These days, there are so many new cryptocurrency coins available that it can be hard to keep track of them all. From the heavy-hitters like Bitcoin to lower-priced coins like Ripple’s XRP, various cryptocurrency coins now make the headlines — and intrigue potential buyers — on a regular basis.
Near the end of 2020, Ripple and its network cryptocurrency XRP began making waves due to legal battles with the U.S. Securities and Exchange Commission (SEC0, a federal regulatory agency “responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation” (Investopedia). We’ll get you caught up to speed on Ripple and XRP, delving into where you can buy them as well as the legal issues surrounding the brand.
What Is Ripple?
Ripple is not a cryptocurrency in itself, but a blockchain-based currency exchange and payment settlement system that was designed to be used worldwide. One of Ripple’s main selling points is that it makes it much cheaper and easier to exchange money internationally.
By quickly facilitating and confirming transactions between two parties, Ripple makes it possible to send payments in under five seconds. This cuts out the need for pre-funding, as well as the lengthy settlement period that’s usually required when transferring money between two financial institutions.
Ripple also cuts the costs of international transaction fees, by charging a standard fee of 0.00001 XRP coin. In other words, if one XRP is worth $1.59, the exchange fee would only be $0.0000159. Because it operates on blockchain technology, Ripple also tends to be incredibly secure and transparent. Best of all, Ripple can handle the exchange of everything from Bitcoin to gold to fiat currencies and currently offers 40+ currency payout options.
What Is XRP?
XRP is the official cryptocurrency of Ripple and goes a long way in helping make currency exchange easier. Say, for instance, that you are currently in the United States and want to send a payment of $200 to a friend in London. Traditionally, you would have to worry about not only how to get your friend the money, but also how to first exchange dollars for pounds.
And that’s where the XRP comes into play. If you chose to use Ripple instead, you’d simply buy $200 worth of XRP and send them to your friend.
Upon receipt, your friend would then cash in the XRP for their worth in pounds. As you can see, this process eliminates the need to go through a third-party exchange. The ease of such transactions has attracted not only banks and other financial institutions, but also companies who do business internationally. For example, companies like Santander, Axis Bank, and Yes Bank are already integrating Ripple into their payment structures.
How Is XRP Different From Bitcoin?
While Bitcoin and XRP are both cryptocurrencies, the similarities pretty much end there. Most notably, Ripple and XRP are centralized, unlike other cryptocurrencies, which grew to popularity based partially on their decentralized nature. Moreover, there are several other major differences you should also be aware of if you’re thinking of investing in XRP.
Unlike Bitcoin, which uses traditional blockchain mining methods, Ripple uses a consensus mechanism that validates transactions via polls. While this can be a little tricky to understand, suffice to say that it makes confirmations much faster.
Another point to note is that XRP’s cap is much larger than Bitcoin’s. While XRP is capped at 100 billion, Bitcoin’s cap is 21 million. This means that while only 21 million Bitcoins can ultimately exist, there will someday be billions of XRPs on the market. Bitcoin’s lower cap is part of what makes investors willing to pay so much more for it, while XRPs are more intended for everyday use and financial exchange.
As mentioned above, one of the other factors that sets XRP apart is that it doesn’t use mining to create and introduce new coins into the market in the same way that Bitcoin does. XRP coins are all pre-mined, which means that 100 billion tokens already exist in the XRP ledger. The idea is that these new coins will be released in a slow, periodic way into the system to prevent oversaturation.
The Ripple vs. SEC Fiasco
The trouble began back in December of 2020 when the SEC declared that it was suing Ripple for raising over $1.3 billion through an “unregistered securities offering.” Basically, what it all comes down to is that the SEC claims that XRP is an investment security, while Ripple claims that it’s a currency. What’s the difference between the two?
- Security: A security is something that represents value and can be exchanged for something of actual financial value. For instance, stocks, bonds, options, banknotes, and treasury notes are all securities.
- Currency: Something that can be used as money.
While the difference is a bit murky, whether XRP is indeed a security or a currency makes all the difference on a legal level. If it is a security, as the SEC claims, then XRP should have been abiding by a whole other set of regulations. Because they were operating under the assumption that XRP was a currency, however, Ripple has largely ignored such regulatory rules.
The case has been confusing, even for Ripple’s CEO, Brad Garlinghouse — especially in light of the fact that Bitcoin and Ethereum are both considered currencies by the SEC. Recently, Garlinghouse actually called out the confusion surrounding cryptocurrency regulation in the U.S. “It is the only country on the planet that has said XRP is anything other than a currency,” Garlinghouse remarked. “The SEC has said… XRP is a security. And so we’re now engaged in a court discussion. So far, I feel good about how that’s been going, but it’s certainly frustrating.”
Where Can You Buy XRP?
As a result of Ripple’s ongoing legal tussle with the SEC, several major exchanges, such as Coinbase, have suspended XRP trading on their platform until things settle down. If you’re interested in investing in the controversy-rich crypto, however, there are still a few places where you can trade and buy XRP in the U.S.
Check out other exchanges, including:
- Crypto.com: Crypto.com is still offering XRP, as well as a huge variety of other cryptocurrencies. From well-known coins like Bitcoin and Ethereum to up-and-comers like Shiba Inu and Safemoon, Crypto.com has got you covered.
- Binance: Binance is known as the world’s largest crypto exchange and it definitely lives up to its name. While it’s great for seasoned traders, it may come across as a tad overwhelming for beginners.
To check out more exchanges that are currently selling XRP, visit Coin Market Cap.
