Cryptocurrency Guide

What is Ripple — A Step-By-Step Guide

Team Cryptoradar by Team Cryptoradar

Updated: Feb 25, 2022

How many times have you read about a cryptocurrency that promises to be vastly different to Bitcoin but ends up being largely similar? Quite often, I imagine. Well, Ripple is a cryptocurrency that really is fundamentally different to other cryptocurrencies.

For starters, it doesn’t use a blockchain and it is not totally decentralised.

Next question: how many times have you read about a cryptocurrency that promises to snub, dethrone or surpass fiat currency? Quite often again, I imagine. Well, Ripple is different in this respect too. Instead, Ripple thrives off of cooperating with banks and financial institutions.

This probably sounds like the antithesis of cryptocurrency’s philosophy and, for cryptocurrency devotees, this will probably send pulses racing and fists clenching. However, having earned the title of the third most valuable cryptocurrency by market cap, it is obvious that Ripple is doing something right.

What is Ripple?

A text message can be sent and received in seconds. A takeaway can be delivered in minutes. An Amazon order can be received in hours. A news update can be released almost instantaneously. We’ve come to value and, moreover, expect immediacy. Yet transactions, specifically international transactions, can often take hours, days or even weeks to be processed. Whether you’re a crypto-devotee or a crypto-sceptic, most people can agree that efficiency is not banking’s strong-point. And that is primarily why Ripple entered the scene.

Ripple was not created to rival fiat currencies. Instead, it was intended to drag international transactions into the digital age, promising fast transaction times with minimal fees. And its success speaks volumes. With its platform being utilised by over a third of the world’s biggest banks, Ripple has garnered an incredible level of commercial acclaim.

To understand Ripple’s successes, failures, benefits and shortfalls, it’s important to keep its parts as separate as possible: XRP and Ripplenet. Both were created by RippleLabs, but they do have different functions.


To gradually ease you into Ripple’s vast differences, we’ll start by speaking about Ripple’s cryptocurrency, XRP. XRP is the currency that is promoted and managed by Ripple. It is a cryptocoin that can be bought and stored similarly to Bitcoin. If you buy XRP, you will receive a private key and public key. Your public key will be needed to receive money, while your private key must be kept securely and only used to send money. This will ensure no one compromises your wallet.

Perhaps one of the most important differences between XRP and the likes of BTC is the fact that XRP is pre-mined. Cryptocurrency mining was implemented to incentivise those who approve the cryptocurrency transactions. If they used their computational power to verify transactions, they would be rewarded with more of the currency. However, this incentive was necessary because a lot of computational power was required to facilitate mining. XRP validation doesn’t need such computational power. An XRP validator only requires as much power as an email server, so a monetary incentive isn’t needed.

This consensus validation means that XRP can maintain a level of decentralisation. This technology is similar to Bitcoin’s blockchain technology. It is opensource, transparent and approves transactions on a consensus basis. However, although it is a decentralised solution, XRP transactions are typically validated by the corporations and individuals that use Ripple. These corporations do not receive a direct profit from this but they validate transactions to help continue XRP’s stability and performance. This means that a lot of the computing power comes from large, corporate and, crucially, centralised institutions.

Without the need for mining, transactions can take place quickly and cheaply. To put this speed into perspective, Bitcoin can process 4 transactions a second, Ethereum can handle 15 transactions a second. XRP can handle a whopping 1,500 transactions a second. Essentially, when it comes to XRP, it is quicker to send cryptocurrency than it is to even say cryptocurrency!

Unfortunately, this doesn’t mean there are no fees at all. While the fee is almost imperceptible, it is important to mention that it is absorbed by Ripple. For some, this is a dealbreaker, as it points to a centralised corporation that benefits from the cryptocurrency. However, on the flip side, because this fee isn’t recirculated, the number of XRP in circulation is reducing with every transaction. This is good news for investors as the remaining XRP will become increasingly more valuable.

