Is Ripple "it" When it Comes to Cross-Border Transactions?

KYC stands for &ldquo;<strong>Know Your Customer<\/strong>&rdquo;. It&rsquo;s a set of financial regulations that all banking and financial institutions around the world must comply with, to some extent. Essentially, these institutions must collect information about their customers (identify them), in order to identify and prevent any and all potential fraud, money laundering, and other types of defrauding activities.<\/p>\n<p>Traditional banking institutions comply with and enact some very strict KYC checks. This is because, by default, traditional banks are very strictly regulated. With cryptocurrencies, things are a bit more in the grey area.<\/p>\n<p>First, you have DEXs - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralized-exchange-dex/">decentralized cryptocurrency exchange platforms<\/strong><\/a>. Individuals who trade on these platforms are able to remain <strong>completely anonymous<\/strong> in doing so. As you can imagine, Russian citizens were not an exception in this regard - theoretically, DEXs could have helped Russians avoid all of those aforementioned sanctions.<\/p>\n<p>The situation isn&rsquo;t all that much better with <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-centralized-exchange-cex/">centralized exchanges<\/strong><\/a>, either. While many of them do comply with KYC laws and regulations, this compliance is often very surface-level, and not in-line with other, traditional financial institutions. That&rsquo;s because crypto regulation is still a very uncertain topic, and there are a lot of grey areas and loopholes.<\/p>\n<p>One of the best examples of this would be <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//kraken/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Kraken<\/strong><\/a>, a well-known and highly-respected cryptocurrency exchange. Kraken CEO, Jesse Powel, has said that the exchange will comply with the sanctions as much as the legalities of the matter are concerned, but that the platform won&rsquo;t ban Russian users outright, since this would be unfair, granted that there are plenty of people in the country that did not support Russia&rsquo;s actions in Ukraine.<\/p>\n<p>To top it all off, Russia developed the so-called &ldquo;<strong>digital ruble<\/strong>&rdquo;, a virtual version of the country&rsquo;s currency. Back in 2020, Russia&rsquo;s Central Bank had pointed out that the digital ruble would make Russia &ldquo;more independent&rdquo; from the West, and ease many potential sanctions that other countries could impose on them.<\/p>\n<p>So, with all of that in mind, what&rsquo;s the answer here - could cryptocurrencies truly pose a risk of mitigating, or even nullifying the sanctions imposed on Russia?<\/p>\n<p><strong>Well, I think that no - not even by a long shot. <\/strong>Allow me to elaborate on this, and explain why I think so.<\/p>\n<h3>Devaluation<\/h3>\n<p>The very first problem for countries sanctioned like Russia is the devaluation of money.<\/p>\n<p>Devaluation is basically the deliberate downward adjustment of the value of a country's money relative to another currency, usually US dollars.<\/p>\n<p>So, think of it this way: imagine there is a bank: 50% filled with, say Russian rubles, and 50% with US dollars. One day, everybody starts bringing their rubles to the bank to get US dollars in exchange. Guess what happens? Banks start accumulating more rubles and losing dollars. Which one do you think will grow in price, and which one will become worthless?<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_3.o.jpg/" alt=\"The practical use of cryptocurrencies: Devaluation.\" width=\"1000\" height=\"1231\" \/><\/p>\n<p>Because of the massive and constant demand for dollars, <strong>the ruble will definitely start to go down<\/strong> each time a new <em>babushka<\/em> brings her already low-valued rubles into the bank, compared to the US dollar, which will grow like crazy. The same will happen with rubles and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoins - the Bitcoin price will grow, because the enormous demand will affect the market, and the ruble will keep going down to the bottom.<\/p>\n<p>From the governmental point of view, this move is lethal, and they will never allow their own currency to lose value, in exchange for an uncontrolled, not government-specific one.<\/p>\n<p>So, to be clear, if your average Russian starts using crypto, this will devalue the ruble even more - that, in turn, would weaken Russia&rsquo;s power. It is said that the Russian Central Bank is actually cracking down on crypto, altogether!<\/p>\n<p>Additionally, very recently,<strong> the Russian government issued new laws<\/strong> that limited Russian citizens from sending, receiving, and transacting with any foreign currency, such as USD.<\/p>\n<p>Specifically, upon receiving foreign currency, Russian citizens had to convert 80% of the total sum into rubles in three days, or risk getting fined. So, even if you resided in Russia, and traded your cryptocurrencies into USD or EUR, you would need to switch it to rubles, almost immediately.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_5.o.jpg/" alt=\"The practical use of cryptocurrencies: Converting 80% of the total sum of foreign currency into rubles.\" width=\"1000\" height=\"533\" \/><\/p>\n<p>This comes with not one, but TWO additional problems - the fact that the <strong>ruble was tanking in price, and was very volatile,<\/strong> as well as the fact that there simply <strong>wasn't enough liquidity on the market<\/strong> for the entirety of Russia to swap between crypto and some traditional currency.<\/p>\n<h3>Mass Adoption<\/h3>\n<p>The second issue that sanctioned countries such as Russia face is mass adoption.<\/p>\n<p>Let's say you have a jar of 100 candies. A child comes and eats 97 candies, all at once. However, you manage to stop the child right before he eats all 100 candies, so there are 3 left. Now, do you think that the 3 candies left will make a big difference for the child's health?<\/p>\n<p>How does this tie into what we&rsquo;re talking about today? Well, a lot of attention was placed on crypto, in regards to Russia and the sanctions - I'm talking about the mainstream media, many politicians, and so on. What the above example illustrates is that <strong>cryptocurrencies were way too small for them to make a difference,<\/strong> in the grand scheme of things!<\/p>\n<p>Around 3% of the global population actually hold crypto, in any form. Following that, people usually hold small amounts of crypto, too - very few have all of their life savings invested into the space. A popular number that I&rsquo;ve seen thrown around online is 10% - so, sure, let&rsquo;s say that 10% of crypto holders have their life savings invested into the space.<\/p>\n<p>So, less than 0,3% of the total global net worth is currently in crypto. Let&rsquo;s transfer this example to Russia - even if 0,3% <em>(and I&rsquo;m being generous with this number)<\/em> of Russians hold a lot of cryptocurrencies, that&rsquo;s still a very small number. In circumstances like these, <strong>sudden and unexpected mass adoption within the country is simply impossible.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_6.o.jpg/" alt=\"The practical use of cryptocurrencies: Around 3% of the global population holds crypto.\" width=\"1000\" height=\"427\" \/><\/strong><\/p>\n<p>Where is the rest of all the money, though? Where&rsquo;s the 99,7%?<\/p>\n<p>Two places - people&rsquo;s pockets, and bank accounts.<\/p>\n<p>Instead of focusing on crypto, all of the sanctions should be focused on traditional banking and money flow mechanisms - again, crypto is just too small to make a real difference for them!<\/p>\n<p>Another barrier to mass adoption is your partners. Internally, Russians have no problems getting and spending their rubles, but if they do business with foreign companies, this is a big issue.&nbsp;<\/p>\n<p><em>Why?<\/em><\/p>\n<p>Imagine that you&rsquo;ve swallowed all of the sanctions, and decided to jump into the crypto bandwagon to help your business survive. The problem will appear on the other side - that of your foreign partners.<\/p>\n<p>As an example, your business is to retail iPhones, and you order them in bulk from international distributors - foreign companies. Even if you become crypto-friendly, it will not change anything, because overseas companies that you deal with will still be aware of the entire situation. No big foreign distributor will sell you iPhones officially, in exchange for crypto!<\/p>\n<p>The same situation can be applied to ordinary Russians, as well. Say, a babushka&rsquo;s grandson has emigrated into the US and is helping her by sending part of his income every month. Now, his task is to learn how to make those same transactions, but in crypto! On top of that, he will then need to teach his old babushka to use crypto, too. For a big chunk of the old population in Russia, this is a huge \"no-go\" option.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_7.o.jpg/" alt=\"The practical use of cryptocurrencies: Teaching babushka to use crypto.\" width=\"1000\" height=\"670\" \/><\/p>\n<p>Speaking of mass adoption and partners, a comment that was often made is that <strong>Russia could have simply traded with China, <\/strong>with the help of crypto. Well, cryptocurrencies are banned in China, at least at the time I&rsquo;m writing this section - same as Russia, the country doesn&rsquo;t look favorably on decentralized and anonymity-preserving currencies.&nbsp;<\/p>\n<p>Do you really think the great Communist Party of China will agree on crypto matters, just to give you a better option to buy an iPhone plastic cover, fake Ipad, or a couple of low-quality gadgets on AliExpress using crypto?<\/p>\n<p>Even if this situation was more lenient, that wouldn&rsquo;t really change much, since you then have to think about the entire <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-supply-chain/">supply chain<\/strong><\/a>, how the trades would happen, and how they could be hidden from the rest of the world.<\/p>\n<p><strong>Spoiler alert - they couldn&rsquo;t.<\/strong><\/p>\n<h3>Privacy<\/h3>\n<p>The third issue that sanctioned countries such as Russia face is privacy.<\/p>\n<p><strong>In Russia - cash is the king.<\/strong> Think about it this way - normally, you were getting lots of cash in suitcases, and spending it the same way. Buying your Lambo, a house, or simply a burger on a street in cash - this is the reality in Russia, and nobody cares how you got your money. With crypto, it's all impossible. People would be afraid to be tracked and taxed - it&rsquo;s a big deterrent for most Russians!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_8.o.jpg/" alt=\"The practical use of cryptocurrencies: Privacy.\" width=\"1000\" height=\"638\" \/><\/p>\n<p><strong>Cryptocurrency transactions aren&rsquo;t as untraceable as you might think.<\/strong> While your trades are anonymous, on the very basic level, there are special companies that are dedicated to analyzing on-chain data, for different types of cryptos.