Ripple was conceived by Jed McCaleb, who is also a co-founder of Stellar, for which he serves as the CTO to this day. He also served as the CTO of Ripple up until 2013. He was also one of the original founders of Mt. Gox, eventually selling it to Mark Karpeles in 2011. It was in 2011 that he began working on a cryptocurrency which would, unlike bitcoin, work with network consensus for verifying transactions. This cryptocurrency would then be built by Arthur Britto and David Schwartz and was designed to improve on the existing systems by making sure that payments were faster and had very low transaction fees.
This was done through the development of the Ripple Transaction Protocol which eliminates middlemen who are usually involved in the sending of funds from one bank to another. Because this saves time and money, many banks have begun adopting the RippleNet platform.
The Interledger protocol, which connects banking systems and blockchain systems, was launched in 2015 and signaled a new era of blockchain use in fintech. The same year, the RippleNet committee was formed, which is made of experts in the banking sector to ensure “operational consistency and legal clarity for every transaction.” The XSpring was unveiled in 2019 and is the means by which Ripple invests in and supports innovative businesses that work towards their ultimate goal of faster, cheaper and safer transactions.
OpenCoin to RippleLabs
The original Ripple protocol was developed by Ryan Fugger and received backing from OpenCoin, which was headed by Chris Larsen. By 2013, OpenCoin had morphed into RippleLabs, with Larsen staying on as CEO. OpenCoin, and then RippleLabs, had been primarily responsible for contributing to the code that controls the Ripple network. The network helps in the verification of transactions and also integrates banking systems for institutions on the Ripple network. RippleLabs works to this day as the primary framework for the Ripple system, as well as its management and business operations.
Some of the earliest investors in Ripple were firms such as Andreessen Horowitz, FF Angel LLC, Lightspeed Venture Partners, Pantera Capital, and Vast Ventures. By 2015, their series A round of funding saw backing from China Growth Capital, Wicklow Capital, and others while their Series B round took place in 2016.
Banks and Ripple
Ripple is very well-known within the banking world as it is considered a potential competitor for the global SWIFT system. From its inception, Ripple has always worked to appeal to the banking sector as one of its major focuses has been improving on the ease of sending and receiving money. Banks began signing up to the Ripple platform and as of 2018, has over 100 banks on its platform.
Ripple has built itself up by having strategic partnerships with financial institutions across its history. The first network usage of RippleNet was in 2014 when Earthport made use of the platform. Since then, Ripple has been used by major institutions like Western Union, who began texting with XRapid in 2018, SBI Holdings and Moneygram in 2018. Ripple has also seen significant use within the Middle East in the last few years.
Like many firms within the blockchain and crypto industry, Ripple has been in some hot water with the law. In 2018, a class-action lawsuit was brought against them by former XRP investor Bradley Sostack, who claims that XRP was sold as al illegal security and was also falsely advertised under California law. Recent court documents allege that Ripple CEO Brad Garlinghouse had sold over 67 million XRP tokens whilst telling the public that he was HODLing for long-term profit. This, according to the document, proves that XRP was sold as an unregistered security. According to Ripple, however, XRP is not an investment tool but an independent asset. The case is ongoing and brings up the rather complex topic of the classification of securities and where cryptocurrencies fall into the mix.
Price and Trading
XRP was first traded publicly on August 4, 2013, with a starting price of $0.01. Its highest selling price was on January 4, 2017, at $3.65. By 2014, Ripple had become the second-largest cryptocurrency by market capitalization and remains in the top five as of 2020.
Sales of the XRP token have been steady but the last quarter of 2019 saw a sharp decline of roughly 80 percent. This, Ripple management said, was due to a decline in institutional buying of crypto in general.