What is XRP?

XRP is the native asset of the XRP Ledger (XRPL), a blockchain originally built for fast, low-cost cross-border payment settlement — targeting the correspondent banking corridor where SWIFT transfers can take days and cost significant fees. The company Ripple Labs created and distributed XRP, retaining a substantial share of total supply in escrow, which has been a persistent point of contention about centralization. XRP was the subject of a multi-year SEC lawsuit (filed December 2020) alleging it was sold as an unregistered security, a case that produced a partial ruling in 2023 with ongoing implications.

The XRP Ledger uses a federated Byzantine Agreement (fBFT) consensus protocol rather than proof-of-work or proof-of-stake. Validators run a Unique Node List (UNL) — a set of trusted peers — and reach consensus when a supermajority agrees on a transaction set. This achieves finality in 3–5 seconds with negligible energy use. The design is optimized specifically for payment settlement rather than general-purpose smart contracts, though XRPL has expanded with features like a native DEX and support for tokens. The protocol has no mining and new XRP cannot be created — the total supply of 100 billion XRP was minted at genesis, with Ripple holding roughly half in escrow released on a periodic schedule.

Ripple's legal and structural risks are distinctive. The SEC lawsuit centered on whether XRP sales constituted an unregistered securities offering; a July 2023 district court ruling found that programmatic (exchange) sales did not constitute securities offerings but institutional sales did — a nuanced split outcome that left ambiguity. Ripple also sells XRP from escrow regularly, which critics argue gives the company an incentive to manage token price rather than purely protocol utility. The degree to which XRP's value proposition depends on Ripple's bank partnerships — rather than permissionless adoption — remains a legitimate open question.

Reviewed by the 2Bitcoins Editorial Team · Updated June 2026. Not financial advice.