<\/p>\n<p>So, if you trade Bitcoin, your address might eventually be flagged as being located in Russia. This, in turn, would prevent many centralized exchanges from offering their services to you, and cause a lot of additional issues.<\/p>\n<p>This is especially so true when you consider the fact that US Senators were looking into the topic by raising the question of how Russia could use digital currencies to overcome and avoid the sanctions imposed on the country.<\/p>\n<p>Granted that the US was looking into the matter, it was very possible that there couldn't really be a major loophole for Russians to use when it comes to crypto.<\/p>\n<p>Now, I can hear you asking - <strong>what about privacy coins?<\/strong> Couldn't Russia have used those, in order to avoid sanctions?<\/p>\n<p>Alright, let&rsquo;s take a look at them. Specifically, let&rsquo;s take the most popular privacy coin - <strong>Monero<\/strong> - as an example.<\/p>\n<p>Monero, at the time of writing this section, had a <strong>market cap of around $3 billion.<\/strong> That&rsquo;s a large number, for a cryptocurrency that was created to be virtually untraceable! However, the <strong>total GDP of Russia was $1,5 trillion. <\/strong>So, Monero makes up 0,2% of the total GDP of Russia. Once again, as you can probably imagine, that&rsquo;s practically nothing, in the grand scheme of things.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_9.o.jpg/" alt=\"The practical use of cryptocurrencies: The total GPD of Russia - $1.5 trillion.\" width=\"1000\" height=\"544\" \/><\/p>\n<p>So, here&rsquo;s an example. Let&rsquo;s imagine that ALL of the $3 billion worth of Monero would be accessible to be used in Russia. That&rsquo;s impossible, but for the sake of this example, let&rsquo;s just assume that.<\/p>\n<p>If that was the case, only 2 out of 1000 Russians would have access to Monero, on average. Again, though - this is assuming that the entirety of the Monero market cap is located in Russia and that the GDP is spread out equally throughout the country. In reality, that number is much, MUCH worse.<\/p>\n<h2>Conclusions<\/h2>\n<p>So, could a country function only on cryptocurrencies? Could crypto substitute traditional currencies and become the one and only payment method? <strong>Well, as of now, no, that's definitely not possible.<\/strong><\/p>\n<p>Even though crypto is seemingly everywhere in the news, and everyone&rsquo;s talking about mass adoption, it&rsquo;s still WAY too small and too complicated for countries to use it as the main currency, and this is why it&rsquo;s a huge opportunity for us to dive in as early adopters!<\/p>","definition":"Did you know that you can pay for a college degree or even a funeral using only cryptocurrencies?","status":"published","meta_title":"Can Crypto Become the One and Only Currency?","meta_description":"Wondering if crypto could substitute traditional currencies? Can it become the main currency of a country? Find that out right here!","meta_keywords":null,"modified_content":"<p>The whole concept of cryptocurrencies is getting more and more popular every day. A lot of countries are integrating crypto as a payment method for certain services. For example, you can even pay with crypto for some KFC chicken wings in Canada.<\/p>\n<p>However, can a country forget all traditional currencies and payment methods and function purely on cryptocurrencies? This scenario would definitely come in handy in a lot of different situations - for example, when a country is facing massive sanctions from other countries. If this was the case, maybe crypto could even help evade these sanctions?<\/p>\n<p>Let's take a <strong>real-world example<\/strong> <strong>of the biggest sanctions in history<\/strong> placed by the Western world on Russia during the military crisis in Ukraine to try to answer these questions. Keep in mind that these sanctions include the denial of a lot of financial tools, too - SWIFT, VISA, MasterCard, and so on.<\/p>\n<p>Also, I&rsquo;d like to stress again that this situation could happen in any other country around the world - Russia, in this case, is just <strong>a real-world example.<\/strong> Keep in mind that it should only be viewed as <strong>a case study!<\/strong><\/p>\n<p><em>So, let&rsquo;s get right to it.<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Can Russia Use Crypto to Bypass Sanctions? (Animated)\"\n title=\"Can Russia Use Crypto to Bypass Sanctions? (Animated)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: The Practical Use of Crypto<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"The Practical Use of Crypto\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"2vVj6jAuBNE\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Can Russia Use Crypto to Bypass Sanctions? (Animated)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/can-russia-use-crypto-to-bypass-sanctions-animated.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/can-russia-use-crypto-to-bypass-sanctions-animated.jpg?tr=w-760 1000w\"\n alt=\"Can Russia Use Crypto to Bypass Sanctions? (Animated)\"\n title=\"Can Russia Use Crypto to Bypass Sanctions? (Animated)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Can Russia Use Crypto to Bypass Sanctions? (Animated)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>Sanctions in Russia<\/h2>\n<p>So, you probably know the massive military crisis that happened in Ukraine which was forcibly initiated by Russia.<\/p>\n<p>Please note that the situation is extremely complex and horrible, so I won&rsquo;t go into any political talks regarding it. Instead, let&rsquo;s focus on the topic at hand.<\/p>\n<p>Due to the unjustifiable aggression, Western countries - the United States, the EU, and a few others -<strong> issued a lot of various sanctions against Russia<\/strong>. Many of these sanctions targeted specific, high-ranking Russian oligarchs - most, however, were aimed at Russia&rsquo;s economy.<\/p>\n<p>In addition to these said sanctions, many Western companies also halted their business within the country, during the time of the crisis. So, let&rsquo;s take a closer look at these sanctions and withdrawals.<\/p>\n<p>For starters, probably the biggest blow to the Russian economy was <strong>the partial denial of SWIFT within the country.<\/strong><\/p>\n<p>What is SWIFT? Officially, the term SWIFT is abbreviated as &ldquo;The Society for Worldwide Interbank Financial Telecommunication&rdquo;.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_2.o.jpg/" alt=\"The practical use of cryptocurrencies: SWIFT.\" width=\"1000\" height=\"463\" \/><\/p>\n<p>So in short, <strong>SWIFT is a financial worldwide messaging service.<\/strong> It&rsquo;s like a niche internet or even a social network, just between banking institutions. To be more specific, it&rsquo;s a tool that banks worldwide use to communicate transactions between one another.<\/p>\n<p>SWIFT doesn&rsquo;t deal with the transactions directly, but instead, it allows banks to communicate these transactions in the form of messages to one another, and <strong>it serves 32 million financial messages per day on average! <\/strong><em>So yeah - now you see, it's a really massive network.<\/em><\/p>\n<p>Allow me to illustrate SWIFT operations with an example, so that you could understand it even better.<\/p>\n<p>Let&rsquo;s say, you have a friend named Tom, and want to send $10 to him, via a bank transfer. However, Tom uses a different banking platform.<\/p>\n<p>As you make the transaction, your bank messages Tom&rsquo;s bank about it - it informs Tom&rsquo;s bank that there&rsquo;s a transaction incoming, from you to Tom and that it&rsquo;s $10. All of this information is relayed via the SWIFT network.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_1.o.jpg/" alt=\"The practical use of cryptocurrencies: Sanctions in Russia.\" width=\"1000\" height=\"818\" \/><\/p>\n<p>Without SWIFT, banks would need to rely on <strong>emails and poor encryption-possessing messages<\/strong> - as you can probably understand, this is far from ideal, since we&rsquo;re talking about financial operations here.<\/p>\n<p>In order to understand the magnitude of the SWIFT ban in Russia, think of it this way - in 2020, there were a bit <strong>over 20 million messages per year<\/strong> sent on the Bank of Russia SPFS system (&ldquo;System for Transfer of Financial Messages&rdquo; - a Russian alternative to SWIFT). By comparison, during that same year, there were <strong>over 110 million messages<\/strong> sent in Russia via SWIFT and other non-Russian bank messaging services.<\/p>\n<p>However, as of March 7th, 2022, there were 7 Russian banks banned from using SWIFT. It was also stated that, if Russia continues its aggression against Ukraine, more banks would be included in the ban too.<\/p>\n<p>With all of that being said, what did all of this meant for Russia, in the first place?<\/p>\n<p>Well, to put it simply, <strong>Russian banks weren't able to communicate with banks located in other countries<\/strong> and were, thus, cut off from the rest of the world. Russians weren't able to send and receive money to and from foreigners, payments were frozen, and credits weren't possible to be issued. According to the announcement of the SWIFT ban, the Russian ruble crashed by 30%, in price.<\/p>\n<p>The next huge blow to the Russian economy was<strong> the announcements made by VISA, MasterCard, and American Express.<\/strong> All three companies seized their operations within the country - if you resided in Russia, and owned any of the three debit cards, you were not able to perform any transactions with them. Even international electronic payment methods like PayPal stopped supporting transactions in Russia.<\/p>\n<p>This was huge for obvious reasons. Take VISA, as the simplest example - it&rsquo;s probably the most popular payment facilitator in the world, being supported on the vast majority of online marketplaces, and used by over 2 billion <em>(yes, you heard right - &ldquo;billions&rdquo;!)<\/em> people around the world.<\/p>\n<p>Naturally, there were MANY more finance-related sanctions imposed on Russia - these are just among the most notable ones. Summing all of that up, however, it&rsquo;s safe to say that these sanctions and major financial company withdrawals from the country were crippling to the Russian economy.<\/p>\n<p><em>Now, then&hellip; Where does crypto come into all of this?<\/em><\/p>\n<h2>Cryptocurrencies as a Tool for Russia to Avoid Sanctions?<\/h2>\n<p>As financial sanctions continued to be imposed on Russia, many people began questioning whether the country could <strong>use cryptocurrencies to mitigate some of the effects of these sanctions.<\/strong> In order to understand how this could be possible, you first need to get familiar with the term &ldquo;<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-know-your-customer-kyc/">KYC&rdquo;./n

