Start Ripple Mining: How to Mine XRP Coin – Is it possible?

Start Ripple Mining: How to Mine XRP Coins?

Bitcoin is the oldest and the largest cryptocurrency out there in terms of market capitalisation. This means that out of the entire value that the crypto market currently holds, Bitcoin in itself holds the biggest. Since cryptocurrencies are an alternative to traditional money, they can be used to transfer value from one person to another. However, most crypto coins are not stable in value like fiat currencies (USD, INR, EUR). They go up and down in their monetary value depending on their supply and demand on exchanges around the world.

 

So how are cryptocurrencies supplied? 

 

Bitcoin is a proof-of-work cryptocurrency that is rewarded to miners in return for verifying transactions on the blockchain network. The miner/s who manage to crack the hashes for every block of transactions before everyone else gets rewarded with a certain amount of Bitcoins. That’s how new Bitcoins are introduced to the market.

 

Ripple (XRP) is also a cryptocurrency. While it can be used to transfer value just like Bitcoin, the way in which it is generated is fundamentally different. That is also the reason why Ripple has a different set of functionalities, principles that are different from Bitcoin.

 

In this blog, we will discuss what Ripple is, how it works, how it can or cannot be mined, and how the supply and demand for the coin play out in the real world.

 

Key Takeaways

Ripple XRP coins are used to transfer money from banks to banks or P2P in a fast and cost-efficient manner.

Ripple cannot be mined in the traditional sense because its supply is controlled by Ripple Labs, the founders of the coin.

Once a Ripple XRP is used in a transaction, it cannot be used again, and hence, a gradual increase in the usage of the network will result in the rising of prices.

Since Ripple’s supply is controlled by one authority, several believe that it is not entirely decentralised, and in that way, is different from traditional cryptocurrencies.

Ripple Mining

Ripple cannot be mined like other cryptocurrencies. Ripple XRP is a cryptocurrency that does not function like Bitcoin and Ether, and other traditional coins. However, it still holds true to the supply and demand equation in the market. Here’s how.

 

Ripple was brought into the crypto world as currency for a centralised payment system. This is the reason why Ripple is a little different from other cryptos and isn’t treated at par with others in so many instances. Ripple is not entirely decentralised because it is under the corporate control of the creators of the coin. Only 100 billion Ripple coins were launched when the coin was first brought into the world by Ripple Labs. These coins are released by Ripple Labs every month in an orderly fashion, keeping the supply and demand-controlled. 

 

The reason why Ripple is considered to be more centralised than other coins is that the supply of the coins isn’t in the hands of the users of the network (like ETH or BTC). Instead, it depends on the calculations and whims of Ripple Labs, who could choose to manipulate the prices of the coin by increasing or decreasing the supply whenever they wanted to. Even though such manipulation is highly unlikely, the possibility of it has deterred lots of investors.

 

Hence, Ripple can’t be mined in the traditional sense of the word. There are no Ripple miners, no verifiers, and no nodes attributing transactions to blocks for rewards. None of that.

 

At the outset of the Ripple coin, the creators over at Ripple Labs set the upper limit for XRP to 100 billion. At no point in time would the concentration of Ripple coins exceed that number.

 

Why Ripple Cannot Be Mined

Ripple cannot be mined because, unlike Bitcoin and other cryptocurrencies, the only individuals who can generate new XRP coins are the creators of the network itself. Only 100 billion XRP are to be released, and once these coins are used in transactions, they cannot be further used in the next transaction. This means that XRP would slowly exhaust over time, decreasing the supply in the market and demanding higher prices. In a way, the usage of the Ripple network to process transactions or simply XRP coins increases the value of the individual coins by a slight amount over time.

 

Why Ripple Is Different From Other Cryptocurrencies

Ripple is different from other cryptocurrencies in a lot of ways. Firstly, it is not completely decentralised. While traditional and bigger crypto coins like Bitcoin and Ether are completely decentralised without a single entity controlling them, the supply of Ripple XRP coins is controlled by Ripple Labs. Although it is highly unlikely that the creators themselves would manipulate the price of coins in the long term, the coin still brings some sense of novelty to the crypto market that some investors find risky. On the other hand, the slightly controlled proposition of XRP coins also makes it an attractive buy for some investors who believe in its potential in the future.

