Deconstructing Ripple

What is RippleNet?

To the majority of cryptocurrency traders, Ripple is viewed as . . . just that, cryptocurrency. However, Ripple the cryptocurrency (XRP) is a small element of the entire ecosystem. Moreover, amid the legal tussle with the SEC, the focus has been be placed upon the outcome of that litigation versus the continued competitive intrusion by Ripple in the payments industry.

The XRP Ledger

Ripple is far more than XRP.

At the core of the Ripple network is the XRP Ledger, which is a decentralized ledger powered by a network of validating servers. The ledger maintains a record of all XRP transactions and account balances. XRP is the native cryptocurrency of the Ripple network and can be used as a bridge currency to facilitate the transfer of value between different fiat currencies.

The XRP Ledger utilizes a consensus algorithm called the XRP Ledger Consensus Protocol (formerly known as the Ripple Protocol Consensus Algorithm or RPCA). It differs from proof-of-work (PoW) used by Bitcoin and proof-of-stake (PoS) used by some other cryptocurrencies. The consensus algorithm ensures agreement among the network’s validating servers on the order and validity of transactions. By design, transactions on the ledger can be confirmed within seconds, enabling near-instantaneous transfers of XRP.

XRP plays a crucial role in the XRP Ledger as a bridge currency. It can be used to facilitate value transfer and conversion between different fiat currencies or digital assets. Its high liquidity and low transaction fees make it suitable for efficient cross-border payments.


RippleNet is a global network of financial institutions, including banks, payment providers, and other financial intermediaries, that utilize Ripple’s technology to facilitate faster, more secure, and more cost-effective cross-border payments. It serves as a decentralized network that enables participants to connect and transact with each other using standardized protocols. RippleNet offers a standardized infrastructure and common framework for participants to interact, facilitating interoperability across different systems and technologies.

Notable members of RippleNet include Standard Charter, Santander, Moneygram and PNC Bank.

The current payment ecosystem can best be described as a patchwork of financial institutions ranging from banks, money transmitters and various cryptocurrency protocols. As a result, payments – especially cross-border payments, are unduly slow, costly or outright impossible given interoperability issues among payment systems.

RippleNet aims to solve these problems.

First, RippleNet enables near-instant settlement of transactions, allowing financial institutions to provide faster payment services to their customers. Traditional cross-border payments often involve multiple intermediaries and can take days to complete, while RippleNet facilitates real-time settlement, reducing the time and cost associated with traditional methods. RippleNet’s payment routing functionality enables participants to find the most efficient and cost-effective payment path across the network. This helps reduce fees, optimize liquidity usage, and improve transaction speed.

Second, RippleNet aims to lower the cost of cross-border transactions by eliminating the need for numerous intermediaries and optimizing liquidity usage. By utilizing Ripple’s liquidity solutions, such as On-Demand Liquidity, financial institutions can access cost-effective liquidity in real-time, avoiding the need for pre-funded accounts in various currencies. This can lead to significant cost savings in terms of transaction fees, foreign exchange rates, and reconciliation expenses.

RippleNet charges network fees for transactions conducted on the XRP Ledger. These fees are typically denominated in XRP and serve as a deterrent to prevent spam and ensure the efficient operation of the network. The fees are exceedingly small when compared to current solutions and are burned as part of the transaction process.

Finally, third, RippleNet enables financial institutions to connect and transact with a global network of participants. It promotes interoperability by providing standardized protocols and infrastructure, allowing seamless communication and value transfer between different systems and currencies. XRP, acts as a bridge currency in the network. When a payment needs to be made between two different currencies, XRP can be used as an intermediary asset. This enables direct conversion and settlement between different fiat currencies without the need for traditional correspondent banking relationships.

SEC v. Ripple

The core of the SEC’s complaint against Ripple is that XRP is (surprise) a security. As a result of the lawsuit, a number of major crypto exchanges have delisted XRP for fear of later being classified as an unregistered securities exchange. But does the outcome of the SEC litigation really matter?

Outside of a “win” being viewed as vindication for Ripple and the crypto community at large, together with it providing much needed regulatory guidance, XRP, by itself, is a small piece of the Ripple ecosystem. Any digital asset with the same (or better) DLT and low network fees could take its place. Moreover, XRP as a tradable cryptocurrency was seemingly never important – nor is it necessary, for the Ripple ecosystem to survive.

The sale of XRP was simply a means with which Ripple sought to raise additional capital to fund the further development of RippleNet. Without question, the SEC is overstepping its bounds – but does it matter long term? Not really, in my opinion.

As always, be sure to reach out to me with any questions or book a meeting here.

About Adam Tracy

Adam Tracy is a payments expert and entrepreneur who specializes in payment systems, blockchain technology, digital currencies, and other emerging technologies. He is the founder of Blockrunner, LLC that provides consulting services to clients in the blockchain, payments and cryptocurrency arenas.

Tracy has been involved in the payments industry as an attorney, consultant and entrepreneur since 2005, while he was become an expert in blockchain and cryptocurrency since its advent in 2013. Tracy has worked with a wide range of clients, including startups, established businesses, and investor – both in the United States and worldwide. He has advised clients on a wide range of compliance, legal and operational issues related to payment transfer systems, crypto token generation and architecture, cryptocurrency exchanges, regulatory licensing, smart contracts, and other blockchain applications.

In addition to his consulting work, Tracy has founded several companies in the payments, blockchain and cryptocurrency space, including a digital asset hedge fund, licensed electronic money institution and a blockchain-based tokenization platform. He is also a proponent of decentralized finance (DeFi) and has been involved in various DeFi projects.

Tracy is also a frequent speaker and writer on blockchain and cryptocurrency topics. He has been featured in a wide range of publications, including Forbes, Hollywood Reporters, CNBC, Reuters, CoinDesk, and

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