KYC stands for &ldquo;<strong>Know Your Customer<\/strong>&rdquo;. It&rsquo;s a set of financial regulations that all banking and financial institutions around the world must comply with, to some extent. Essentially, these institutions must collect information about their customers (identify them), in order to identify and prevent any and all potential fraud, money laundering, and other types of defrauding activities.<\/p>\n<p>Traditional banking institutions comply with and enact some very strict KYC checks. This is because, by default, traditional banks are very strictly regulated. With cryptocurrencies, things are a bit more in the grey area.<\/p>\n<p>First, you have DEXs - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralized-exchange-dex/">decentralized cryptocurrency exchange platforms<\/strong><\/a>. Individuals who trade on these platforms are able to remain <strong>completely anonymous<\/strong> in doing so. As you can imagine, Russian citizens were not an exception in this regard - theoretically, DEXs could have helped Russians avoid all of those aforementioned sanctions.<\/p>\n<p>The situation isn&rsquo;t all that much better with <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-centralized-exchange-cex/">centralized exchanges<\/strong><\/a>, either. While many of them do comply with KYC laws and regulations, this compliance is often very surface-level, and not in-line with other, traditional financial institutions. That&rsquo;s because crypto regulation is still a very uncertain topic, and there are a lot of grey areas and loopholes.<\/p>\n<p>One of the best examples of this would be <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//kraken/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Kraken<\/strong><\/a>, a well-known and highly-respected cryptocurrency exchange. Kraken CEO, Jesse Powel, has said that the exchange will comply with the sanctions as much as the legalities of the matter are concerned, but that the platform won&rsquo;t ban Russian users outright, since this would be unfair, granted that there are plenty of people in the country that did not support Russia&rsquo;s actions in Ukraine.<\/p>\n<p>To top it all off, Russia developed the so-called &ldquo;<strong>digital ruble<\/strong>&rdquo;, a virtual version of the country&rsquo;s currency. Back in 2020, Russia&rsquo;s Central Bank had pointed out that the digital ruble would make Russia &ldquo;more independent&rdquo; from the West, and ease many potential sanctions that other countries could impose on them.<\/p>\n<p>So, with all of that in mind, what&rsquo;s the answer here - could cryptocurrencies truly pose a risk of mitigating, or even nullifying the sanctions imposed on Russia?<\/p>\n<p><strong>Well, I think that no - not even by a long shot. <\/strong>Allow me to elaborate on this, and explain why I think so.<\/p>\n<h3>Devaluation<\/h3>\n<p>The very first problem for countries sanctioned like Russia is the devaluation of money.<\/p>\n<p>Devaluation is basically the deliberate downward adjustment of the value of a country's money relative to another currency, usually US dollars.<\/p>\n<p>So, think of it this way: imagine there is a bank: 50% filled with, say Russian rubles, and 50% with US dollars. One day, everybody starts bringing their rubles to the bank to get US dollars in exchange. Guess what happens? Banks start accumulating more rubles and losing dollars. Which one do you think will grow in price, and which one will become worthless?<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_3.o.jpg/" alt=\"The practical use of cryptocurrencies: Devaluation.\" width=\"1000\" height=\"1231\" \/><\/p>\n<p>Because of the massive and constant demand for dollars, <strong>the ruble will definitely start to go down<\/strong> each time a new <em>babushka<\/em> brings her already low-valued rubles into the bank, compared to the US dollar, which will grow like crazy. The same will happen with rubles and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoins - the Bitcoin price will grow, because the enormous demand will affect the market, and the ruble will keep going down to the bottom.<\/p>\n<p>From the governmental point of view, this move is lethal, and they will never allow their own currency to lose value, in exchange for an uncontrolled, not government-specific one.<\/p>\n<p>So, to be clear, if your average Russian starts using crypto, this will devalue the ruble even more - that, in turn, would weaken Russia&rsquo;s power. It is said that the Russian Central Bank is actually cracking down on crypto, altogether!<\/p>\n<p>Additionally, very recently,<strong> the Russian government issued new laws<\/strong> that limited Russian citizens from sending, receiving, and transacting with any foreign currency, such as USD.<\/p>\n<p>Specifically, upon receiving foreign currency, Russian citizens had to convert 80% of the total sum into rubles in three days, or risk getting fined. So, even if you resided in Russia, and traded your cryptocurrencies into USD or EUR, you would need to switch it to rubles, almost immediately.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_5.o.jpg/" alt=\"The practical use of cryptocurrencies: Converting 80% of the total sum of foreign currency into rubles.\" width=\"1000\" height=\"533\" \/><\/p>\n<p>This comes with not one, but TWO additional problems - the fact that the <strong>ruble was tanking in price, and was very volatile,<\/strong> as well as the fact that there simply <strong>wasn't enough liquidity on the market<\/strong> for the entirety of Russia to swap between crypto and some traditional currency.<\/p>\n<h3>Mass Adoption<\/h3>\n<p>The second issue that sanctioned countries such as Russia face is mass adoption.<\/p>\n<p>Let's say you have a jar of 100 candies. A child comes and eats 97 candies, all at once. However, you manage to stop the child right before he eats all 100 candies, so there are 3 left. Now, do you think that the 3 candies left will make a big difference for the child's health?<\/p>\n<p>How does this tie into what we&rsquo;re talking about today? Well, a lot of attention was placed on crypto, in regards to Russia and the sanctions - I'm talking about the mainstream media, many politicians, and so on. What the above example illustrates is that <strong>cryptocurrencies were way too small for them to make a difference,<\/strong> in the grand scheme of things!<\/p>\n<p>Around 3% of the global population actually hold crypto, in any form. Following that, people usually hold small amounts of crypto, too - very few have all of their life savings invested into the space. A popular number that I&rsquo;ve seen thrown around online is 10% - so, sure, let&rsquo;s say that 10% of crypto holders have their life savings invested into the space.<\/p>\n<p>So, less than 0,3% of the total global net worth is currently in crypto. Let&rsquo;s transfer this example to Russia - even if 0,3% <em>(and I&rsquo;m being generous with this number)<\/em> of Russians hold a lot of cryptocurrencies, that&rsquo;s still a very small number. In circumstances like these, <strong>sudden and unexpected mass adoption within the country is simply impossible.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_6.o.jpg/" alt=\"The practical use of cryptocurrencies: Around 3% of the global population holds crypto.\" width=\"1000\" height=\"427\" \/><\/strong><\/p>\n<p>Where is the rest of all the money, though? Where&rsquo;s the 99,7%?<\/p>\n<p>Two places - people&rsquo;s pockets, and bank accounts.<\/p>\n<p>Instead of focusing on crypto, all of the sanctions should be focused on traditional banking and money flow mechanisms - again, crypto is just too small to make a real difference for them!<\/p>\n<p>Another barrier to mass adoption is your partners. Internally, Russians have no problems getting and spending their rubles, but if they do business with foreign companies, this is a big issue.&nbsp;<\/p>\n<p><em>Why?<\/em><\/p>\n<p>Imagine that you&rsquo;ve swallowed all of the sanctions, and decided to jump into the crypto bandwagon to help your business survive. The problem will appear on the other side - that of your foreign partners.<\/p>\n<p>As an example, your business is to retail iPhones, and you order them in bulk from international distributors - foreign companies. Even if you become crypto-friendly, it will not change anything, because overseas companies that you deal with will still be aware of the entire situation. No big foreign distributor will sell you iPhones officially, in exchange for crypto!<\/p>\n<p>The same situation can be applied to ordinary Russians, as well. Say, a babushka&rsquo;s grandson has emigrated into the US and is helping her by sending part of his income every month. Now, his task is to learn how to make those same transactions, but in crypto! On top of that, he will then need to teach his old babushka to use crypto, too. For a big chunk of the old population in Russia, this is a huge \"no-go\" option.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_7.o.jpg/" alt=\"The practical use of cryptocurrencies: Teaching babushka to use crypto.\" width=\"1000\" height=\"670\" \/><\/p>\n<p>Speaking of mass adoption and partners, a comment that was often made is that <strong>Russia could have simply traded with China, <\/strong>with the help of crypto. Well, cryptocurrencies are banned in China, at least at the time I&rsquo;m writing this section - same as Russia, the country doesn&rsquo;t look favorably on decentralized and anonymity-preserving currencies.&nbsp;<\/p>\n<p>Do you really think the great Communist Party of China will agree on crypto matters, just to give you a better option to buy an iPhone plastic cover, fake Ipad, or a couple of low-quality gadgets on AliExpress using crypto?<\/p>\n<p>Even if this situation was more lenient, that wouldn&rsquo;t really change much, since you then have to think about the entire <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-supply-chain/">supply chain<\/strong><\/a>, how the trades would happen, and how they could be hidden from the rest of the world.<\/p>\n<p><strong>Spoiler alert - they couldn&rsquo;t.<\/strong><\/p>\n<h3>Privacy<\/h3>\n<p>The third issue that sanctioned countries such as Russia face is privacy.<\/p>\n<p><strong>In Russia - cash is the king.<\/strong> Think about it this way - normally, you were getting lots of cash in suitcases, and spending it the same way. Buying your Lambo, a house, or simply a burger on a street in cash - this is the reality in Russia, and nobody cares how you got your money. With crypto, it's all impossible. People would be afraid to be tracked and taxed - it&rsquo;s a big deterrent for most Russians!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_8.o.jpg/" alt=\"The practical use of cryptocurrencies: Privacy.\" width=\"1000\" height=\"638\" \/><\/p>\n<p><strong>Cryptocurrency transactions aren&rsquo;t as untraceable as you might think.<\/strong> While your trades are anonymous, on the very basic level, there are special companies that are dedicated to analyzing on-chain data, for different types of cryptos.<\/p>\n<p>So, if you trade Bitcoin, your address might eventually be flagged as being located in Russia. This, in turn, would prevent many centralized exchanges from offering their services to you, and cause a lot of additional issues.<\/p>\n<p>This is especially so true when you consider the fact that US Senators were looking into the topic by raising the question of how Russia could use digital currencies to overcome and avoid the sanctions imposed on the country.