An open-source, permissionless, and decentralized layer-1 blockchain

The XRP Ledger (XRPL) is an open-source, permissionless, and decentralized layer-1 blockchain launched in 2012 by Jed McCaleb, Arthur Britto, and David Schwartz. It is notable for its speed, low transaction costs, scalability, and energy efficiency, particularly when compared to other major blockchains like Bitcoin and Ethereum.

Purpose

The XRP Ledger is designed primarily for payments, particularly aiming to improve cross-border payments and currency exchange efficiency. It provides a platform for financial institutions and payment providers to facilitate faster and cheaper international money transfers, bypassing the need for traditional, often slow and expensive, intermediaries like the SWIFT system.

How it works

The XRP Ledger uses the XRP Ledger Consensus Protocol (XRPL Consensus Protocol), a unique consensus mechanism. Transactions are validated by independent servers called validators. Validators use Unique Node Lists (UNLs) of trusted validators to reach consensus on transactions. Through iterative rounds, validators agree on transactions to be included in the next ledger version, with 80% agreement in a UNL confirming a transaction. This process enables rapid transaction validation, typically within 3-5 seconds.

Key features

The XRP Ledger offers several key features, including fast transaction settlement (3-5 seconds) and low transaction costs, typically fractions of a cent (though the minimum fee was raised in December 2024 for security and efficiency). It is designed to handle up to 1,500 transactions per second and has the potential to scale to 50,000. Other features include a built-in decentralized exchange (DEX) for trading assets, support for tokenizing digital assets like stablecoins and NFTs, payment channels for off-ledger transactions, and an energy-efficient consensus mechanism. Ripple, the company behind XRP, continues to develop and improve its platform, including its cross-border payment solutions. Ripple has established partnerships with over 200 banks and financial institutions globally, showcasing XRP's potential for real-world use. Ripple is also working towards carbon neutrality.

Relationship with Ripple and XRP

Ripple is the technology company that launched and is involved in the development and promotion of the XRP Ledger and its native cryptocurrency, XRP. XRP serves as a bridge currency for cross-border payments and covers transaction fees on the XRPL. Ripple gifted a significant amount of XRP to itself at the ledger's launch and manages a portion in escrow accounts. 

Decentralization debate

While the XRP Ledger is technically decentralized, there are debates about Ripple Labs' influence due to its XRP holdings and involvement in development and the validator ecosystem. Supporters point to independent validators and the open-source nature of the ledger as evidence of decentralization. Ripple has also outlined a strategy to increase decentralization over time.