What is the Difference between Ripple and XRP?
Ripple has always had an issue with people associating it with the XRP cryptocurrency. For a long time, developments on the Ripple network have always had an effect on the price of the XRP cryptocurrency.
Users will be forgiven for not differentiating the two. First of all, both the network which was built to make cross border transfers easier uses the same logo as the XRP cryptocurrency.
In any case, coins like XRP are usually associated with the network that they power, the same way we associate Ether with the Ethereum network. In fact for the latter, people often mislabel the token as Ethereum.
So why is Ripple uncomfortable with people associating it with XRP? After all, isn’t XRP part and parcel of its products range?
In the past, adoption of products from the Ripple Labs have in one way or another affected XRP prices. One of these instances was when the xRapid technology was adopted by Santander, Europe’s largest bank for cross border transfers. This led to a spike in the price of Ripple.
Another instance was when UAE exchange adopted the xCurrent technology which also resulted in XRP surging.
As we can see from these patterns, investors have come to associate holding XRP as somehow equivalent to having shares in the company. This assumption is of course false.
Ripple is now actively looking at making the difference more apparent including designing a different logo to help users spot it more easily.
The company offers banks its software which uses InterLedger Protocol to enable transfers between banks. Unlike, other systems the conversions only have to happen once. Banks can choose to use XRP but this is just an option. Most often choose not to use it.
Although it has obvious advantages like high liquidity and fast transactions, the XRP cryptocurrency exists outside the Ripple network and does not have to be used with it. Ripple is therefore building a larger ecosystem where XRP will compete with other players. As you can, the success of Ripple, the company may not directly translate to the success of the XRP cryptocurrency.
Ripple says transaction costs can be cut by 30% if its XRP cryptocurrency is used together with its software.
According to Ripple CEO Brad Garlinghouse, Ripple is 1000 times faster and 1000 times cheaper in terms of transaction fees compared to bitcoin.
One of Ripple’s other products is xRapid. According to Garlinghouse, Xrapid uses real time XRP to fund real time liquidity.
Lately, the company has also been trying to delink itself from XRP, as it tries to boost the chances of XRP not being seen as a security. It argues that XRP is open source and therefore sufficiently decentralised and hence out of its control.
However, Ripple still holds substantial tokens, a point of major contention in the community. Ripple has responded to this by putting the funds in escrow with some tokens being released monthly for use.