When diving into the world of digital currencies, few topics generate as much confusion as the relationship between XRP and Ripple. Many people use the terms interchangeably—referring to XRP as “Ripple” or calling the company Ripple “XRP.” But while they’re closely connected, they are not the same thing. Understanding the distinction is essential for anyone interested in blockchain technology, cross-border payments, or cryptocurrency investing.
This article breaks down the core differences, explores how XRP functions within Ripple’s ecosystem, and answers the burning question: Why is XRP called Ripple?
What’s the Difference Between Ripple and XRP?
At a high level:
- Ripple is a fintech company.
- XRP is a digital asset (cryptocurrency).
Despite their intertwined roles, confusing them is like mistaking a car manufacturer for the fuel it uses. Let’s clarify each.
Ripple: The Financial Technology Company
Founded in 2012, Ripple Labs Inc. (commonly known as Ripple) develops blockchain-based solutions for banks and financial institutions. Its primary mission? To modernize global payments by making cross-border transactions faster, cheaper, and more transparent.
Ripple’s flagship product is RippleNet, a network that connects banks, payment providers, and digital asset exchanges. Through RippleNet, institutions can settle international payments in real time—without the need for pre-funded nostro accounts.
Key tools within RippleNet include:
- xCurrent: Enables instant messaging, clearing, and settlement between banks—without requiring XRP.
- xRapid (now rebranded as On-Demand Liquidity, or ODL): Uses XRP as a bridge currency to source liquidity on demand.
- xVia: A standardized API for sending payments across RippleNet.
These tools showcase Ripple’s broader vision: leveraging blockchain to streamline traditional finance.
XRP: The Digital Asset
XRP is the native cryptocurrency of the XRP Ledger, an open-source, decentralized blockchain that predates Ripple’s involvement. While Ripple did help develop early versions of the ledger, it does not control it.
Key features of XRP:
- Total supply: 100 billion tokens (all created at launch)
- No mining: Unlike Bitcoin, XRP uses a consensus protocol
- Transaction speed: Settlements in 3–5 seconds
- Extremely low fees: ~0.00001 XRP per transaction
XRP was designed to act as a bridge currency in cross-border transactions. Instead of converting USD to EUR through multiple intermediaries, funds can be converted to XRP instantly and then to the target currency—cutting costs and delays.
This functionality makes XRP especially valuable in environments where liquidity is limited or correspondent banking is inefficient.
Why Is XRP Called Ripple? Origins of the Name
The confusion stems from branding and historical context.
When Ripple launched its payment protocol, it introduced XRP as the digital asset powering certain use cases—particularly liquidity solutions. Because Ripple promoted XRP so heavily within its ecosystem, many users began referring to the token as “Ripple.”
Additionally:
- Early adopters often said “I bought Ripple” instead of “I bought XRP.”
- Financial news outlets sometimes used “Ripple” when reporting on XRP price movements.
- The company itself used “Ripple” broadly in marketing materials.
Over time, this led to widespread colloquial usage—despite being technically inaccurate.
In short: XRP isn’t called Ripple by design—it’s called that because of market habit.
But make no mistake: calling XRP “Ripple” is like calling Ethereum “Consensys” or Bitcoin “Blockstream.” The company supports the ecosystem, but the asset stands independently.
How Do Ripple and XRP Work Together?
While distinct entities, Ripple and XRP are symbiotic.
XRP Powers On-Demand Liquidity (ODL)
One of Ripple’s most innovative offerings—On-Demand Liquidity (ODL)—relies entirely on XRP. Here’s how it works:
- A payment provider in the U.S. wants to send money to Mexico.
- Instead of holding Mexican pesos in advance, they convert USD to XRP.
- XRP is transferred across borders in seconds.
- On the receiving end, XRP is converted to MXN.
This eliminates the need for pre-funded accounts and reduces capital costs by up to 90%, according to Ripple case studies.
👉 See how businesses are using digital assets for instant cross-border settlements.
Does RippleNet Require XRP?
No. Not all RippleNet services use XRP.
- xCurrent: Operates without XRP; uses messaging and synchronized ledgers.
- xVia: Agnostic to settlement method.
- ODL (formerly xRapid): Requires XRP for liquidity bridging.
This flexibility allows financial institutions to choose their preferred method—whether traditional or crypto-enabled.
Scarcity and Transaction Fees: What Happens to XRP?
Every transaction on the XRP Ledger incurs a tiny fee—currently around 0.00001 XRP. However, this fee isn’t paid to validators or miners. Instead, it’s destroyed permanently, reducing the total supply over time.
This process, known as burning, has long-term implications:
- Total XRP supply slowly decreases
- Increases scarcity
- Potentially enhances value over time (if demand remains steady or grows)
With 100 billion XRP created at genesis and Ripple holding a portion in escrow, this deflationary mechanism adds another layer of economic design that appeals to investors.
Legal Challenges and Market Impact
A major factor influencing both Ripple and XRP has been regulatory scrutiny—particularly in the U.S.
In December 2020, the SEC filed a lawsuit against Ripple Labs, alleging that XRP was sold as an unregistered security. This sparked volatility and delistings from major exchanges.
However, key developments since then have shifted sentiment:
- In July 2023, a U.S. federal judge ruled that XRP is not inherently a security when sold to retail investors.
- Institutional sales were scrutinized, but the ruling clarified distinctions between different types of token distribution.
While legal clarity continues to evolve, this decision strengthened confidence in XRP’s legitimacy as a digital asset—not just a corporate token.
The Future of XRP and Ripple
Growth Potential
As global demand for fast, low-cost remittances rises, so does the relevance of solutions like ODL. Emerging markets—where access to foreign currency liquidity is limited—are ideal candidates for XRP-powered settlements.
Countries like India, the Philippines, and Nigeria already see significant adoption of crypto-based remittance platforms using XRP.
Moreover, central banks exploring CBDCs (Central Bank Digital Currencies) may integrate with networks like RippleNet, further validating the infrastructure.
Institutional Adoption
Financial institutions are increasingly testing blockchain-based rails. Santander, MoneyGram, and SBI Remit have all piloted or implemented Ripple-powered solutions—with measurable improvements in speed and cost-efficiency.
As more banks digitize operations, the synergy between Ripple’s tech and XRP’s utility becomes harder to ignore.
Frequently Asked Questions (FAQ)
Q: Is Ripple the same as XRP?
A: No. Ripple is a company; XRP is a digital asset used on the XRP Ledger.
Q: Can I use RippleNet without XRP?
A: Yes. Products like xCurrent don’t require XRP. Only ODL uses it for liquidity.
Q: Who owns XRP?
A: The total supply was created at launch. Ripple Labs holds a portion in escrow; the rest is circulating or held by early investors.
Q: Why do people call XRP "Ripple"?
A: Due to historical branding and common misuse in media and conversation.
Q: Is XRP a good investment?
A: It depends on market conditions, adoption trends, and regulatory outcomes. Always do your own research before investing.
Q: Does XRP have real-world use?
A: Yes. It’s actively used in cross-border payments via ODL, reducing costs and settlement times for financial providers.
Final Thoughts
So, why is XRP called Ripple? Largely due to association—but technically, it's incorrect.
Understanding the difference empowers better decision-making for investors, developers, and financial professionals alike. While Ripple drives innovation in payment infrastructure, XRP serves as a scalable, efficient bridge currency with growing real-world utility.
As digital finance evolves, both will likely play pivotal roles—but their identities must be recognized separately to fully appreciate their potential.
👉 Stay ahead in digital finance—track market trends and explore next-gen payment technologies now.