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History of XRP (Ripple)

Origins and Concept

The idea behind XRP (Ripple) can be traced back to 2012 when Ripple Labs was founded by Chris Larsen and Jed McCaleb. The two founders aimed to solve a critical problem in the global financial system: the slow, expensive, and inefficient process of cross-border payments. They envisioned a system that could facilitate fast, low-cost international money transfers by leveraging blockchain technology. Unlike traditional banking systems that rely on intermediaries, Ripple’s technology enables direct transactions between parties in real-time, without the need for a central clearinghouse.

The main goal behind Ripple was to revolutionize the way financial transactions were handled globally, making them faster, more transparent, and less costly.

Ripple Labs & RippleNet

Ripple Labs, later rebranded to simply Ripple, created RippleNet, a decentralized global payment network that uses XRP as its native cryptocurrency for liquidity. RippleNet is designed to be a fast and secure platform for transferring money across borders, ensuring that financial institutions can make international payments without relying on traditional SWIFT-based systems. XRP serves as a bridge currency that enables liquidity for these transactions.

While Ripple’s technology has been embraced by many financial institutions, the role of XRP as a token used for transferring value on the network is where the controversy often arises. XRP is unique in that it is not mined like many other cryptocurrencies. Instead, it is pre-mined, with a fixed supply of 100 billion XRP tokens.

The Ripple Founders:

• Chris Larsen: Co-founder and former CEO of Ripple. He played a crucial role in Ripple’s development, helping to create the company and its vision for improving the global payment system.
• Jed McCaleb: Co-founder of Ripple and the creator of the eDonkey peer-to-peer file-sharing network. McCaleb was one of the original minds behind the creation of XRP but later left Ripple to start Stellar (XLM).

Ripple’s Challenges and Legal Issues

Over the years, Ripple has faced significant legal challenges, particularly with the U.S. Securities and Exchange Commission (SEC). The SEC filed a lawsuit in December 2020, alleging that Ripple’s sale of XRP constitutes an unregistered securities offering. The case has yet to reach a final conclusion, but it has caused uncertainty around the future of XRP, particularly in the United States. Despite this, Ripple has maintained strong support from global financial institutions and has expanded its reach across the globe.

XRP and the ETF Talks

The idea of an Exchange-Traded Fund (ETF) for XRP has been a subject of speculation in recent years. The purpose of an ETF is to allow institutional investors to gain exposure to the cryptocurrency market without directly holding the digital assets. For XRP to have its own ETF, it must first be classified as a commodity rather than a security by regulatory authorities like the SEC.

While there has been no definitive approval for an XRP ETF yet, talks have emerged, especially after the success of Bitcoin and Ethereum ETFs. However, the ongoing legal battle with the SEC poses a significant barrier to XRP’s inclusion in the ETF space. A favorable ruling for Ripple in its legal case could pave the way for XRP to be treated as a commodity, opening up the potential for an ETF in the future.

History of XLM (Stellar)

Origins and Concept

Stellar (XLM) was created in 2014 by Jed McCaleb, one of Ripple’s co-founders, after he left Ripple due to disagreements over the direction of the company. McCaleb’s vision for Stellar was to create an open-source, decentralized platform that facilitates fast, low-cost, cross-border payments, much like Ripple’s network. However, McCaleb had a different vision for Stellar’s structure, focusing on enabling financial inclusion by providing banking services to people in developing countries.

Unlike Ripple, which primarily focuses on financial institutions, Stellar’s aim was to provide direct access to financial services for individuals, especially in underserved regions. Stellar allows for seamless and cost-effective international payments, connecting financial institutions and individuals around the world, particularly in emerging markets.

Stellar Development Foundation (SDF)

The Stellar Development Foundation (SDF) was established in 2014 to oversee the development and promotion of Stellar’s blockchain network. The foundation’s mission is to promote financial inclusion, improve cross-border payment systems, and allow low-cost transactions across the globe.

Stellar’s consensus mechanism is also unique. Rather than using proof-of-work or proof-of-stake, Stellar uses the Stellar Consensus Protocol (SCP), which allows for faster transaction speeds and greater scalability.

Jed McCaleb’s Role

Jed McCaleb’s background in technology and decentralized networks played a significant role in shaping the vision of Stellar. Before founding Stellar, McCaleb was known for his work with eDonkey, one of the first peer-to-peer file-sharing networks. He also co-founded Ripple, where he helped develop the concepts of cross-border payments using blockchain technology.

XLM and the ETF Talks

Like XRP, XLM is also a candidate for an ETF. Stellar’s low-cost, fast, and scalable nature has made it an attractive solution for cross-border payments. However, the process of launching an ETF for XLM faces similar hurdles as XRP—regulatory approval.

An ETF for XLM could help provide institutional investors with easier access to Stellar’s ecosystem. The growing adoption of Stellar by major players in the payments industry, including IBM and various remittance companies, makes it a strong contender for future ETF approval.

The regulatory landscape remains uncertain, but if Stellar continues to expand and its legal standing remains stable, there could be significant progress toward an ETF for XLM.