Why Is It Impossible To Mine XRP?
So you’ve got the crypto basics down and then you start to learn about Ripple… wait, what, it cannot be mined? Well, not directly at least.
Ripple was designed to be used as currency through a centralised payment system. While this is its advantage, it is also the main reason why the crypto community often does not consider Ripple as a true cryptocurrency in the same way as others. It is, in fact, subject to institutional control.
How is Ripple used?
Ripple allows you to carry out inter-bank transactions quickly without incurring high costs. B2B (business-to-business) and P2P (peer-to-peer) transactions are also possible.
A Ripple transfer takes less than five seconds. This is surprisingly quick compared to the 15 required to transfer Ethereum, and the ten minutes required to transfer Bitcoin. Of course, all of these options are much quicker than a standard international bank transfer (transferring fiat), which can take up to three to five working days!
The average cost of a Ripple transfer is less than half a pence at XRP’s current value (around 17p). It is therefore among the lowest fees of all cryptocurrencies and is up to several thousand times less than the cost of an international transfer made by a traditional bank. To learn more, refer to our guide dedicated to transferring money with Ripple.
Why can’t Ripple be mined?
Just to recap, mining a cryptocurrency consists of performing calculations using computer hardware to validate transactions and, in turn, adding to its blockchain (a record of all completed transactions).
Ripple is one of the few cryptocurrencies that it is impossible to ‘mine’ in the strictest meaning of the term. When it was launched, 100 billion Ripple tokens were created and set as the maximum number of XRP that would ever be in circulation. The Ripple Foundation (formerly OpenCoin) still holds around 55% of the currency in its reserves.
Ripple’s management has the ability to release up to a billion tokens a month, but rarely releases so many. It usually does so by publicly announcing the release of new tokens.
So if you cannot mine Ripple, how do you acquire it?
Mining other cryptocurrencies and exchanging them for Ripple
Since it is impossible to mine Ripple, the only solution to get it without buying some is to start by mining other cryptocurrencies.
Choose your mining equipment: either an ASIC miner, or a graphics card that can provide you with sufficient performance. Then install the necessary software. Need more information on how to mine Bitcoin specifically? Read our guide.
Start mining by yourself or join a mining pool (a team of miners) and make sure you store your cryptocurrency securely. It is best to store them using a cold wallet but you can also opt for a hot wallet, it depends on the amount you have and your personal preference. Read about the best wallets here.
Use an exchange (i.e. Crypto.com) to exchange your mined cryptocurrency for XRP. It’s then up to you to keep up-to-date with when Ripple Labs will next release some more XRP.
Why would you want Ripple?
The advantages of Ripple
As you have just seen, Ripple is a pre-mined token, which comes with a few advantages.
Ripple’s management has in fact set up a system to deter hackers. Each transaction issued has a commission that automatically destroys an infinitesimal amount of the currency. This means that the total number of tokens in circulation will very gradually decrease, implying (in theory, while still to be proved in practice) an increase in XRP’s value.
Risks of buying XRP
It’s a centralised currency and the tokens are pre-mined (created before the platform was opened to the public). These facts are at the very heart of the Ripple Foundation but certainly go against the important principles of what a cryptocurrency should be. Ripple’s leadership’s monopoly on the currency is in fact a double-edged sword. Its total control over the currency’s supply allows them to manipulate its value, which makes it just like any other central bank.
What you need remember about Ripple
Even though mining Ripple is impossible in the official sense of the word, it is possible to exchange it for another mined cryptocurrency, thus removing the need to buy it. The indirect mining and centralisation as well as the non-preservation of anonymity shown by Ripple are the main reasons why some purists decide to avoid it.
Other players, notably the banks, tend to lean towards such centralisation and price control as this provides a level of security difficult to achieve with other cryptocurrencies.
Furthermore, its extremely high transaction speed and low cost are attractive for businesses. Ripple offers an interesting and promising cryptocurrency thanks to its disruptive function. Discover how ambitious Ripple Labs’ project is in this article here.
Ripple does not comply with the usual cryptographic rules. Despite all this, it is of considerable interest for the development of an international banking system that is not future-proofing itself. This currency, which is supposed to increase in value each time it is used, is helping to see finance in a different light. With its ultimate goal of making exchanges between financial institutions, businesses and individuals easier, we can quickly understand why Ripple is looking to set up numerous partnerships in order to extend its network.
Hi! Привет! Salut ! Je m’intéresse à deux choses : la crypto et les langues. Je suis donc heureux de faire partie de l’équipe multinationale du CoinTribune, où je peux partager mes connaissances de la crypto avec des gens des quatre coins du monde – l’un article après l’autre.