What Is XRP (XRP)? How It Works, Use Cases and Risks
What is XRP? A plain-English guide to the XRP Ledger, how its consensus works, what XRP is used for, its supply design, Ripple's role and the main risks.
XRP is the native cryptocurrency of the XRP Ledger (XRPL), an open-source blockchain designed for fast, low-cost payments and settlement. It is closely associated with the company Ripple, which uses XRP in some of its cross-border payment products, but the ledger itself is public and run by independent validators.
XRP is one of the oldest cryptocurrencies still widely traded, and it is often misunderstood. Some people treat XRP and Ripple as the same thing; others assume it works like Bitcoin. Neither is quite right. This guide explains where XRP came from, how the network works, what the token is used for, and the risks and criticisms worth knowing. For the live price and market data, see the XRP coin page.
Origins: Who Created XRP?
The XRP Ledger was developed by Jed McCaleb, Arthur Britto and David Schwartz and went live in 2012. Its goal was to improve on Bitcoin for payments by settling transactions in seconds without energy-intensive mining. Our Stellar (XLM) explainer covers the project's basics, use cases and risks. If you want to go further, read XRP vs Solana.
The creators founded a company, initially called OpenCoin and later renamed Ripple, with Chris Larsen as a co-founder. When the ledger launched, 100 billion XRP were created in total. A large portion was given to the company to fund development and grow the ecosystem. In 2017, Ripple placed a large part of its XRP holdings in escrow on the ledger, with a set amount becoming available each month and unused amounts typically locked again. For background on the project itself, see Flare (FLR) explained. Related reading: Hedera vs XRP.
How the XRP Ledger Works
The XRP Ledger does not use proof of work or the type of proof of stake used by networks such as Ethereum. Instead, it uses its own XRP Ledger Consensus Protocol:
- 1Each validator maintains a Unique Node List (UNL): a list of other validators it trusts not to collude.
- 2Validators exchange proposed transaction sets and iterate until a supermajority agrees.
- 3Once agreement is reached, a new ledger version closes, typically within a few seconds.
Because there is no mining, the network uses little energy, and transactions finalize quickly. Many participants use a default UNL published by organizations in the ecosystem, which is central to debates about decentralization. Our Telcoin (TEL) explainer covers the project's basics, use cases and risks.
The ledger also includes features that other chains add through smart contracts:
- A built-in decentralized exchange for trading assets issued on the ledger.
- Issued tokens (sometimes called IOUs), which let institutions issue assets such as stablecoins on the XRPL.
- Escrow and payment channels at the protocol level.
- Destination tags, numbers that identify individual customers behind a shared address, commonly used by exchanges.
What XRP Is Used For
XRP has several roles on the network:
- Transaction fees. Every transaction burns a tiny amount of XRP. This makes spam expensive at scale.
- Account reserve. Each account must hold a minimum XRP balance to exist, which limits ledger bloat. The reserve level can be changed by validator vote.
- Bridge currency. XRP can act as an intermediate asset when converting between two currencies, which is how Ripple has promoted its use in cross-border payments.
- Trading and settlement. XRP is used as a trading pair on the ledger's built-in exchange and on many centralized exchanges.
Supply Design in Plain Words
| Feature | How it works |
|---|---|
| Total supply at launch | 100 billion XRP, created all at once |
| New issuance | None; XRP cannot be mined |
| Fee burning | A small amount is destroyed with each transaction, slowly reducing supply |
| Ripple holdings | A large share held by Ripple, with much of it released gradually from escrow |
Because Ripple and early figures held large amounts, circulating supply has grown over time as XRP is released. When looking at XRP's market data, compare circulating supply with total supply, as explained in our guide to circulating, total and max supply. If you want to know what could move XRP over the next two years, see our XRP price prediction for 2026–2027.
Risks and Criticisms
XRP has a large and loyal community, but the criticisms are real and worth weighing:
- Concentration. A single company holds a significant share of the supply, and its sales can affect the market.
- Validator decentralization. Critics argue that reliance on a recommended validator list concentrates influence. Supporters point out that anyone can run a validator and choose their own list.
- Dependence on Ripple. Much of XRP's adoption story is tied to one company's business success.
- Regulatory history. In December 2020, the US Securities and Exchange Commission sued Ripple, alleging that its XRP sales were unregistered securities offerings. In 2023, a federal court ruled that some of Ripple's sales to institutional buyers were securities offerings, while programmatic sales on exchanges were not. Regulatory treatment of crypto assets continues to differ by country and change over time.
- Adoption claims. Partnerships with financial institutions do not always mean those institutions use XRP itself; some use Ripple's software without the token.
How to Find Official XRP Information and Avoid Fakes
Because XRP is native to its own ledger, there is no official XRP token contract to copy. That creates a specific risk: tokens on other networks named "XRP" can be wrapped versions, unofficial bridges or outright scams.
- Use the official technical documentation at xrpl.org for ledger information.
- Buy and withdraw XRP only on the XRP Ledger network unless you deliberately want a wrapped version.
- When depositing to an exchange, copy both the address and the destination tag.
- Be wary of "XRP giveaways," fake airdrops and sites asking for your secret key; impersonation of Ripple executives is a common scam.
Our guide to verifying a token's official contract address explains how to check wrapped versions on other chains, and our XRP vs Stellar comparison covers its closest relative.
Bottom line
XRP is the native asset of a fast, payment-focused public ledger with unusual design choices: no mining, a validator trust list, built-in exchange features and a fixed supply that slowly shrinks through fee burning. Its close link to Ripple is both its biggest strength and its most cited weakness. If you hold or research XRP, understand the supply concentration and regulatory history, use the native ledger, and always include the destination tag when an exchange requires one.
Frequently asked questions
Is XRP the same as Ripple?
No. XRP is the native digital asset of the XRP Ledger, an open-source blockchain. Ripple is a private company that builds payment products, uses XRP in some of them and holds a large amount of XRP. The ledger can run without Ripple, but the company remains the most influential participant in the ecosystem.
Can XRP be mined?
No. All XRP was created when the XRP Ledger launched, and no new XRP can be mined or issued. Validators agree on transactions through a consensus protocol rather than mining. A tiny amount of XRP is destroyed with every transaction fee, so the total supply slowly decreases over time.
Does XRP have a contract address?
XRP itself is native to the XRP Ledger, so it has no token contract address there. Tokens calling themselves XRP on other blockchains are wrapped, bridged or outright fake versions. If you hold XRP, use a wallet or exchange that supports the native XRP Ledger, and treat any other version with caution.
What is the destination tag when sending XRP?
A destination tag is a number that identifies the specific customer account at a shared address, such as an exchange deposit address. If the receiving platform gives you a tag and you leave it out, your deposit may not be credited automatically, so always copy both the address and the tag.