 

ripple mining

 

Secondly, Ripple cannot be mined. The reason behind that is the governance and coding behind the coin. While traditional cryptocurrencies can be mined by nodes finding blocks of transactions to verify, Ripple has a fixed amount that cannot be released into the market willy-nilly. The supply of Ripple coins is the sole call of individuals at Ripple Labs, and they’re the ones who decide the amount that’s going to be released into the market that month.

 

Lastly, Ripple does not have a wide range of functionalities like other crypto coins. It is a coin that caters to a very niche financial audience that uses XRP coins to focus on fast and inexpensive bank-to-bank transactions. Ripple can also be used to provide business-to-business transfers of money and also P2P transfers. Ripple is also optimised to transfer value from one entity to another within seconds. Compared to the several minutes or hours that are needed for a Bitcoin or Ether transaction, an average Ripple one takes less time and costs a fraction.

 

Ways To Mine Ripple (XRP)

There are no direct ways to ‘mine’ Ripple XRP because it does not conform to the traditional cryptocurrency mining setup. There are no Ripple miners and Ripple block rewards. The supply of Ripple is controlled by the founders of Ripple Labs. The owners of Ripple Labs have individually kept 20 billion (out of a total of 100 billion coins) for themselves and contributed the rest to the company. As of 2021, more than 50 billion coins have already been put out into circulation. However, it is worth noting that the company still holds more than 6 billion coins directly and has placed 55 billion Ripple in an escrow account.

 

How Is The Circulation of Ripple Controlled?

Ripple Labs has provided explanations as to how they believe they would control the supply of XRP coins in the market and why they’ve chosen an escrow account to hold more than 55% of their coins. The company has claimed that “a responsible steward of XRP supply for almost five years and has clearly demonstrated a tremendous track record of investing in and supporting the XRP ecosystem.” They have also conceded to the possibility of a market crash if huge amounts of XRP coins were to be suddenly released in the market.

 

In the future, the company explains, each of the 55 different escrow accounts (which hold 55 billion XRP) will be broken. The proceeds will be used by Ripple Labs to reward market makers or will be put out for sale to institutional investors. If any of the month’s supply of 1 billion Ripple coins goes unused, the leftovers will be put back into escrow with a new expiration date. This leftover is stacked to the end of the escrow chain, dated to expire at the end of the 55 primary escrow contracts.

 

By expert estimations, it is believed that the circulating supply of Ripple will double by the time the world enters June of 2022.

 

Wrapping It Up

Ripple is not a cryptocurrency that can be mined. The control of its supply by Ripple Labs makes investors wonder if it actually is a real cryptocurrency because it is not decentralised in the true nature of the word. Even though Ripple Labs uses validating nodes provided by third parties to maintain the blockchain, many don’t trust the process transparently enough to invest heavily in its future.

 

However, Ripple has a fascinating edge over other cryptocurrencies because of its insanely fast transactions and extremely low fees. In a world where huge commissions charged by banks for wire transfers are commonplace, Ripple could become the flagbearer for the seamless financial integration of the world and, in turn, the banking network. Although Bitcoin is the largest cryptocurrency in the world, it certainly has its drawbacks, and altcoins like Ripple are tackling them head-on.

 

Only time will tell if they manage to bring more and more investors to their corner.

 

Frequently Asked Questions (FAQs)

Can Ripple be mined?

No, Ripple XRP coins cannot be mined like other crypto coins. Their supply is controlled by escrow contracts held in the name of the founders of Ripple Labs.

 

Will Ripple XRP reach $1000?

Ripple, as of 11th October 2021, is priced at $1.16 approximately. While the coin is becoming more popular amongst investors who use it to transfer money internationally, only time will tell for certain if its growth will make it touch the $1000 mark in the future.

 

Why can’t XRP be mined?

XRP coins cannot be mined because of the way in which they have been coded by their founders. While most cryptocurrencies are completely decentralised in the mode of their supply, Ripple is not. Ripple Labs controls the number of coins released into the market every month, and users of the network have hardly any say in the decision.

Published on: 12/21/21, 4:11 PM