list of trusted validators. This list is known as a Unique Node List (UNL). Validators consult with their UNL to validate transactions on the network. Ripple offers a default list of trusted validators. Presently, there are 35 validators on the Ripple Network. Out of these, Ripple runs six.
Unlike Bitcoin miners, Ripple validators do not receive coins for confirming transactions. When Ripple first started, XRP creators issued a total of 100 billion XRP, and according to the Ripple protocol, no more XRP can ever be created. Ripple founders Jed McCaleb, Chris Larsen, and Arthur Britto together received 20 billion XRP.
Meanwhile, Ripple received 7 billion as a gift. Meanwhile, other companies and individuals bought a total of 20 billion XRP. The rest is sealed in a smart contract. It will release 1 billion XRP to Ripple every month until it hits the last of its 100 billion total.
The XRP supply will decrease over time, therefore, making it more valuable as time passes. The supply reduces when small amounts of XRP are destroyed during every confirmed XRP transaction. Once destroyed, the used XRP will vanish like smoke.
It is important to take note that while XRP is used on RippleNet, the network can run without XRP. In case banks choose not to use XRP to transfer their funds, they will use IOUs instead. At the moment, Ripple offers three main services to its customers. They are xCurrent, xRapid, and xVia.
Ripple defined their products not by trying to disrupt the way the finance sector worked, but by actually working to bridge the gap between existing financial systems and payment providers. They hoped to create a space where all these individual instruments could connect and communicate until they were all beating to the same rhythm.
As for the XRP Ledger, it is the foundation of Ripple’s success. In fact, the ballad of XRP would not exist if the founders of Ripple hadn’t built the XRP Ledger first. It is purely a decentralized cryptographic ledger, specifically designed to allow RippleNet to smoothly orchestrate multi-asset transactions. It is a flawless system — a masterpiece — that works hard on the Ripple blockchain.
But most importantly, it does so while using XRP as the ultimate bridge currency.
The Crescendo: XRP, the Third Largest Cryptocurrency
XRP held the title of ‘The Third Largest Cryptocurrency’ for seven years — from 2013 till 2020. During this time, Ripple saw incredible reach with its products and offerings. They signed on with many partners and launched multiple initiatives between 2014 to 2019.
Some of the major partnerships included ZipZap, TransferGo, American Express, Standard Chartered Bank, MoneyGram, National Bank of Abu Dhabi, and so many more. At its peak, Ripple gained over 300 unique partners who have joined and strengthened the Ripple Network.
All of Ripple’s partners have gained access to Ripple’s unique offers. Depending on the demands of their customers, they partake in Ripple’s array of products and services.
Ripple Labs co-founded the Digital Asset Transfer Authority (DATA) in July 2013. DATA set off to help guide companies on the technical standards and finer practices within the industry. This also included anti-money laundering guidelines.
In June 2018, Ripple committed over $50 million in funds to create the University Blockchain Research Initiative. This initiative strived to bring about collaboration in research & development initiatives. It would encompass innovation and knowledge sharing about blockchain technology.
Additionally, this created a chance to set a new curriculum to meet the rising demands for blockchain learning. Furthermore, it offers a center for incubating and exploring new ideas with fresh minds that will eventually groom future leaders in the industry.
SBI Ripple Asia launched MoneyTap in March 2018. It is a Ripple-run mobile app that transfers domestic payments in Japan. In May 2018, Santander, a Spanish Banking group, launched One Pay FX — another mobile app that uses xCurrent to power its payment service. That same year, many Indian banks such as Axis Bank and IndusInd started adopting Ripple products as well.
In March 2019, Ripple funded $100 million for a gaming project headed by Forte. Ripple was riding its wave of success, establishing itself as a thought leader in the field of crypto. However, even In the midst of all its success, it did not forget its corporate social responsibility — Ripple made multiple donations to charities.
Some of these included working with the World Community Grid where by March 2014, Ripple Labs donated 134,528,800 XRP to the cause. It continued with many other donations in the future. In 2018, Ripple donated $29 million in XRP to public schools in the USA. It also donated $4 million to The Ellen DeGeneres Wildlife Fund.
As the third-largest cryptocurrency, XRP was high up on the leaderboard. It was running with the big leagues, right behind Bitcoin and Ethereum. Unfortunately, at the end of 2020, Ripple had a run-in with the SEC, and no-thanks to the hubbub it caused, the value of XRP fell dramatically.
At the same time, Polkadot (DOT) surpassed XRP in market cap and XRP lost its seven-year-long title as ‘The Third Largest Cryptocurrency’.
Facing the Music: Ripple Faces Lawsuit
The history of Ripple cannot qualify as a riveting tale unless it is sprinkled in with some discord, don’t you think? Like with every epic story, there is always some strife and a big climactic showdown toward the end. In the ballad of XRP, that showdown is taking place in real-time with the SEC’s lawsuit against Ripple and its XRP.
The SEC sued Ripple in December 2020. It accused Ripple of selling XRP as a digital currency instead of selling it as a security. Therefore, the SEC filed papers against Ripple for the sale of an unlicensed ‘securities offering’.
The aftermath of the lawsuit painted quite a picture. Many exchanges and partners began calling off their support for the coin. MoneyGram was a major one of the partners that pulled out. Meanwhile, big exchanges such as Coinbase and Kraken either limited or completely suspended trading of the coin on their exchanges altogether.
Ripple, in turn, replied saying that XRP is, in fact, a coin. They said that while Ripple is a securities offering, XRP is not. Ripple has also begun suiting up and compiling their defense for their upcoming pretrial hearing in February 2021.
This is not the first time that Ripple is facing a lawsuit. In September 2013, R3 sued Ripple for a breach in an XRP agreement. Ripple had promised to sell R3 up to 5 billion XRPs, but this promise was not met.
Ripple countersued R3 with the argument that R3 failed to meet several promises of its own. The whole dispute was cleared when both parties settled on a mutual agreement.
The Next Verse: Ripple’s Resolute Plans
Ripple is optimistic about their upcoming hearing with the SEC. In fact, they are looking forward to their future and have already begun taking on more hires in various offices around the world.
The SEC may have accused XRP of being a security, but there were many others who do not agree with its view. For instance, Japan’s Financial Services Agency (FSA) said that they did not view XRP as a security but as any other cryptocurrency.
XRP holders in the USA filed an appeal to their court requesting it to reconsider the SEC’s accusation. They said that the SEC’s job is to protect investors and this fight against XRP goes against that.
Coinbase too was sued during the aftermath for allowing the sale of XRP. It was quite an eventful string of days.
Meanwhile, Ripple is gearing up to fight the case by using its vast collection of data. They plan to draw a relation between the success of Ripple and its partners to the high and lows of XRP’s value.
By doing so, they aim to prove that Ripple’s success is in no way related to XRP’s price hikes. Thus, this may prove that Ripple and XRP play different roles — Ripple the firm, and XRP the cryptocurrency.
The Final Note: The Conclusion
It seems the history of Ripple is still writing itself. Will the courts sway in favor of Ripple and XRP? Will XRP’s value ever rise again?
Well, one thing is for certain. Ripple is not backing down. They have a dream they believe in, allies who are standing by them, and fans screaming out their name.
The SEC better watch out, because come February 22, 2021, the whole world will be watching them outplay each other on the global stage. The ballad of XRP still has many power chords to play.