Moreover, Ripple also controls how much XRP is in circulation. Again, for crypto-purists, this implies an alarming level of centralisation. However, there are plenty of benefits of this too. New XRP is secured in an escrow account that can only release 1 billion XRP every month, and it takes back any that hasn’t been used at the end of each month. This means that Ripple cannot control the currency, and it also stabilises the value of XRP because the market cannot be flooded. Arguably, the fact that the remaining XRP can be monitored is more transparent than the more volatile, indefinite cryptocurrencies like Ethereum.


For those who are familiar with cryptocurrencies, you’ll probably be thinking that nothing about XRP justifies its immense popularity. Well, we’re not done yet. Enter Ripplenet. Ripplenet is what makes this cryptocurrency so popular, as it has revolutionised how money is sent internationally.

It’s important to separate Ripplenet from XRP because you don’t need XRP to trade on Ripplenet. Ripplenet essentially just uses XRP as a common currency that can be quickly, cheaply and temporarily exchanged for Fiat currency. What’s more, unless you fancy managing your own gateway, a trusted financial institution manages the exchange process for you too. This is what Ripple calls XRapid. This is a huge selling point of Ripple as the volatility of cryptocurrencies is almost irrelevant if you’re merely using XRP as a transactor. With almost instant transactions, the thing you are trading only needs to exist for a fraction of a second.

While it doesn’t use Bitcoin’s blockchain technology, Ripplenet’s technology is fairly similar, making it the world’s first commercially operational blockchain network. At the beginning and end of a transaction, there are gateways: local, trustworthy financial institutions. Presently, there are over 200 of these financial institutions in over 40 countries. By using Ripplenet’s XCurrent service, these gateways are able to communicate quickly to settle transactions as easily as if they were passing a 10-pound note between them. The liquidity that Ripplenet facilitates can support emerging markets as well as supporting financial giants with speedy transactions. With Ripple, businesses needn’t hold several currencies that they only occasionally use. Instead, they only need to keep one currency: XRP. Essentially, Ripple allows country borders to fall away.

Before the arrival of Ripple, banks relied solely on a solution called SWIFT. SWIFT was essentially a messaging service that detailed what amounts of currency needed to be debited or received. It did not actually move any money. Banks also needed to have intermediary correspondents to link the banks’ transactions which left more room for errors and double spends. The sender would have very little visibility of where and how their money was being transferred. The conflicting time zones and superfluous steps slow down this process considerably. It was a successful service, but it was far from efficient.

Since the arrival of Ripplenet, SWIFT has been attempting to evolve their service to prevent Ripplenet from taking their spot as top dog. SWIFT has successfully cut down their transaction time, although it is still incomparable to Ripple. However, while the speed of transactions is responsible for some of Ripple’s, it is not their only niche.

Crucially, Ripple’s equivalent messaging system, XCurrent, allows two-way messaging so transparency and efficiency can be achieved. This live-time communication is crucial to prevent transactions from bouncing, which can save a business a lot of time and money. The gateways also facilitate further, more complex privacy measures such as ‘Know your customer’ and ‘Anti-money laundering’ processes.

With XRP acting purely as a common currency, in theory, anything can be exchanged over Ripplenet. Whether it be Pokémon cards, rubber ducks or air miles, if you can find a gateway that is happy to exchange your currency into XRP, you can transfer it.

While this is not a cryptocurrency that holds decentralization at its core, it is a cryptocurrency that prioritises revolution, progress and efficiency. While some may disagree with their interpretation of cryptocurrency, Ripple has found a mainstream and commercial audience where no other cryptocurrency has.

Despite its innumerable advantages and disadvantages, the question of whether Ripple is a good investment comes down to two things: risk and reward. To be level-headed enough to weigh up risk and reward, you need to put your prejudices aside. If you can accept that Ripple pushes the boundary of what is accepted as cryptocurrency, then this could be the coin for you. If you are still sweating at the thought of a cryptocurrency that supports big-name-banks, then maybe you should invest elsewhere…

How to Buy Ripple

Nowadays, there are many marketplaces that offer the purchase of Ripple for US dollars, euros or pounds. Just follow these four steps to buy Ripple in no time:

  1. Find a cryptocurrency exchange
  2. Sign up for a cryptocurrency exchange
  3. Buy XRP using US dollars, euros or pounds
  4. Store XRP securely

1. Find a XRP exchange

You shouldn't just choose any cryptocurrency exchange. The below list outlines key factors which should influence your decision for a marketplace that suits your needs:

  • User experience: the user interface and functionalities of many exchanges may be confusing at first. Nevertheless, an intuitive user interface helps you make better informed investment decisions and reduces the risk of unnecessary mistakes.
  • Fee structure and rates: Trading fees as well as payment fees can range from as little as 0.1% per transaction to 10% per transaction and more. Hence, always look for a good trade-off between pricing and user-experience.
  • Payment methods: make sure that your preferred cryptocurrency exchange offers payment methods that suit your wants and needs.
  • Security & trust: make sure to choose a platform that follows security best practices. Read reviews by real users to learn more about the trustworthiness and support provided by the different marketplaces.

How to use Cryptoradar to find a cryptocurrency exchange

Cryptoradar helps you find a suitable cryptocurrency marketplace, providing you a comprehensive yet compact overview Ripple marketplaces.

Make sure to use the filters on the left side of the website to narrow down your list based on your wants and needs.

2. Sign up for an exchange

Signing up to an exchange is actually one of the easiest parts of the process. Simply enter your personal details to get started.

After registration, however, you need to verify your identity. To do so, you will either be asked to upload identification documents to the marketplace (e.g. a copy of your passport and a recent utility bill as proof of residence), or you will be asked to jump on a short video chat with a support agent who will verify your details remotely.

3. Buy XRP using US dollars, euros or pounds

Finally, you're on the brink of making your first Ripple purchase! Yet, before you can actually buy cryptocurrency, you need to deposit money on the marketplace. This can either be done through bank transfer or instant payment methods like credit cards or Skrill.

Once your payment is received by the cryptocurrency exchange, you can go ahead and buy Ripple. This is actually the easiest part of the whole process. On most marketplaces it’s as easy as selecting the purchase amount (in US dollars, euros or pounds) and clicking the buy button.

4. Store XRP securely

Optionally, you can withdraw XRP after your purchase to a secure wallet that you manage. Keep in mind that you should not leave large amounts of cryptocurrencies on marketplaces as they are popular targets of hackers.

Frequently asked questions

Ripple is a digital payment network based on blockchain technology. Ripple is distinct from other cryptos like Bitcoin because it does no us a distributed consensus mechanism. Ripple is among the top ten cryptocurrencies by market capitalisation.

XRP is the name of the native currency of the Ripple network. It’s used to distinguish the token, XRP, from the blockchain (Ripple) and the organisation (Ripple Labs) that maintains and develops it.

Ripple has several advantages over the alternatives. To begin with, it is highly energy-efficient, and
transactions take very little time to be approved. The former concern is paramount among traders
with an environmental mindset, as one of the major criticisms of proof-of-work currencies is the
inordinate amount of power they consume.
The Ripple payment system is mostly used by banks, as it allows them to exchange value almost
instantaneously, unlike the traditional system of wire transfer. With that said, individual investors
may still wish to speculate on the price of XRP, as they might with any other digital commodity.

Unlike many of its rivals, Ripple doesn’t use a blockchain in the traditional sense. The ledger is distributed and validated across a network of servers.

You can invest in Ripple without directly revealing your identity. However, transactions that take
place using Ripple are available on the consensus ledger, which means that your activity could be
vulnerable to de-anonymisation — a practice whereby a determined person can deduce who you
are, how much you’re trading, and with whom.

To store XRP you’ll need a Ripple wallet. Many marketplaces provide new users with their own wallet, but a wallet that you own and control yourself presents several security advantages. Storing significant amounts of cryptocurrency on an exchange presents a risk, as such exchanges are vulnerable to cyberattack. Ripple Labs does not endorse any particular wallet.

The currency was created before the company was formed. The creators of the currency then gifted a portion of the 100 billion XRP to the organisation now called Ripple Labs.

By the same token, Ripple Labs is unable to freeze XRP transactions.

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