XRP and Ripple Explained: The XRP Ledger, Fees and the SEC Case

XRP is the native currency of the XRP Ledger, a public blockchain that settles payments in 3 to 5 seconds without mining. All 100 billion XRP were created when the ledger launched in 2012, and a tiny fee is destroyed with every transaction. Ripple is a separate company that holds a large share of the supply and builds payment products around it. The US Securities and Exchange Commission’s lawsuit against Ripple ended in August 2025, when both sides dropped their appeals.

This page untangles the three names (Ripple, XRP and the XRP Ledger), explains how the ledger works and what it costs to use, covers the court case in plain terms, and lists the mistakes that most often cost XRP holders money. You will not find prices or forecasts here.

Ripple, XRP and the XRP Ledger: three different things

The confusion is understandable. The ledger was built in 2011 and 2012 by David Schwartz, Jed McCaleb and Arthur Britto, who then founded the company that became Ripple, and they gave it 80 billion of the 100 billion XRP. Old exchange listings and our own former page used “Ripple” as the coin name. The coin is XRP; Ripple is the company.

How the XRP Ledger reaches agreement

The XRP Ledger does not use proof of work or proof of stake. Each server picks a list of validators it trusts not to collude, called a unique node list. Every few seconds, validators exchange proposed sets of transactions and vote in rounds until a supermajority agrees on the same set. That set becomes the next validated ledger version, and its transactions are final. There are no block rewards, because there is no mining and no staking.

Two consequences matter for users. Settlement is quick and final: once a transaction appears in a validated ledger with a success code, it will not be reversed by a later reorganisation. And because nobody earns new coins for validating, validators are run by exchanges, universities, businesses and individuals for their own reasons, usually because they rely on the ledger.

Critics point out that most servers use a default validator list published by a small number of organisations, which concentrates influence. Supporters answer that every operator can change their list and that validators cannot steal funds or alter balances, only agree or disagree on ordering.

Why XRP cannot be mined

Our old site had an “XRP mining” page; that page now points here, because there is nothing to mine. The full supply of 100 billion XRP was created in the first ledger. No software, cloud contract or app can produce new XRP. Offers of “XRP mining” are at best a disguised investment product and at worst a scam.

The supply only moves in one direction. Each transaction destroys a small fee, so the total amount of XRP has slowly shrunk since 2012. Ripple placed 55 billion of its XRP into on-ledger escrow contracts in 2017, which release up to 1 billion XRP a month; whatever Ripple does not use is typically locked back into new escrow. The escrow schedule is visible on the ledger.

Fees, reserves and destination tags

Transaction cost

The minimum fee for a standard transaction is 10 drops, where one drop is 0.000001 XRP, so the minimum is 0.00001 XRP. The fee rises temporarily when the network is under heavy load. It is destroyed rather than paid to anyone, which discourages spam without enriching validators.

Account reserve

An XRP Ledger address does not exist until it receives enough XRP to meet the base reserve, currently 1 XRP. On top of that, every item the address keeps on the ledger (a token trust line, an open offer, an escrow) raises the requirement by an owner reserve of 0.2 XRP. Reserved XRP cannot be sent, which is why a wallet may show a spendable balance lower than the total. The reserve values are set by validator vote and have been lowered several times; check xrpl.org for the current figures.

A worked example: an account holding 25 XRP with three open orders on the built-in exchange has 1 + (3 × 0.2) = 1.6 XRP locked, leaving 23.4 XRP spendable before fees. Trust lines follow a special rule, since the ledger does not charge the owner reserve for an account’s first two trust lines in some cases, so wallets may show slightly different figures.

Destination tags

Exchanges usually receive all customers’ XRP at one shared address and tell deposits apart with a number called a destination tag. If you send XRP to an exchange without the tag, or with the wrong one, the coins arrive at the exchange yet the exchange has no automatic way of telling whose they are. Most exchanges can recover such deposits through support, but it can take weeks and some charge a fee. Take the deposit address and its tag together from the exchange’s own deposit page, every time. Personal wallets generally do not need a tag.

What else runs on the XRP Ledger

• Built-in exchange. The ledger has had a native order book for trading tokens since its early days, and an automated market maker was added in 2024.
• Issued tokens. Anyone can issue a token on the ledger; holders must first open a trust line to the issuer. Ripple’s dollar stablecoin, RLUSD, is issued on the XRP Ledger and on Ethereum.
• Escrow and payment channels. Time-locked and conditional payments are native features, not smart contracts.
• NFTs. Native NFT support was added in 2022.

The ledger has historically lacked general-purpose smart contracts of the kind found on Ethereum. Developers have been working on extensions to add programmability, and a separate EVM-compatible sidechain connects to the ledger.

The SEC case, from start to finish

In December 2020 the SEC sued Ripple and two of its executives, alleging that Ripple’s sales of XRP since 2013 were unregistered securities offerings. Several US exchanges suspended XRP trading soon after.

The outcome in plain language: the 2023 ruling and the 2024 judgment stand. Ripple paid the penalty and remains under the injunction for institutional sales. XRP bought on exchanges was not found to be a securities sale by Ripple to those buyers. The ruling is a district court decision, so it does not bind other courts, but it shaped how US exchanges treat XRP. In November 2025, the first US spot XRP exchange-traded fund began trading on Nasdaq.

What XRP is used for in practice

Ripple’s original pitch was that banks and payment companies could use XRP as a bridge currency: convert one currency into XRP, send it across the world in seconds, and convert it into another currency at the far end, instead of keeping pre-funded accounts in every country. Ripple has sold this as part of its cross-border payment products, although many of its banking customers use its messaging and settlement software without touching XRP at all.

For individuals, the main uses are simpler. Traders move XRP between exchanges because transfers are quick and cheap. Some people use the ledger’s built-in exchange or tokens issued on it. Others hold XRP as a speculative asset. Merchant acceptance exists through payment processors but remains small.

Tax and record-keeping

Selling XRP, swapping it for another token on the ledger’s built-in exchange or paying for something with it is usually a taxable disposal. Trades on the decentralised exchange happen inside your own wallet and do not appear on any exchange statement, so keep your own records or export your address history from a block explorer at the end of each year.

Buying and holding XRP safely

1. Pick a licensed exchange. Our exchange directory explains which licences each major platform holds; the Kraken and Binance reviews cover two large XRP markets.
2. Fund a new wallet with more than the reserve. A brand-new address only comes into existence once it receives enough XRP to meet the base reserve, so the first payment to it must be at least 1 XRP.
3. Record the destination tag whenever you deposit to an exchange, and send a test amount first.
4. Ignore airdrop and “XRP giveaway” offers. Fake giveaways using executives’ names are among the most common crypto scams on video platforms. Ripple does not run giveaways that ask you to send XRP first.
5. Be careful with trust lines. Anyone can create a token on the ledger, including tokens named to look official. Only open trust lines to issuers you have verified.
6. Store larger amounts in a wallet you control. Our wallet guide lists hardware and software wallets that support XRP.

How XRP compares with other coins

Next to Bitcoin and Litecoin, XRP trades mining-based security for fast, final settlement and very low fees. Next to Ethereum, it offers fewer programmable features but simpler built-in tools for payments, tokens and trading. Its biggest structural difference is supply: rather than being created over time, every XRP already exists, and a single company holds a large share. Weigh that concentration alongside the speed. Another practical difference is the reserve: on Bitcoin-style chains an address can hold any amount, while every XRP account must keep a minimum balance locked, so very small holdings are less practical in a self-custody XRP wallet than on an exchange. Our coin directory compares all five major coins side by side.