<\/p>\n<p>Granted that the US was looking into the matter, it was very possible that there couldn't really be a major loophole for Russians to use when it comes to crypto.<\/p>\n<p>Now, I can hear you asking - <strong>what about privacy coins?<\/strong> Couldn't Russia have used those, in order to avoid sanctions?<\/p>\n<p>Alright, let&rsquo;s take a look at them. Specifically, let&rsquo;s take the most popular privacy coin - <strong>Monero<\/strong> - as an example.<\/p>\n<p>Monero, at the time of writing this section, had a <strong>market cap of around $3 billion.<\/strong> That&rsquo;s a large number, for a cryptocurrency that was created to be virtually untraceable! However, the <strong>total GDP of Russia was $1,5 trillion. <\/strong>So, Monero makes up 0,2% of the total GDP of Russia. Once again, as you can probably imagine, that&rsquo;s practically nothing, in the grand scheme of things.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//can_crypto_mitigate_sanctions_9.o.jpg/" alt=\"The practical use of cryptocurrencies: The total GPD of Russia - $1.5 trillion.\" width=\"1000\" height=\"544\" \/><\/p>\n<p>So, here&rsquo;s an example. Let&rsquo;s imagine that ALL of the $3 billion worth of Monero would be accessible to be used in Russia. That&rsquo;s impossible, but for the sake of this example, let&rsquo;s just assume that.<\/p>\n<p>If that was the case, only 2 out of 1000 Russians would have access to Monero, on average. Again, though - this is assuming that the entirety of the Monero market cap is located in Russia and that the GDP is spread out equally throughout the country. In reality, that number is much, MUCH worse.<\/p>\n<h2>Conclusions<\/h2>\n<p>So, could a country function only on cryptocurrencies? Could crypto substitute traditional currencies and become the one and only payment method? <strong>Well, as of now, no, that's definitely not possible.<\/strong><\/p>\n<p>Even though crypto is seemingly everywhere in the news, and everyone&rsquo;s talking about mass adoption, it&rsquo;s still WAY too small and too complicated for countries to use it as the main currency, and this is why it&rsquo;s a huge opportunity for us to dive in as early adopters!<\/p>","youtube_video":{"id":19,"channel_id":1,"sort":77,"video_title":"Can Russia Use Crypto to Bypass Sanctions? (Animated)","description":"Can Russia use crypto to bypass sanctions?\n\nDue to Russia unjustifiably attacking Ukraine, Western countries and their allies are imposing a series of sanctions on Russia. The list of sanctions, as well as foreign companies leaving the country, is getting bigger every day.\n\nThere is a general notion online that Russia could mitigate the damage done by these sanctions by utilizing cryptocurrencies. In this video, I will tell you about the most significant sanctions imposed on Russia thus far, and also, whether or not crypto could help the country minimize the damage done to its economy by those said sanctions.\n\nWhat role do you think cryptocurrencies play, when it comes to the Russia\u2019s war in Ukraine? Share your opinion in the comments below.\n\nVideo Time Table:\n\n0:00 Introduction to Can Russia Use Crypto to Bypass Sanctions\n1:17 Sanctions in Russia\n5:06 Crypto as a Tool to Avoid Sanctions?\n7:16 Issues Faced by Sanctioned Russia: Devaluation\n9:03 Issues Faced by Sanctioned Russia: Mass Adoption\n12:01 Issues Faced by Sanctioned Russia: Privacy\n14:18 Wrap-up: Can Russia Use Crypto to Bypass Sanctions?\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#RussiaSanctions #SanctionsAgainstRussia #RussiaCrypto","video_id":"2vVj6jAuBNE","duration":916,"view_count":564,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/can-russia-use-crypto-to-bypass-sanctions-animated.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-03-31T16:29:44.000000Z","created_at":"2022-03-31T23:00:01.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :prev-section="{"id":618,"chapter_id":2,"order":19,"featured_image_id":5178,"youtube_video_id":116,"author_id":4,"created_at":"2023-09-04T06:24:32.000000Z","updated_at":"2023-12-28T22:43:04.000000Z","slug":"what-is-monero-coin","title":"Monero: Where Cryptocurrency Meets Cryptography","content":"<p>In this section, we&rsquo;re going to take a look at <strong>one of the stealthiest cryptos out there<\/strong>, and answer the questions of &ldquo;<em>What is Monero coin?<\/em>&rdquo; and &ldquo;<em>How does Monero work?<\/em>&rdquo;.<\/p>\n<p>Monero is where &ldquo;Cryptocurrency&rdquo; meets &ldquo;Cryptography.&rdquo; <strong>It&rsquo;s a privacy-focused crypto coin that prioritizes different objectives than your usual crypto assets<\/strong>. By providing a laser-sharp focus on the importance of anonymity, <a href=https://www.bitdegree.org/"//crypto//buy-monero-xmr/">Monero gained momentum and a following of those who have no doubts about the importance of such aspects when it comes to blockchains and cryptocurrencies.<\/p>\n<p>But, by doing so, <strong>Monero found itself in the middle of a crossfire<\/strong>. On the one hand, highlighting the importance of anonymity sounds like a non-compromising dedication to protecting user privacy and their data. On the other hand, it&rsquo;s exactly what criminals want.<\/p>\n<p>In this section, we&rsquo;re going to look into the questions of &ldquo;<em>What is Monero coin?<\/em>&rdquo;, &ldquo;<em>What is XMR coin?<\/em>&rdquo;, and &ldquo;<em>What does XMR DeFi look like?<\/em>&rdquo;. Understanding this will allow you to see what is Monero used for, and why it&rsquo;s popular among people with malicious intentions as well.<\/p>\n<p><em>Well, let&rsquo;s wait no more and get straight to the point.<\/em><\/p>\n<h2>What is Monero (XMR?)<\/h2>\n<p>When it comes to cryptocurrencies, Monero is the one that&rsquo;s all dressed in camouflage. <strong>It&rsquo;s the coin where anonymity and privacy reign supreme<\/strong>. Similar to <a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin in its decentralized nature, Monero takes anonymity to a whole new level, establishing itself as the go-to choice for those valuing discretion. But to truly answer the question of &ldquo;<em>What is Monero coin?<\/em>&rdquo;, we have to take a look at this project&rsquo;s history.<\/p>\n<p>The origins of Monero trace back to a moment in 2012 with the release of the <strong>CryptoNote whitepaper<\/strong>. Authored by the enigmatic developer known only as <strong>Nicolas van Saberhagen<\/strong>, this cryptocurrency research paper unveiled revolutionary cryptographic techniques and introduced a novel electronic cash concept called \"CryptoNote.\"<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: anonymity and privacy.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-01.jpg/" alt=\"What is Monero coin: anonymity and privacy.\" width=\"1000\" height=\"602\"><\/p>\n<p>Taking a bold leap from theory to reality, <strong><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bytecoin-bcn/">Bytecoin became the first cryptocurrency to implement the CryptoNote protocol<\/strong>. But the story didn't end there. In 2014, Bytecoin's codebase experienced a fork, birthing a brand-new currency known as <strong>Bitmonero<\/strong>. Over time, Bitmonero transformed into the Monero that we know today.<\/p>\n<p>By the way, a fork in crypto refers to the process where a blockchain splits into two separate chains, creating a new version of the original cryptocurrency. That&rsquo;s how Monero was born!<\/p>\n<p>What&rsquo;s interesting about Monero, is the fact that <strong>everything that&rsquo;s Monero-related is at least somehow shrouded in the mist of anonymity<\/strong>. Unlike most conventional cryptocurrencies, Monero has no single founder or CEO at the top of the project. Instead, a core team of developers is responsible for the creation of it.&nbsp;And, no surprises, most of them chose to remain incognito.<\/p>\n<p>Among the few known names is <strong>Riccardo Spagni, known as FluffyPony<\/strong>. For years, he led Monero's development before stepping down in December 2019.<\/p>\n<p>As an open-source endeavor, <strong>Monero relies on the support of its community<\/strong>. Thousands of dedicated individuals worldwide have contributed to the project's growth through <strong>Monero's Community Crowdfunding System (CCS)<\/strong>, ensuring this privacy-oriented cryptocurrency does not fade away because of a sudden lack of resources.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: Monero's Community Crowdfunding System (CCS).\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-02.jpg/" alt=\"What is Monero coin: Monero's Community Crowdfunding System (CCS).\" width=\"1000\" height=\"504\"><\/p>\n<p>But understanding the answer to the question of &ldquo;<em>What is Monero coin?<\/em>&rdquo; requires taking a look at why this coin gained popularity as time passed. And, of course, it all comes down to privacy and how Monero approaches it.<\/p>\n<p>With traditional cryptocurrencies, like Bitcoin, users have public addresses where transactions can be traced back and linked. The recipient's address is exposed to the sender, revealing the number of coins they hold, and all transfers are recorded and made public on the blockchain.<\/p>\n<p>But here's where Monero saw an opportunity and grabbed it. They realized that this is not ideal. <strong>When you transact with Monero, you don't get an all-access pass to the recipient's holdings, even if you have their public address<\/strong>. Monero's transactions are cleverly designed to be unlinkable and untraceable. Each coin sent to a recipient takes a detour through a randomly generated address, tailored exclusively for that transaction.<\/p>\n<p>Unlike traditional blockchains, <strong>Monero's ledger doesn't reveal the true sender and recipient's stealth addresses<\/strong>. The one-time address created for each transaction remains disconnected from the parties' actual addresses, leaving no footsteps for curious online sleuths and detectives to follow. The result? Complete confidentiality for all past and present transactions within the Monero network.<\/p>\n<p><em>Now, let&rsquo;s take a deeper look at how does Monero work, because, as you can see, it&rsquo;s what makes it so different.<\/em><\/p>\n<h2>How Does Monero Do It?<\/h2>\n<p>Monero uses three innovative technological solutions. They&rsquo;re called ring signatures, stealth addresses, and confidential transactions. Here's a brief rundown of each element.<\/p>\n<p><strong>Ring signatures are used to hide the sender's identity<\/strong>. When a transaction occurs, multiple possible senders are mixed together in a \"ring,\" making it impossible to determine which one is the actual sender. It's like a cloak of invisibility for your transaction! But hey, let&rsquo;s use a more real-life example.<\/p>\n<p>Imagine you and your close friends decide to send a surprise gift to someone, but you want to keep it a secret who exactly contributed to the gift. So, each of you write your name on a piece of paper and put it into a hat. Then, one of your friends takes out all the pieces of paper, shuffles them, and randomly picks one piece without looking at it.