Ripple Business Model: How Does It Work and Make Money?

Ripple Business Model

Ripple, or Ripple Labs Inc., is an American technology company. It is responsible for developing the Ripple payment protocol and exchange network. Initially, the company started its operations as OpenCoin in 2012. Later, however, it got renamed to Ripple Labs in 2015. Ripple Labs currently operates from San Francisco, California, USA. The company is well-known for its cryptocurrency XRP.

Ripple started its operations through its founders Arthur Britto, Chris Larsen, Jed McCaleb, and David Schwartz. Arthur always remained a sleeping partner in this dynamic. However, Chris and Jed were the ones who represented the business on all fronts. The concept behind the company started in May 2011 when Jed began developing a digital currency system for verified payments.

Within this network, transactions got verified by consensus among members of the network. This process was different from other prevalent cryptocurrencies, for example, Bitcoin. In August, both Jed and Chris approached Ryan Frugger with their digital currency idea. Ryan Frugger was the owner of Ripple, a monetary system that could empower individuals and communities to create their own money. However, it was a decentralized system.

After the discussion between Chris and the members of the Ripple company, Ryan passed his control over to the new founders. In 2012, Chris and Jed co-founded the OpenCoin corporation. This platform began the development of the Ripple protocol (RTXP) and the Ripple payment and exchange network. In 2013, the company officially changed its name to Ripple Labs, Inc.

Over the years, Ripple raised finance through different investors. However, it has also gone through several controversies and legal issues. In 2016, the company obtained a virtual currency license, making it the fourth company with a BitLicense. The company also offered its XRP currency which competed with other well-known cryptocurrencies online.

Overall, Ripple is an acclaimed and appreciated name in the industry, specifically for its ripple protocol and payment/exchange network. The company has won several awards over the years for its services to customers worldwide. Currently, Ripple still operates in the cryptocurrency market. However, its currency did better in the past than its current position.

How does Ripple work?

Ripple offers the XRP cryptocurrency that runs on the XRP ledger. However, the company is not primarily a cryptocurrency dealer. Instead, it is a digital payment network and protocol based on a decentralized peer-to-peer platform. It is what differentiates the company from its competitors. Similarly, it is one of the crucial factors that set it apart from other cryptocurrencies.

Related:  Merchant Business Model and How it Works

Ripple does not use the conventional method of blockchain mining. Instead, the Ripple network utilizes a unique distributed consensus mechanism. Through this network, the company validates transactions through a pool. This pool allows participating notes to verify the transaction’s authenticity. One of the critical factors in this process is the speed with which it happens.

Ripple allows instantaneous transactions with fast confirmations. However, it does not require a central authority to validate them. With Ripple’s services, users can send money back and forth across borders without any physical transfers. Therefore, it is similar to hawala services, which allows them to transfer money internationally.

Ripple’s cryptocurrency XRP is also well-known among a select few users online. Sometimes, users also use the interchangeable term Ripple for its XRP currency. This currency works like other cryptocurrencies. Users can buy them as an investment or exchange them for other currencies. Similarly, they can make online or on-site transactions through this cryptocurrency.

Ripple is a popular cryptocurrency option for larger financial institutions. Its quick and convenient setup allows banks and other institutions to complete transactions quickly. On top of that, the company also offers several payment systems. However, the company holds most of its cryptocurrencies itself. For this process, the company uses its blockchain system, known as RippleNet.

Ripple is also different from most other online cryptocurrencies, for example, Bitcoin. One of its primary differentiating factors is the speed offered for online transactions, which others don’t. Similarly, most well-known cryptocurrencies are volatile, which can significantly impact the rates between transactions. However, it has a more centralized system about which some users worry.

What is Ripple’s Business Model?

Ripple uses a blockchain model, which is an open-source, decentralized, and peer-to-peer platform. The company facilitates smooth and seamless financial transfers from various currencies, whether crypto or real. Similarly, Ripple is well-known for its digital payment protocol. However, it also has the XRP cryptocurrency, which helps in online transactions.

With the blockchain business model, Ripple offers payments within its trusted network. As mentioned, the company uses its XRP cryptocurrency to enable users to use these features. In exchange, the company generates money for these services and cryptos. Those involved within the consensus network receive a token that carries some value.

Related:  Wayfair's Business Model and How it Makes Money

Through the decentralized blockchain business model, Ripple offers seamless transactions. This process also alters the way that businesses and companies function. This way, those businesses and end-users can benefit from the technologies. Primarily, the company focuses on services that cater to its specific customer base. By doing so, it also makes money.

Overall, Ripple uses a blockchain-based business model. The company offers its digital payment protocol and native cryptocurrency to make money. However, its services differ from other well-known and established cryptocurrencies. Through its business model, Ripple has expanded its operations to serve customers and users worldwide.

How does Ripple make money?

Ripple makes money from various sources. As mentioned, two of its primary products include its protocol and cryptocurrency, known as XRP. The company primarily generates money from these sources. However, it also charges payment fees. On top of that, Ripple also makes profits from investments. Similarly, it earns interest from loans.


XRP is the currency that Ripple developed and offered in the market. The company created this currency in 2013 and used 100 billion coins as supply. However, most of these coins stayed within the company. Therefore, it has significant control over the XRP currency. While this process has allowed the company to earn from XRP sales, it has also gained crucial criticism.

Ripple makes money whenever it circulates its XRP cryptocurrency. The company has put 55 billion XRPs in escrow, issuing 1 billion of these each month. Currently, the XRP stands at a market value of around $1. Therefore, the company generates $1 billion every time it issues its XRP currency. Ripple primarily sells the XRP cryptocurrency to exchanges, for example, Binance and financial institutions.

Payment fees

Ripple also offers the RippleNet, which allows the transfer of money between participants. For every transaction processed through this network, Ripple charges a fee, which is around 0.00001 XRP. While this sum may seem insignificant due to the low value of XRP, it still makes up a portion of the company’s revenues. The company processes over 50,000 transactions per second, which adds to the volume of transactions.

Related:  TransferWise Business Model: How Does It Make Money?

With the payment fees, Ripple primarily depends on the number of transactions processed to make money. The more transactions it processes, the higher it can earn from the volume. On top of that, this process also leads to an increase in the market value of the XRP. This way, it helps the company make more money on XRP sales.

Interest fees

Ripple didn’t earn any interest fees before 2020. However, the company launched its loan product in that year, known as the Line of Credit. With this service, the company allows users to access On-Demand Liquidity (ODL), similar to a loan. Ripple issues a loan to users, which is in the form of XRP. The borrower can use their existing XRP holding as collateral.

However, Ripple only issues these loans to financial institutions. Therefore, the risks associated with these loans is significantly lower. Ripple makes money on these loans through interest fees that users must pay to access the finance. However, there is no information available about how much these interests are.


Ripple is also active in the investment market, investing in over 15 investments over its lifetime. Most of these investments allow the company to expand its primary product, the XRP currency. As mentioned above, the increase in usage also leads to a rise in the currency’s market value. However, these investments also make money for the company.

Some of these investments also make losses. However, Ripple values these investments for the impact they have on the XRP currency. Ripple uses its Ripple X subsidiary to make these investments. However, these contribute to the company’s overall earnings. The company also holds the potential to make profits from the sale of these investments.


Ripple is an American technology company. The company’s primary products include the XRP currency and the exchange network. Overall, the company uses a blockchain business model, which is similar to some other cryptocurrencies. However, its services are significantly different from those alternatives. Ripple also makes money from several sources, some of which are listed above.

Scroll to Top