The XRP Ledger is a decentralized cryptographic ledger powered by a network of peer-to-peer servers. The XRP Ledger is the home of XRP, a digital asset designed to bridge the many different currencies in use worldwide. Ripple stewards the development of the XRP Ledger, and advances XRP as a key contribution to the Internet of Value: a world in which money moves the way information does today.
XRP is a digital asset native to the XRP Ledger. Anyone with a cryptographic key and an internet connection can receive, hold, and send XRP to anyone else. XRP's creators have developed it to be a desirable bridge currency that can facilitate trades in any other currency. XRP has many properties which make it an appealing asset for many other use cases, too:
The XRP Ledger's biggest difference from most cryptocurrencies is that it uses a unique consensus algorithm that does not require the time and energy of "mining", the way Bitcoin, Ethereum, and almost all other such systems do. Instead of "proof of work" or even "proof of stake", The XRP Ledger's consensus algorithm uses a system where every participant has an overlapping set of "trusted validators" and those trusted validators efficiently agree on which transactions happen in what order. As of early 2018, the amount of electricity the Bitcoin network uses per transaction is more than a family home in the USA uses in an entire day, and confirming the transaction takes hours. A single XRP transaction uses a negligible amount of electricity, and takes 4 or 5 seconds to confirm.
Furthermore, each new "ledger version" in the XRP Ledger (the equivalent of a "block") contains the full current state of all balances, so a server can synchronize with the network in minutes instead of spending hours downloading and re-processing the full transaction history.
XRP is part of a new class of money which includes Bitcoin and other cryptocurrencies:
This combines qualities of physical and centralized digital money. Prior to the invention of Bitcoin in 2009, all currencies could be divided into those two categories:
Alongside war and political turmoil, hyperinflation is one of the leading causes of death for currencies. While the decentralized system of validators provides XRP with some resistance to political factors, the rules of the XRP Ledger provide a simpler solution to hyperinflation: the total supply of XRP is finite. Without a mechanism to create more, it becomes much less likely that XRP could suffer hyperinflation.
The supply of XRP available to the general public does change due to a few factors:
Sending transactions in the XRP Ledger destroys a small amount of XRP. Senders choose how much to destroy, with certain minimums based on the expected work of processing the transaction and how busy the network is. If the network is busy, potential transactions that promise to destroy more XRP can cut in front of the transaction queue. This is an anti-spam measure to make it prohibitively expensive to DDoS the XRP Ledger network. For more information, see Transaction Cost.
Each account in the XRP Ledger must hold a small amount of XRP in reserve. This is an anti-spam measure to disincentivize making the ledger data occupy too much space. XRP Ledger validators can vote to change the amount of XRP required as a reserve, to compensate for changes in XRP's real-world value. (The last time this happened was in December 2013, when the reserve requirement decreased from 50 XRP to 20 XRP.) If the reserve requirement decreases, XRP that was previously locked up by the reserve becomes available again.
Ripple (the company) holds a large reserve of XRP in escrow. At the start of each month, 1 billion XRP is released from escrow for Ripple to use. (Ripple uses XRP to incentivize growth in the XRP Ledger ecosystem and sells XRP to institutional investors. Ripple also sells XRP programmatically on exchanges, limited to a small percentage of overall exchange volume. Ripple publishes sales figures quarterly in the XRP Markets Report.) At the end of each month, any remaining XRP the company does not sell or give away is stored into escrow for a 54-month period. For more information on Ripple's escrow policy, see Ripple Escrows 55 Billion XRP for Supply Predictability. For more information on the technical capabilities of the Escrow feature, see Escrow.
Any piece of software can only be as good as the developers who code and manage it. Ripple employs a team of world-class engineers dedicated full-time to maintaining and improving the XRP Ledger software, especially the core server, rippled. The source code for rippled is available to the public with a permissive open-source license, as are many other parts of the XRP Ledger ecosystem. Ripple engineers follow best practices for software engineering, including:
As an entity that is obligated to hold large amounts of XRP for the long term, Ripple has a strong incentive to ensure that XRP is widely used in ways that are legal, sustainable, and constructive. Ripple provides technical support to businesses whose goals align with Ripple's ideal of an Internet of Value. Ripple also cooperates with legislators and regulators worldwide to guide the implementation of sensible laws governing digital assets and associated businesses.
Besides simple value transfer with XRP payments, the XRP Ledger has several advanced features that provide useful functions for building applications that use the Internet of Value to serve previously unknown or impractical needs. Rather than running applications as "smart contracts" in the network itself, the XRP Ledger provides tools for settling contracts, while letting the applications themselves run anywhere, in whatever environment or container is appropriate. This "keep it simple" approach is flexible, scalable, and powerful.
A sample of advanced features in the XRP Ledger:
One of the biggest features that sets the XRP Ledger apart from other cryptocurrency networks is that it also contains a full currency exchange that runs on the XRP Ledger. Within this system, businesses (typically called "gateways") can freely issue any currency they want to customers, and those customers can freely trade issued currencies for XRP or other issued currencies issued by any gateway. The XRP Ledger can execute atomic cross-currency transactions this way, using orders in the exchange to provide liquidity.