<\/p>\n<p><strong>The name on the chosen paper becomes the \"signature\" on the gift<\/strong>. Even though everyone contributed, no one knows who specifically gave what, maintaining the surprise and secrecy. Ring signatures work similarly by mixing multiple senders' signatures, making it impossible to tell who exactly sent the transaction.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: ring signatures, stealth addresses, and confidential transactions.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-03.jpg/" alt=\"What is Monero coin: ring signatures, stealth addresses, and confidential transactions.\" width=\"1000\" height=\"487\"><\/p>\n<p><strong>With stealth addresses, the recipient's public address is obscured<\/strong>. Each transaction generates a one-time address for the recipient, keeping their identity hidden from possible external, unrelated onlookers.<\/p>\n<p>Think of stealth addresses as a <strong>temporary forwarding address for your mail<\/strong>. Let's say you're a YouTuber, and you want to open your P.O. Box for the viewers, so they could send you gifts and stuff. Thus, you provide them with a special address that&rsquo;s designated to receive parcels from strangers, but it&rsquo;s not your home address.<\/p>\n<p>By doing so, you remain accessible, yet you manage to keep your actual location hidden, because you don&rsquo;t want to put sensitive personal data out there for anyone. Stealth addresses work similarly by generating <strong>unique, one-time addresses for each transaction<\/strong>, protecting the recipient's real address.<\/p>\n<p><strong>And when it comes to Confidential Transactions, Monero uses them to hide the transaction amount<\/strong>. It employs cryptographic methods to ensure that only the sender and recipient know how much was sent, while outsiders are left in the dark.<\/p>\n<p><img title=\"What is Monero coin: confidential transactions.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-04.jpg/" alt=\"What is Monero coin: confidential transactions.\" width=\"1000\" height=\"584\"><\/p>\n<p>Picture a store where the price tags are covered with scratch-off material. When you buy something, the cashier removes the scratch-off to reveal the price, and you pay the amount. However, other customers in the store can't see the original price, only the final amount you paid.<\/p>\n<p>This way, you can make purchases without revealing the exact price to others. <strong>Confidential transactions work similarly by hiding the exact transaction amounts<\/strong>, so only the sender and receiver know the actual values, while outside observers see encrypted or distorted information.<\/p>\n<p>By combining these privacy features, Monero managed to take anonymity to a whole new level. No wonder it's become a <strong>top choice for privacy-conscious individuals<\/strong> in the crypto world! And, whether we like it or not, that&rsquo;s the reason why headlines like &ldquo;<em>The Criminal Underworld Is Dropping Bitcoin for Another Currency<\/em>&rdquo; started popping up a few years ago.<\/p>\n<h2>What is XMR?<\/h2>\n<p>At this point, we've answered the questions of &ldquo;<em>What is Monero?<\/em>&rdquo; and &ldquo;<em>How does Monero work?<\/em>&rdquo;, but we haven&rsquo;t yet touched upon the question of &ldquo;<em>What is XMR coin?<\/em>&rdquo;. So, let&rsquo;s do that right now, since XMR is inseparable from Monero.<\/p>\n<p>In its very essence, <strong>XMR is the ticker symbol for Monero<\/strong>. Think of XMR as the code name for Monero, just like BTC is for Bitcoin. So, whenever you hear people talking about XMR, they're referring to Monero.<\/p>\n<p>Let&rsquo;s address the <strong>tokenomics of XMR<\/strong>, the <a href=https://www.bitdegree.org/"//crypto//buy-monero-xmr/">Monero token<\/strong><\/a>, so you have a better understanding of how this project looks when it comes to practical matters.<\/p>\n<p>Monero's tokenomics are carefully designed to achieve several key objectives: maintaining scarcity and value appreciation through a <strong>capped supply<\/strong>, incentivizing miners through a <strong>dynamic emission rate and a tail emission mechanism<\/strong>, and ensuring <strong>decentralized mining through ASIC resistance<\/strong>.<\/p>\n<p>As you can see, miners play a role within Monero&rsquo;s ecosystem, because <strong>it runs on a variant of the Proof-of-Work algorithm<\/strong>.<\/p>\n<p><em>To learn more about PoW, be sure to <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-proof-of-stake-vs-proof-of-work/">check out this section<\/a>.<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: deflationary asset.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-05.jpg/" alt=\"What is Monero coin: deflationary asset.\" width=\"1000\" height=\"565\"><\/em><\/p>\n<p>So, the combination of these said features aims to strike a <strong>balance between rewarding early participants and securing the network's long-term sustainability<\/strong>. Monero's approach to tokenomics contributes to its appeal as a privacy-focused cryptocurrency.<\/p>\n<p>The question of Monero's tokenomics begins with the total supply of XMR coins. Similar to Bitcoin, Monero has a capped supply to ensure scarcity and value retention. <strong>The total supply of XMR is capped at approximately 18.4 million coins<\/strong>. This means that once this number is reached, no new XMR coins will be created. The controlled supply makes Monero a <strong>deflationary asset<\/strong>, which may contribute to its potential long-term value appreciation.<\/p>\n<p><strong>Monero's emission rate was designed to ensure a fair distribution of coins over time<\/strong>. In the early days of Monero, the emission rate was higher, gradually decreasing as the network matured. This approach helped incentivize early adopters, including miners, while also ensuring that XMR doesn't flood the market all at once, which could adversely affect its value.<\/p>\n<p>The emission rate decreased smoothly until it eventually ended in 2022, when the last coin was created.<\/p>\n<p>As mentioned previously, Monero runs on a Proof-of-Work consensus mechanism. This means that <strong>it relies on miners<\/strong>. Miners use computational power to validate transactions and create new blocks on the blockchain.<\/p>\n<p>Unlike some other cryptocurrencies, <strong>Monero's PoW algorithm is designed to be ASIC-resistant<\/strong>, meaning it aims to prevent specialized mining hardware from dominating the network. This allows for a more decentralized mining process and wider participation among individual miners.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: tail emission.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-06.jpg/" alt=\"What is Monero coin: tail emission.\" width=\"1000\" height=\"516\"><\/p>\n<p>And, as it&rsquo;s usually the case with PoW blockchains, as miners validate transactions and add blocks to the blockchain, they are <strong>rewarded with newly minted XMR coins<\/strong>. The block reward serves as an incentive for miners to participate in securing the network and maintaining its integrity. However, it's important to note that the <strong>block reward decreases over time due to the dynamic emission rate<\/strong> mentioned earlier.<\/p>\n<p>In addition to the block reward, <strong>miners also earn transaction fees<\/strong> for including transactions in the blocks they mine. Transaction fees act as an additional incentive for miners and help support the network's security and operations. The fees vary depending on the size and urgency of the transaction and serve as a means to prioritize transactions in the blockchain.<\/p>\n<p>There&rsquo;s one more thing about Monero. As I said previously, Monero has a fixed supply, and <strong>it has already reached the point when the last coin is already mined<\/strong>. But there&rsquo;s a twist.<\/p>\n<p>Unlike some cryptocurrencies that have a fixed supply, <strong>Monero has a \"tail emission\" mechanism<\/strong>. This means that even after the maximum supply of XMR is reached, a small block reward continues to be given to miners in perpetuity.<\/p>\n<p>This ensures that <strong>there is always an incentive for miners to secure the network<\/strong>, even when the block reward from newly minted coins becomes negligible. The tail emission also helps maintain a constant level of inflation to encourage circulation and spending of XMR.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>So, by now, it&rsquo;s safe to say that we have touched upon Monero DeFi and got Monero explained. We&rsquo;ve answered the questions of &ldquo;<em>What is Monero coin?<\/em>&rdquo; and &ldquo;<em>How does Monero work?<\/em>&rdquo;. As you can see, when you understand what the Monero meaning is, the questions about <a href=https://www.bitdegree.org/"//crypto//buy-monero-xmr/">XMR become superfluous.<\/p>","definition":"Did you know that ring signatures, stealth addresses, and confidential transactions are the three mechanisms that make Monero private?","status":"published","meta_title":"What is Monero Coin (XMR) and What is It Used For?","meta_description":"What is Monero coin (XMR)? How does Monero work? What is it used for? Find answers to these and many other related questions right here!","meta_keywords":"what is monero coin, how does monero work, what is monero coin, what is xmr coin, what is monero used for, monero token, monero defi, xmr defi, monero meaning, monero explained,","modified_content":"<p>In this section, we&rsquo;re going to take a look at <strong>one of the stealthiest cryptos out there<\/strong>, and answer the questions of &ldquo;<em>What is Monero coin?<\/em>&rdquo; and &ldquo;<em>How does Monero work?<\/em>&rdquo;.<\/p>\n<p>Monero is where &ldquo;Cryptocurrency&rdquo; meets &ldquo;Cryptography.&rdquo; <strong>It&rsquo;s a privacy-focused crypto coin that prioritizes different objectives than your usual crypto assets<\/strong>. By providing a laser-sharp focus on the importance of anonymity, <a href=https://www.bitdegree.org/"//crypto//buy-monero-xmr/">Monero gained momentum and a following of those who have no doubts about the importance of such aspects when it comes to blockchains and cryptocurrencies.<\/p>\n<p>But, by doing so, <strong>Monero found itself in the middle of a crossfire<\/strong>. On the one hand, highlighting the importance of anonymity sounds like a non-compromising dedication to protecting user privacy and their data. On the other hand, it&rsquo;s exactly what criminals want.<\/p>\n<p>In this section, we&rsquo;re going to look into the questions of &ldquo;<em>What is Monero coin?<\/em>&rdquo;, &ldquo;<em>What is XMR coin?<\/em>&rdquo;, and &ldquo;<em>What does XMR DeFi look like?<\/em>&rdquo;. Understanding this will allow you to see what is Monero used for, and why it&rsquo;s popular among people with malicious intentions as well.<\/p>\n<p><em>Well, let&rsquo;s wait no more and get straight to the point.