What Is The Difference Between Ripple And XRP

Ripple: The Company

While people often use the two terms interchangeably, there is a clear difference between Ripple and XRP.

Ripple is an investor-backed company seeking to streamline global money transfers. It is best known for its software product, xRapid, which utilizes XRP and the XRP Ledger.

At its core, Ripple is just like many other organizations. They have a board, founders and employees who collectively control the company’s fate.

Because Ripple created XRP, many have mistakenly assumed the company controls the token and its ledger. In reality, Ripple is independent of the digital asset and the technology underlying it.

However, some argue that this is misleading as Ripple owns 60 billion of the 100 million XRP in circulation. Even though this looks suspect on the surface, Ripple has legally locked up 55 billion XRP in escrow. The company believes that this ensures predictability to the XRP Supply.

To be clear, the escrow system Ripple has created forces the company to release one billion XRP per month over a 55 month period. Despite the plan’s guidelines, leadership at Ripple believes that the amount of XRP released into circulation will likely be much lower than one billion every month. Therefore, the company’s plan allows for them to take any leftover released-tokens and place them into a new escrow. Ripple would release this “new escrow” in the first month after they release the last pre-planned escrow. With this strategy, the company anticipates adding numerous escrow months to the existing plan.

When it comes to Ripple’s business model, the company creates software products for their clients (financial institutions) to use.

Their best known product, xRapid, is a money-transfer solution for banks. It uses XRP tokens as a bridge currency to eliminate the long delays in global payments. Quite simply, by saving time in the transfer process, Ripple drastically lowers the costs associated with it.

The bottom line?

Ripple builds the software.

XRP: The Token Ripple Built

Ripple is the creator—and XRP is one of its creations.

In simple terms, XRP is an independent digital asset. Like Bitcoin, Ethereum, and other well known blockchain-based tokens, XRP is a cryptocurrency.

Also similarly to other cryptos, XRP has its own open source blockchain ledger behind it. Because the XRP ledger is “open source,” it cannot be owned by any one person, organization, or entity. It must exist independently and, therefore, companies like Ripple cannot own it.