XRP is a crypto-currency that trades on a public ledger. The software is developed and maintained by a company that is based in San Francisco with almost 200 full time employees.
That company, among other things, makes software for banks. That software allows interbank payments to take place very quickly and with numerous other advantages over conventional payment systems.
There will only ever be 100 billion XRP in existence. Ripple, the company, holds about 60 billion XRP. Part of its business model is to profit from the increasing value and liquidity of XRP, if that can be accomplished.
Ripple's strategy for increasing the value and liquidity of XRP is to position XRP as a fast settlement system to go with its fast payment system.
Say two banks use Ripple's payment technology and a customer at one bank receives a $1 million payment. Now they want to wire that $1 million over a domestic payment system. The bank needs $1 million on that domestic rail immediately or it can't let the $1 million payment be used immediately (even though it knows the money is coming).
The plan is to use the value of the XRP it holds to incentivize the creation of deep pools of liquidity between XRP and other currencies on other payment rails. To do this, it is developing and promoting a neutral payment protocol (ILP) that permits such cross-ledger payments to occur trustlessly.
If Ripple succeeds, the price of XRP could increase because those who want to pay into payment systems that have liquidity to XRP can save money by holding one pile of XRP, rather than currency in all of those payment systems. And those who want to profit by facilitating settlement will need to hold the currency those making the payments want in exchange, which would be XRP.
Ripple's strategy is to work with others to build protocols and technologies to allow any asset to bridge any payment on a level playing field. Then it will work to make XRP competitive on that playing field.
The public ledger XRP trades on has numerous technological advantages over blockchain systems that use proof of work. This should help XRP compete against bitcoin and Ethereum. For example:
- There aren't forced stakeholders who want high transaction fees.
- You can go from signing a transaction to having it fully confirmed in less than 10 seconds.
- Hundreds of transactions per second can be executed.
- XRP sits in accounts, not as unspent outputs. These accounts can have properties on the ledger. So, for example, you can change your signing key without changing your receiving address.
- The ledger supports native payment channels, escrow, multisign, a distributed exchange, and numerous other features aimed at secure asset issuance, transfer, and storage.
- History is not needed to process transactions. A server running rippled can process and verify transactions within ten minutes of being downloaded.
The network is currently handling between 10 and 13 transactions per second most of the time, with average transaction fees equivalent to less than a tenth of a penny. The network has closed over 30 million ledgers since it was opened to the public in late 2012. More transactions have been performed by the XRP network than any other public ledger system.