<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"What is Monero? XMR Animated Explainer\"\n title=\"What is Monero? XMR Animated Explainer\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: Monero: Where Cryptocurrency Meets Cryptography<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"Monero: Where Cryptocurrency Meets Cryptography\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"OAFAzBoFHAc\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">What is Monero? XMR Animated Explainer<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-monero-xmr-animated-explainer.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-monero-xmr-animated-explainer.jpg?tr=w-760 1000w\"\n alt=\"What is Monero? XMR Animated Explainer\"\n title=\"What is Monero? XMR Animated Explainer\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"What is Monero? XMR Animated Explainer\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What is Monero (XMR?)<\/h2>\n<p>When it comes to cryptocurrencies, Monero is the one that&rsquo;s all dressed in camouflage. <strong>It&rsquo;s the coin where anonymity and privacy reign supreme<\/strong>. Similar to <a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin in its decentralized nature, Monero takes anonymity to a whole new level, establishing itself as the go-to choice for those valuing discretion. But to truly answer the question of &ldquo;<em>What is Monero coin?<\/em>&rdquo;, we have to take a look at this project&rsquo;s history.<\/p>\n<p>The origins of Monero trace back to a moment in 2012 with the release of the <strong>CryptoNote whitepaper<\/strong>. Authored by the enigmatic developer known only as <strong>Nicolas van Saberhagen<\/strong>, this cryptocurrency research paper unveiled revolutionary cryptographic techniques and introduced a novel electronic cash concept called \"CryptoNote.\"<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: anonymity and privacy.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-01.jpg/" alt=\"What is Monero coin: anonymity and privacy.\" width=\"1000\" height=\"602\"><\/p>\n<p>Taking a bold leap from theory to reality, <strong><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bytecoin-bcn/">Bytecoin became the first cryptocurrency to implement the CryptoNote protocol<\/strong>. But the story didn't end there. In 2014, Bytecoin's codebase experienced a fork, birthing a brand-new currency known as <strong>Bitmonero<\/strong>. Over time, Bitmonero transformed into the Monero that we know today.<\/p>\n<p>By the way, a fork in crypto refers to the process where a blockchain splits into two separate chains, creating a new version of the original cryptocurrency. That&rsquo;s how Monero was born!<\/p>\n<p>What&rsquo;s interesting about Monero, is the fact that <strong>everything that&rsquo;s Monero-related is at least somehow shrouded in the mist of anonymity<\/strong>. Unlike most conventional cryptocurrencies, Monero has no single founder or CEO at the top of the project. Instead, a core team of developers is responsible for the creation of it.&nbsp;And, no surprises, most of them chose to remain incognito.<\/p>\n<p>Among the few known names is <strong>Riccardo Spagni, known as FluffyPony<\/strong>. For years, he led Monero's development before stepping down in December 2019.<\/p>\n<p>As an open-source endeavor, <strong>Monero relies on the support of its community<\/strong>. Thousands of dedicated individuals worldwide have contributed to the project's growth through <strong>Monero's Community Crowdfunding System (CCS)<\/strong>, ensuring this privacy-oriented cryptocurrency does not fade away because of a sudden lack of resources.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: Monero's Community Crowdfunding System (CCS).\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-02.jpg/" alt=\"What is Monero coin: Monero's Community Crowdfunding System (CCS).\" width=\"1000\" height=\"504\"><\/p>\n<p>But understanding the answer to the question of &ldquo;<em>What is Monero coin?<\/em>&rdquo; requires taking a look at why this coin gained popularity as time passed. And, of course, it all comes down to privacy and how Monero approaches it.<\/p>\n<p>With traditional cryptocurrencies, like Bitcoin, users have public addresses where transactions can be traced back and linked. The recipient's address is exposed to the sender, revealing the number of coins they hold, and all transfers are recorded and made public on the blockchain.<\/p>\n<p>But here's where Monero saw an opportunity and grabbed it. They realized that this is not ideal. <strong>When you transact with Monero, you don't get an all-access pass to the recipient's holdings, even if you have their public address<\/strong>. Monero's transactions are cleverly designed to be unlinkable and untraceable. Each coin sent to a recipient takes a detour through a randomly generated address, tailored exclusively for that transaction.<\/p>\n<p>Unlike traditional blockchains, <strong>Monero's ledger doesn't reveal the true sender and recipient's stealth addresses<\/strong>. The one-time address created for each transaction remains disconnected from the parties' actual addresses, leaving no footsteps for curious online sleuths and detectives to follow. The result? Complete confidentiality for all past and present transactions within the Monero network.<\/p>\n<p><em>Now, let&rsquo;s take a deeper look at how does Monero work, because, as you can see, it&rsquo;s what makes it so different.<\/em><\/p>\n<h2>How Does Monero Do It?<\/h2>\n<p>Monero uses three innovative technological solutions. They&rsquo;re called ring signatures, stealth addresses, and confidential transactions. Here's a brief rundown of each element.<\/p>\n<p><strong>Ring signatures are used to hide the sender's identity<\/strong>. When a transaction occurs, multiple possible senders are mixed together in a \"ring,\" making it impossible to determine which one is the actual sender. It's like a cloak of invisibility for your transaction! But hey, let&rsquo;s use a more real-life example.<\/p>\n<p>Imagine you and your close friends decide to send a surprise gift to someone, but you want to keep it a secret who exactly contributed to the gift. So, each of you write your name on a piece of paper and put it into a hat. Then, one of your friends takes out all the pieces of paper, shuffles them, and randomly picks one piece without looking at it.<\/p>\n<p><strong>The name on the chosen paper becomes the \"signature\" on the gift<\/strong>. Even though everyone contributed, no one knows who specifically gave what, maintaining the surprise and secrecy. Ring signatures work similarly by mixing multiple senders' signatures, making it impossible to tell who exactly sent the transaction.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: ring signatures, stealth addresses, and confidential transactions.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-03.jpg/" alt=\"What is Monero coin: ring signatures, stealth addresses, and confidential transactions.\" width=\"1000\" height=\"487\"><\/p>\n<p><strong>With stealth addresses, the recipient's public address is obscured<\/strong>. Each transaction generates a one-time address for the recipient, keeping their identity hidden from possible external, unrelated onlookers.<\/p>\n<p>Think of stealth addresses as a <strong>temporary forwarding address for your mail<\/strong>. Let's say you're a YouTuber, and you want to open your P.O. Box for the viewers, so they could send you gifts and stuff. Thus, you provide them with a special address that&rsquo;s designated to receive parcels from strangers, but it&rsquo;s not your home address.<\/p>\n<p>By doing so, you remain accessible, yet you manage to keep your actual location hidden, because you don&rsquo;t want to put sensitive personal data out there for anyone. Stealth addresses work similarly by generating <strong>unique, one-time addresses for each transaction<\/strong>, protecting the recipient's real address.<\/p>\n<p><strong>And when it comes to Confidential Transactions, Monero uses them to hide the transaction amount<\/strong>. It employs cryptographic methods to ensure that only the sender and recipient know how much was sent, while outsiders are left in the dark.<\/p>\n<p><img title=\"What is Monero coin: confidential transactions.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-04.jpg/" alt=\"What is Monero coin: confidential transactions.\" width=\"1000\" height=\"584\"><\/p>\n<p>Picture a store where the price tags are covered with scratch-off material. When you buy something, the cashier removes the scratch-off to reveal the price, and you pay the amount. However, other customers in the store can't see the original price, only the final amount you paid.<\/p>\n<p>This way, you can make purchases without revealing the exact price to others. <strong>Confidential transactions work similarly by hiding the exact transaction amounts<\/strong>, so only the sender and receiver know the actual values, while outside observers see encrypted or distorted information.<\/p>\n<p>By combining these privacy features, Monero managed to take anonymity to a whole new level. No wonder it's become a <strong>top choice for privacy-conscious individuals<\/strong> in the crypto world! And, whether we like it or not, that&rsquo;s the reason why headlines like &ldquo;<em>The Criminal Underworld Is Dropping Bitcoin for Another Currency<\/em>&rdquo; started popping up a few years ago.<\/p>\n<h2>What is XMR?<\/h2>\n<p>At this point, we've answered the questions of &ldquo;<em>What is Monero?<\/em>&rdquo; and &ldquo;<em>How does Monero work?<\/em>&rdquo;, but we haven&rsquo;t yet touched upon the question of &ldquo;<em>What is XMR coin?<\/em>&rdquo;. So, let&rsquo;s do that right now, since XMR is inseparable from Monero.<\/p>\n<p>In its very essence, <strong>XMR is the ticker symbol for Monero<\/strong>. Think of XMR as the code name for Monero, just like BTC is for Bitcoin. So, whenever you hear people talking about XMR, they're referring to Monero.<\/p>\n<p>Let&rsquo;s address the <strong>tokenomics of XMR<\/strong>, the <a href=https://www.bitdegree.org/"//crypto//buy-monero-xmr/">Monero token<\/strong><\/a>, so you have a better understanding of how this project looks when it comes to practical matters.<\/p>\n<p>Monero's tokenomics are carefully designed to achieve several key objectives: maintaining scarcity and value appreciation through a <strong>capped supply<\/strong>, incentivizing miners through a <strong>dynamic emission rate and a tail emission mechanism<\/strong>, and ensuring <strong>decentralized mining through ASIC resistance<\/strong>.<\/p>\n<p>As you can see, miners play a role within Monero&rsquo;s ecosystem, because <strong>it runs on a variant of the Proof-of-Work algorithm<\/strong>.<\/p>\n<p><em>To learn more about PoW, be sure to <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-proof-of-stake-vs-proof-of-work/">check out this section<\/a>.<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: deflationary asset.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-05.jpg/" alt=\"What is Monero coin: deflationary asset.\" width=\"1000\" height=\"565\"><\/em><\/p>\n<p>So, the combination of these said features aims to strike a <strong>balance between rewarding early participants and securing the network's long-term sustainability<\/strong>. Monero's approach to tokenomics contributes to its appeal as a privacy-focused cryptocurrency.