Ripple XRP for beginners: Step by step guide

In the world of decentralisation, Ripple stands out as the first institutional cryptocurrency. Unlike the mysterious founder of Bitcoin and the 17 year old genius founder of Ethereum, Ripple is a private-owned technology company in San Francisco, USA with offices in India, UK and Singapore. This beginners guide will give you a quick introduction to everything Ripple (XRP).

Ripple XRP for beginners | Chillur

What is Ripple (XRP)?

The goal of Ripple, the company is to improve cross-border money transfers by reducing cost, transaction fees and time. Anyone who has used Western Union or SWIFT to send money know the pains involved in doing something as simple as sending money internationally. For starters, it can take anywhere between 2-5 days for the money to clear and the costs associated with the transfer are ridiculous considering how normal and everyday the activity actually is.

Enter Ripple and their vision to become the system that the banks and finance institutions use to transfer money from one country to another. So rather than be a consumer facing currency, like Bitcoin, their cryptocurrency, XRP, would be used bank banks to transfer money. The bank would change currency 1 to XRP on the sender side. This volume of XRP would be sent to the receiving-side bank, which would then convert it to currency 2. The movement of XRP between banks in different countries would take seconds rather than 5 days – and that is how Ripple wants to change the world, using XRP.

If you aren’t solving a real problem for real customers you’re not going to drive velocity in that digital asset

Ripple for beginners | Chillur

Brad Garlinghouse, CEO, Ripple

How does Ripple work?

Unlike other cryptocurrency, Ripple does not have a blockchain. It also cannot be mined, but we’ll get to that later. Ripple does not have a blockchain and instead uses its own proprietary technology called the Ripple protocol consensus algorithm. This means that every node must agree to every transaction to verify that it is correct.

Ripple (XRP) is a cryptocurrency that is pre-mined. There are 100 billion Ripple (XRP) that have been created and around 55% of it is owned by Ripple itself. They have done this to ensure that there isn’t runaway inflation. To ensure that they stay independent of price fluctuation, Ripple has locked up their holdings in escrow and will only release a certain amount of XRP into the market at regular intervals.

As mentioned above, Ripple (XRP) aims to work as a bridge currency for banks. So say you needed to send $5000 to your friend in Spain. Normally, you would take the $5000 dollars to your bank and pay the exorbitant fees to the bank for the service. Anywhere between 3-5 days later, your friend would receive a portion of that money in Euro, not because of the currency difference because because of the costs of transactions along the way.

With Ripple, the bank would convert $5000 to XRP and transfer that to the bank in Spain. XRP moves across the platform, literally in seconds. Your friend would see the Euro equivalent pop up almost immediately. The vision is that it would move at the speed of text messages. Imagine that!

What can I do with Ripple (XRP)?

Ripple (XRP) is positioned to function both as an institutional as well as consumer or retail cryptocurrency. Currently, you can do the following with Ripple (XRP):

  • Currency exchange:

    Rather than having to convert currency 1 to USD and then on to currency 2, Ripple XRP would be the intermediate currency.

    • International transactions

      Since it takes seconds to move Ripple (XRP) across international borders, one key use of Ripple (XRP) is to be the currency for banks to transact

    • Payment

      Like Bitcoin, you can choose to accept Ripple (XRP) as currency. So whether you are running an estore or are a freelancer, you can choose to be paid in Ripple (XRP)

    • Investment

      Like investing in Bitcoin or Ethereum, you can buy Ripple (XRP) and wait for it to appreciate in value. When Ripple (XRP) launched in 2013, you could buy it for around $0.01. In 2019, Ripple (XRP) was worth $0.60. If you had invested just $1,500 then, it would now be worth $90,000!

How do I buy Ripple in Australia?

There are two ways to buy Ripple in Australia today:

Buy Ripple (XRP) from a cryptocurrency exchange in Australia

A cryptocurrency exchange allows you to exchange your Australian collars for the cryptocurrency of your choice – in this case, Ripple (XRP). In order to buy Ripple from a cryptocurrency exchange in Australia, you would need to follow these steps:

  1. Find the cryptocurrency exchange that’s right for you. There are over two dozen cryptocurrency exchanges for you to choose from.
  2. Register for an account with an official ID.
  3. Navigate to the Buy/Sell Ripple and select the amount.
  4. Select the payment method – Most cryptocurrency exchange offer BPay while others also include Poli and bank transfers.
  5. Review the order details and click ‘Buy’.

Buy Ripple as a cryptocurrency portfolio investment

When you buy Ripple (XRP) directly from an exchange, you need to decide how much to buy and at what price. And then you would need to decide which other coins should also be purchased as part of the portfolio. You would then have to repeat this process every time you want to make a new investment.

Instead, you can create a portfolio of the top 10 cryptocurrencies using Chillur and invest in these currencies on an ongoing basis. This way, Ripple would be part of your portfolio and you would regularly invest small amounts of money into Ripple (XRP) without worrying about timing, price and amount – Chillur would do all that for you on a regular, set schedule.

How do I invest in Ripple?

There are two ways to invest in Ripple XRP – directly, as we described in the previous section or by investing in Ripple XRP as part of an index portfolio.

Index portfolio with Ripple

The more hassle-free option is to invest in Ripple XRP as part of an index portfolio. An index portfolio spreads out your investment across several cryptocurrencies ensuring that you are not risking everything by investing in just one – remember that thing about eggs and the same basket? At the time of writing this, there are closing in on 2,000 different cryptocurrencies, of which Ripple XRP is one. With an index portfolio with Ripple, you would invest in Ripple and selected other currencies.

Chillur offers an index portfolio of the top 10 cryptocurrencies by market capitalisation. This means that every $1 that you invest through Chillur is spread across the top 10 cryptocurrencies (that includes Ripple) based on their value in the market at the time. What Chillur also does is invest small amounts more regularly instead of a one-time amount in one shot. This way, you ensure that you are always investing in cryptocurrency regularly.

Where do I store my Ripple?

Ripple wallet | Chillur

All cryptocurrencies are stored in cryptocurrency wallets. Cryptocurrency wallets are physical devices as well as mobile phone apps that either specially designed to hold just one kind of cryptocurrency or you can store multiple cryptocurrencies in the same wallet. Ripple is one of the few cryptocurrencies that doesn’t have its own wallet but can be stored in wallets that are easily available to purchase online. In addition, if you are buying Ripple (XRP) from an exchange, you have the option of saving the cryptocurrency in that exchange as part of your account services too.

What next for Ripple XRP?

Signing up banks to use their international currency transfer process. At the time of writing, Ripple had already signed up with some big names like Santander and IndusInd as well as money transfer services like Western Union and Moneygram. While none of these institutions have yet replaced their currency transfer protocols with Ripple, signing up for a test is an important first step. This shows that the banks agree with the principles of what Ripple is trying to do and are now testing to see if they work.

Two important challenges from Ripple are to get into as many exchanges as possible so that more and more people are able to buy Ripple XRP; and to stay ahead of the competition. There is nothing stopping the current money transfer services like SWIFT doing the exact same thing that Ripple is – and with their current network of partners on board, they could theoretically leapfrog over Ripple. That said, it’s been over 5 years and they haven’t shown any inclination of change so things look good for Ripple.

To be honest, the best way to find out what the future holds for Ripple XRP is to join them on that journey. And that’s exactly what the people who have bought Ripple XRP in Australia are doing.

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