What is Ripple: Its history, how to buy it, and where to store it

What is Ripple: Its history, how to buy it, and where to store it

Robert McDougall

February 25, 2024

Cryptocurrency

Bitcoin and Ethereum dominate the headlines in the blockchain and cryptocurrency space. Unfortunately, this takes away attention from industry gems that do not enjoy similar prominence. Ripple (XRP) is a case in point. It has emerged as one of the more significant players in digital currency, playing a particularly important role in cross-border payments. 

To make the most of the opportunities Ripple presents, it's vital that you understand what is XRP, its history, features, applications and how to buy XRP. We take a look at these as well as the best practices and platforms for the purchase and storage of cryptocurrencies like Ripple in Australia. The goal is to give you the foundational knowledge required to determine if investing in Ripple is the best decision for you. 

Understanding Ripple and Its Unique Features

From the get-go, Ripple wanted to take a somewhat different path from major cryptocurrencies. While it does satisfy the basic crypto attributes of being a digital currency, Ripple’s primary selling point is as a tool for international payments. As both a digital payment protocol and cryptocurrency, it introduces a new cost-effective avenue in the global financial system. 

XRP acts as a bridging currency. It is run by the Ripple Protocol Consensus Algorithm (RPCA), a quorum-based consensus model that is a departure from Bitcoin’s proof-of-work and Ethereum’s proof-of-stake algorithms. RPCA enjoys better transaction speed and scalability. Ripple’s core technology, RippleNet, allows financial institutions around the world to settle transactions in real time with XRP as the bridging currency.  

The History of Ripple

As an entity, Ripple was founded by Ryan Fugger in 2004 in Vancouver. It thus pre-dated the cryptocurrency era. Known as RipplePay at the time, it was a means of securely transferring money around the world.  The company was sold to Jed McCaleb, Chris Larsen, David Schwartz and Arthur Britto in 2012. It transformed into a digital currency network known as NewCoin and shortly after OpenCoin. OpenCoin was renamed to Ripple Labs in 2013 which was then shortened to Ripple in 2015, the name the company retains to date.

In line with its roots, Ripple intended to be a decentralised funds transfer protocol. Since then, it has undergone multiple changes and improvements that would, at one point, lead to its rebranding as Ripple Labs. Starting 2014, its profile rose as a growing number of financial institutions looking for a quick, efficient and reliable platform for cross-border transactions. 

Technological improvements coupled with strategic partnerships with major global financial institutions like American Express, Bank of America, Standard Chartered and Santander have positioned Ripple as a notable player in both the cryptocurrency and international payments market. Today, more than 200 financial services organisations participate on the RippleNet network, transacting billions of dollars every day.

Note that while Ripple and XRP are often used interchangeably, XRP is, strictly speaking, an open source currency independent of the technology company Ripple.

How and Where to Buy Ripple in Australia

Australians looking to invest in Ripple have dozens of places and ways they can buy Ripple. However, just like conventional currencies, the platform or service provider you choose to facilitate your investment matters. Not every crypto exchange in Australia lives up to its promises. And that can prove catastrophic for your digital currency holdings. Your best bet to buy Ripple Australia is to go for a platform that has an excellent reputation.

CoinSpot fits the bill in many ways. For starters, it was founded in 2013 which makes it one of Australia’s oldest crypto exchanges, and it has been a member of Blockchain Australia since 2014. During its operation spanning 11 years, CoinSpot has weathered industry and macroeconomic shocks that have seen less established exchanges collapse. 

CoinSpot offers its 2.5 million users more than 430+ cryptocurrencies including Ripple (XRP). It has a simple interface backed by multifaceted security controls and excellent customer support.

The process to buy XRP on CoinSpot is relatively straightforward. It entails the following:

  • Go to the CoinSpot website or download the mobile app from Google Play Store or Apple’s App Store.
  • Create an account by providing an email address and password. Click on the link you receive via email to verify your account.
  • Verify your identity by providing your driver’s licence. Account verification is necessary if you want to buy XRP on CoinSpot.
  • Deposit funds into your account. This can be done via credit card, debit card, PayID, BPay, Direct Deposit or Cash Deposit.
  • Navigate to the Buy menu, select XRP and specify the amount to buy in XRP or in Australian dollars. Re-check the details before confirming the transaction.

Storing Ripple: Best Practices and Options

If you are new to cryptocurrencies, you might be surprised to learn that buying digital currencies is one thing and storing it is another. Once you purchase XRP, you need to keep it in a secure location – in the world of crypto, that means a cryptocurrency wallet. There are different types of wallets you could choose from.

Custodial wallets

Strictly speaking, custodial wallets (or hosted wallets) do not fundamentally differ from the non-custodial wallets we’ll cover in the sub-sections below. Their main distinction is that they are managed by cryptocurrency exchanges such as CoinSpot – hence the name custodial or hosted. 

For most people, custodial wallets are the default choice unless one wants to store their XRP holdings outside the exchange they made the purchase on. They are convenient, easy to manage and free of charge. You can keep tabs on your investment on the exchange’s website or app and buy or sell in real time whenever you want to. CoinSpot users benefit from the exchange’s world-class cybersecurity staff and technology. 

Custodial wallets are usually free since exchanges consider them a value add that incentivises users to remain on their platform. The primary drawback of custodial wallets is that the user does not have possession of the funds, and if the exchange is hacked or collapses, you may permanently lose your crypto investment.

Non-custodial hot (or software) wallets  

Non-custodial (or self-custody) hot wallets are crypto wallets available in web-based, desktop app and mobile app versions. They are non-custodial because they are independent of the exchange where the crypto was purchased. 

A hot wallet is accessible from anywhere there is an Internet connection. This accessibility is its primary advantage. It is also its main shortcoming – internet dependence leaves it susceptible to cyber theft and hacking. To mitigate this risk, hot wallets must be protected by state-of-the-art security features. Hot wallets are often free as well.

Non-custodial cold (or hardware) wallets

Non-custodial cold wallets are purpose-built storage devices in the form of flash drives or other types of hardware. They provide offline storage of digital currency and are not accessible over the internet. This physical separation makes them more secure than hot wallets. However, they create a longer process for accessing and transacting your XRP. Cold wallets cost anywhere from $50 to $1,000.

Irrespective of the type of wallet you opt for, always make maximum use of available cybersecurity features such as regular account monitoring and multi-factor authentication.

Legal and Regulatory Aspects of Buying and Storing Ripple in Australia

In Australia, buying, storing and transacting in cryptocurrencies is legal. Yet, since Ripple and other cryptos have to inevitably interface with fiat currencies, they do not operate in a vacuum. Cryptocurrency exchanges acquired full legal status starting in 2017. In 2018, Australia’s crypto laws incorporated anti-money laundering (AML) and counter-terrorism financing (CTF) provisions. Exchanges are required to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC). Further, the Australian Securities and Investment Commission (ASIC) considers XRP an exchange-traded product  which automatically places it under the regulator’s purview as a security. 

Conclusion

Cryptocurrency provides a unique path of growing your wealth. Ripple’s steady growth from a basic digital currency to a tool accepted by global banks for international funds transfer is testament to its current opportunity and future potential. If you are going to invest in Ripple in Australia, it's vital that you do so on a secure, tried-and-tested exchange such as CoinSpot where it is safe to buy XRP. For best results, set your investment goals, quantify your risk appetite and take gradual steps as you grow in your mastery of the market.


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