<\/p>\n<p>The question of Monero's tokenomics begins with the total supply of XMR coins. Similar to Bitcoin, Monero has a capped supply to ensure scarcity and value retention. <strong>The total supply of XMR is capped at approximately 18.4 million coins<\/strong>. This means that once this number is reached, no new XMR coins will be created. The controlled supply makes Monero a <strong>deflationary asset<\/strong>, which may contribute to its potential long-term value appreciation.<\/p>\n<p><strong>Monero's emission rate was designed to ensure a fair distribution of coins over time<\/strong>. In the early days of Monero, the emission rate was higher, gradually decreasing as the network matured. This approach helped incentivize early adopters, including miners, while also ensuring that XMR doesn't flood the market all at once, which could adversely affect its value.<\/p>\n<p>The emission rate decreased smoothly until it eventually ended in 2022, when the last coin was created.<\/p>\n<p>As mentioned previously, Monero runs on a Proof-of-Work consensus mechanism. This means that <strong>it relies on miners<\/strong>. Miners use computational power to validate transactions and create new blocks on the blockchain.<\/p>\n<p>Unlike some other cryptocurrencies, <strong>Monero's PoW algorithm is designed to be ASIC-resistant<\/strong>, meaning it aims to prevent specialized mining hardware from dominating the network. This allows for a more decentralized mining process and wider participation among individual miners.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Monero coin: tail emission.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-monero-coin-06.jpg/" alt=\"What is Monero coin: tail emission.\" width=\"1000\" height=\"516\"><\/p>\n<p>And, as it&rsquo;s usually the case with PoW blockchains, as miners validate transactions and add blocks to the blockchain, they are <strong>rewarded with newly minted XMR coins<\/strong>. The block reward serves as an incentive for miners to participate in securing the network and maintaining its integrity. However, it's important to note that the <strong>block reward decreases over time due to the dynamic emission rate<\/strong> mentioned earlier.<\/p>\n<p>In addition to the block reward, <strong>miners also earn transaction fees<\/strong> for including transactions in the blocks they mine. Transaction fees act as an additional incentive for miners and help support the network's security and operations. The fees vary depending on the size and urgency of the transaction and serve as a means to prioritize transactions in the blockchain.<\/p>\n<p>There&rsquo;s one more thing about Monero. As I said previously, Monero has a fixed supply, and <strong>it has already reached the point when the last coin is already mined<\/strong>. But there&rsquo;s a twist.<\/p>\n<p>Unlike some cryptocurrencies that have a fixed supply, <strong>Monero has a \"tail emission\" mechanism<\/strong>. This means that even after the maximum supply of XMR is reached, a small block reward continues to be given to miners in perpetuity.<\/p>\n<p>This ensures that <strong>there is always an incentive for miners to secure the network<\/strong>, even when the block reward from newly minted coins becomes negligible. The tail emission also helps maintain a constant level of inflation to encourage circulation and spending of XMR.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>So, by now, it&rsquo;s safe to say that we have touched upon Monero DeFi and got Monero explained. We&rsquo;ve answered the questions of &ldquo;<em>What is Monero coin?<\/em>&rdquo; and &ldquo;<em>How does Monero work?<\/em>&rdquo;. As you can see, when you understand what the Monero meaning is, the questions about <a href=https://www.bitdegree.org/"//crypto//buy-monero-xmr/">XMR become superfluous.<\/p>","youtube_video":{"id":116,"channel_id":1,"sort":12,"video_title":"What is Monero? XMR Animated Explainer","description":"What is Monero coin in crypto?\n\nMonero is a project that you\u2019ll definitely come across, in your crypto journey. However, it\u2019s also one that\u2019s shrouded in a lot of mystery and speculation. Monero is also very two-sided - on the one hand, it features some industry-leading functionality. On the other hand, this creates potential for it to be used for illicit activities.\n\nIn this video, I\u2019ll tell you all about what is Monero coin (XMR), and what this project is all about, in general. You will learn what makes Monero so special, and why the unique functionality of this project is often viewed as both a blessing and a curse.\n\nDo you hold any Monero? Have you heard about the project before? Share your thoughts, in the comments section below!\n\nVideo Time Table:\n\n0:00 Introduction to What is Monero Coin?\n1:08 What is Monero?\n4:10 How Does Monero Work?\n6:48 What is XMR?\n10:29 Wrap-up: What is Monero & XMR?\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#Monero #XMR #WhatisMonero","video_id":"OAFAzBoFHAc","duration":676,"view_count":167,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-monero-xmr-animated-explainer.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2023-09-01T14:40:37.000000Z","created_at":"2023-09-01T23:00:10.000000Z","updated_at":"2024-01-09T23:00:03.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :model="{"id":619,"chapter_id":2,"order":20,"featured_image_id":null,"youtube_video_id":126,"author_id":4,"created_at":"2023-09-27T13:53:18.000000Z","updated_at":"2023-10-09T13:08:36.000000Z","slug":"what-is-ripple-xrp","title":"Is Ripple \"it\" When it Comes to Cross-Border Transactions?","content":"<p>In this section, we&rsquo;re going to talk about what is Ripple &amp; <strong><a href=https://www.bitdegree.org/"//crypto//buy-ripple-xrp/">XRP, and what&rsquo;s the difference between the two!<\/p>\n<p>Ripple is a name that <strong>has been causing ripples in the industry for a long time<\/strong>. It&rsquo;s a company that&rsquo;s behind not only one of the most popular cryptocurrencies on the market, but also one that&rsquo;s facing the regulatory authorities in the most intense manner, to date. You could even say that the future of crypto, in some ways, relies heavily on Ripple.<\/p>\n<p>To understand what&rsquo;s at stake, it&rsquo;s important to take a deep dive into <strong>what does Ripple offer<\/strong> to the crypto community, <strong>how does their project stand out<\/strong>, and, most importantly, <strong>how and why do people at Ripple refuse to agree with the US regulatory authorities<\/strong> about how cryptocurrencies are viewed.<\/p>\n<p>o, in this section, we&rsquo;re going to answer such questions as &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;, &ldquo;<em>What is XRP used for?<\/em>&rdquo;, and what conclusions can you draw if you take a look at it from the &ldquo;<em>XRP vs Bitcoin<\/em>&rdquo; perspective. It&rsquo;s a household name, and you cannot understand the contemporary crypto landscape without understanding the situation surrounding Ripple and XRP.<\/p>\n<p><em>Let&rsquo;s see what it is all about!<\/em><\/p>\n<h2>What is Ripple?<\/h2>\n<p>To put it very simply, the answer to &ldquo;<em>What is Ripple crypto?<\/em>&rdquo; would sound something like this: <strong>a <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">blockchain-based technology and cryptocurrency company with a focus on revolutionizing cross-border payments<\/strong>. These &ldquo;cross-border payments&rdquo; are exactly what they sound like - money transfers that take place between the parties from different countries, and that are settled with the help of blockchain technology.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): cross-border payments.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-01.jpg/" alt=\"What is Ripple (XRP): cross-border payments.\" width=\"1000\" height=\"567\"><\/p>\n<p>So, Ripple offers solutions to financial institutions to <strong>enable faster, more cost-effective and transparent international transactions<\/strong>. Now, to get a full picture, it&rsquo;s important to address the question, &ldquo;<em>What is XRP crypto?<\/em>&rdquo; XRP is Ripple's native cryptocurrency, and it serves as a bridge currency to facilitate these transactions.<\/p>\n<p>But that&rsquo;s only the surface-level answer to these questions. In order to fully get the picture of what is XRP crypto, and what role it plays in the whole crypto ecosystem, we have to zoom out and take a look at the entire <strong>Ripple timeline<\/strong>, what challenges has this company faced, and what milestones has it achieved.<\/p>\n<h2>Ripple, a Timeline<\/h2>\n<p>So, <strong>Ripple&rsquo;s story began in 2004<\/strong> when Ryan Fugger created <strong>RipplePay<\/strong>, an early iteration that laid the groundwork for what would later become the Ripple we know today. Fugger's concept aimed to establish a decentralized digital currency system, sparking the initial inspiration for the project.<\/p>\n<p>Fast forward to 2011, and <strong>RipplePay caught the attention of Jed McCaleb<\/strong>, a programmer and entrepreneur with a vision to create a digital currency solution that seamlessly integrates with traditional finance.&nbsp;In 2012, <strong>McCaleb joined forces with Chris Larsen<\/strong>, a fintech veteran, to co-found OpenCoin.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): Ryan Fugger and Jed McCaleb.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-02-v1.jpg/" alt=\"What is Ripple (XRP): Ryan Fugger and Jed McCaleb.\" width=\"1000\" height=\"549\"><\/p>\n<p>Chris Larsen and Jed McCaleb recognized that the global financial system was ripe for disruption, and that blockchain technology held the potential to revolutionize the way value was transferred and financial transactions were conducted.<\/p>\n<p>Fueled by this conviction, they embarked on a journey to create a solution that would <strong>bridge the gap between the existing financial infrastructure and the emerging possibilities of blockchain tech<\/strong>.<\/p>\n<p>Their mission was to develop a <strong>digital payment protocol that could redefine the way money moves globally<\/strong>. OpenCoin's evolution led to the introduction of the Ripple protocol, which aimed to streamline cross-border transactions using blockchain technology. With the protocol came the birth of <a href=https://www.bitdegree.org/"//crypto//buy-ripple-xrp/">XRP, Ripple's native cryptocurrency, designed to facilitate fast and cost-effective international money transfers.<\/p>\n<p>We&rsquo;re going to get into specifics of XRP and the way Ripple functions in a minute. But before doing so, let&rsquo;s finish the overview of Ripple's journey.<\/p>\n<p>So, the years that followed saw the company expressing a strategic focus on forming partnerships with traditional financial institutions. <strong>In 2014, Ripple began collaborating with industry giants like American Express or Standard Chartered<\/strong>, aiming to leverage its technology for more efficient global transactions. As these partnerships took shape, Ripple's role in the financial landscape began to solidify.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): Ripple journey in 2014.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-03.jpg/" alt=\"What is Ripple (XRP): Ripple journey in 2014.\" width=\"1000\" height=\"601\"><\/p>\n<p>However, Ripple's journey was not without its hurdles. <strong>Regulatory uncertainties<\/strong> surrounding the classification of cryptocurrencies posed quite a challenge. In 2018, debates emerged about whether XRP could be classified as a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-security/">security or <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-utility-token/">utility token<\/strong><\/a>.<\/p>\n<p>The debate intensified as the cryptocurrency market experienced rapid growth and volatility. Amid these challenges, Ripple introduced the <strong>Interledger Protocol (ILP)<\/strong>, a groundbreaking initiative to facilitate seamless transactions across various payment networks.<\/p>\n<p>The legal landscape became even more complex in 2020 when the <strong><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-securities-and-exchange-commission-sec/">U.S. Securities and Exchange Commission (SEC)<\/a> filed a lawsuit against Ripple<\/strong>. The lawsuit alleged that the sale of XRP constituted an unregistered securities offering. Ripple responded by firmly asserting its position that XRP is not a security and defending its actions.<\/p>\n<p>This legal battle raised pivotal questions about the regulatory classification of cryptocurrencies and their implications for the industry.<\/p>\n<p>We&rsquo;re going to get into the specifics of the infamous SEC vs Ripple case at the end of this section, because this isn&rsquo;t just a simple legal question. <strong>It&rsquo;s a battle that may redefine the future of crypto<\/strong>.<\/p>\n<h2>How Does Ripple Work?<\/h2>\n<p>Now, as I&rsquo;ve already mentioned, one of the key challenges that Ripple sought to overcome was <strong>the sluggishness of cross-border transactions<\/strong>. Traditional methods of sending money across borders were characterized by lengthy processing times, intermediaries, and high costs. This created a significant barrier to businesses and individuals alike, making things run slower than they could.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): lengthy processing times, intermediaries, and high costs.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-04.jpg/" alt=\"What is Ripple (XRP): lengthy processing times, intermediaries, and high costs.\" width=\"1000\" height=\"595\"><\/p>\n<p>Ripple's solution to this challenge came in the form of its <strong>innovative payment protocol and digital currency, XRP<\/strong>. Ripple introduced a network that enabled real-time, cross-border transactions with reduced costs and enhanced efficiency. XRP played a pivotal role in facilitating these transactions by serving as a bridge currency that could be easily converted to various fiat currencies.<\/p>\n<p>But to continue answering the question of &ldquo;<em>What is Ripple cryptocurrency?&rdquo;<\/em>, let's delve into <strong>how Ripple works<\/strong> and unveil the mechanics behind their products.<\/p>\n<p>At the core of Ripple's operation lies <strong>the Ripple Protocol<\/strong>, which serves as the technological foundation. This protocol employs a unique consensus mechanism that sets it apart from other blockchain networks. Instead of energy-intensive <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-mining/">mining, Ripple employs a consensus algorithm known as the <strong>Ripple Protocol Consensus Algorithm (RPCA)<\/strong>.<\/p>\n<p>This mechanism enables the network to reach consensus without relying on <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-proof-of-stake-vs-proof-of-work/">Proof-of-Work (PoW) or Proof-of-Stake (PoS)<\/strong><\/a> methods, making it faster and more energy-efficient.<\/p>\n<p>The second ingredient that&rsquo;s partially accountable for Ripple&rsquo;s success is <strong>Ripple's distributed ledger, also known as the XRP Ledger<\/strong>. This ledger doesn't just store transactions - it records a wide range of data, including offers to buy or sell assets and even <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-are-smart-contracts/">smart contracts<\/strong><\/a>.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): Ripple's Distributed Ledger.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-05.jpg/" alt=\"What is Ripple (XRP): Ripple's Distributed Ledger.\" width=\"1000\" height=\"570\"><\/p>\n<p>But here's the twist: <strong>transactions on the XRP Ledger aren't grouped into blocks like traditional blockchains<\/strong>. Instead, they're individually validated as they occur, resulting in near-instant transaction confirmation.<\/p>\n<p>That being said, we also have to talk about <strong>RippleNet<\/strong>. Imagine a digital highway connecting financial institutions across the globe. That's RippleNet. It's a <strong>network of banks, payment providers, and other financial institutions<\/strong> that facilitates seamless cross-border transactions.<\/p>\n<p>RippleNet's suite of tools, including <strong>xCurrent and On-Demand Liquidity (ODL)<\/strong>, empowers participants to send money across borders with speed and transparency that traditional systems could only dream of.<\/p>\n<p>All of these features fit under the category of <strong>Liquidity Solutions<\/strong> because that&rsquo;s essentially what Ripple aimed to improve. To rephrase it in a simple way, think of liquidity as the <strong>speed at which you can turn stuff into cash<\/strong>. It's like having a vending machine for your assets &ndash; the easier and faster you can get your hands on the cold, hard cash, the more liquid your assets are. So, apply this definition to cross-border payments, and you have liquidity solutions that work.<\/p>\n<p><strong>Picture this<\/strong>: financial institutions need liquidity in foreign markets to process transactions. Traditionally, this required pre-funded accounts in each country, tying up capital. But the already-mentioned On-Demand Liquidity flips the script.<\/p>\n<p><strong>It leverages XRP to provide instant liquidity on demand<\/strong>. Financial institutions can convert one currency into XRP, send it across borders in a flash, and then convert it back into the local currency on the other end. Voil&agrave;, instant and affordable liquidity without the hassle that was taken for granted before introducing these novelties.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): multi-signature transactions and conditional payments.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-06.jpg/" alt=\"What is Ripple (XRP): multi-signature transactions and conditional payments.\" width=\"1000\" height=\"584\"><\/p>\n<p>At this point, the question of &ldquo;<em>What is XRP cryptocurrency?<\/em>&rdquo; must be addressed. <strong>XRP is the digital glue that holds Ripple's vision together<\/strong>. It serves as a bridge asset, offering a means of transferring value between different currencies. Whether it's converting from dollars to euros or yen to pesos, XRP acts as the intermediary, enabling cost-effective and efficient cross-border transactions.<\/p>\n<p>But Ripple's XRP Ledger isn't just a one-trick tool. <strong>It supports smart contracts and escrows too<\/strong>. Smart contracts enable automated, self-executing agreements without intermediaries, revolutionizing business processes. Escrows, on the other hand, provide a secure way to hold funds until predefined conditions are met. Whether it's complex multi-signature transactions or conditional payments, the XRP Ledger has it covered.<\/p>\n<p>Now, all of this pretty much sums up what made Ripple kind of a big deal, and answers the question of &ldquo;<em>What is XRP used for?<\/em>&rdquo; Yet, we&rsquo;re in crypto, which means that we have to take a better look at XRP, since, when it comes to trading, the XRP cryptocurrency is where it&rsquo;s all at.<\/p>\n<h2>XRP Tokenomics<\/h2>\n<p>Created back in 2012, when <strong>Ripple was known as OpenCoin<\/strong>, <a href=https://www.bitdegree.org/"//crypto//buy-ripple-xrp/">XRP's purpose wasn't just to play the role of another cryptocurrency. It's not mined like <a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin; instead, <strong>all the 100 billion XRP coins were created at once<\/strong>, which means that the concept of mining farms is foreign when it comes to Ripple.<\/p>\n<p><em>By the way, to understand what these mining farms are all about, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-crypto-mining/">check out this section<\/strong><\/a>.<\/em><\/p>\n<p>Okay, back to answering the question of &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;<\/p>\n<p><strong>XRP had an initial supply of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//cryptocurrency-prices//xrp-xrp-price/">100 billion tokens<\/a><\/strong>. But as of now, the circulating supply is around 46 billion. <em>Why the shrink?<\/em> Ripple decided to lock up a chunk of those XRP tokens in escrow accounts to ensure a <strong>controlled release into the market<\/strong>&nbsp;to keep inflation levels low. Every month, a portion of these escrowed tokens gets released, and any unused ones are sent back to the backroom for safekeeping.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP):\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-07.jpg/" alt=\"What is Ripple (XRP):\" width=\"1000\" height=\"513\"><\/p>\n<p>When it comes to XRP&rsquo;s importance in the Ripple ecosystem, it plays multiple roles: <strong>as a bridge currency for cross-border payments, a tool to help secure transactions, and a way to help fight spam<\/strong>.<\/p>\n<p>Now, there's this term called \"<em>burning<\/em>\". When transactions happen on the Ripple network, a small amount of XRP gets destroyed. This reduces the total supply of XRP over time, giving it a hint of <strong>deflationary nature<\/strong> to the cryptocurrency.<\/p>\n<p>It&rsquo;s thanks to Ripple&rsquo;s active involvement in looking for serious, long-term partnerships, that XRP didn&rsquo;t tank and continued to stay relevant as one of the top cryptos in the market. But like any successful story, <strong>XRP has its share of drama<\/strong>. The question of whether XRP is a security or not has sparked legal, seemingly never-ending disputes with regulators.&nbsp;<\/p>\n<h2>Ripple vs SEC<\/h2>\n<p>When trying to answer the question of &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;, you often end up with the finding that <strong>Ripple is at the avant-garde of the crypto industry&rsquo;s battle with the regulatory authorities about the official, legal status of many cryptocurrencies<\/strong>. Here&rsquo;s the gist of this landmark case.<\/p>\n<p><strong>The SEC filed a lawsuit in 2020<\/strong>, alleging Ripple's unregistered XRP sales during an initial public offering (IPO) back in 2013 when the company founders were raising funds.&nbsp;The lawsuit accused Ripple&rsquo;s co-founders of <strong>unregistered XRP transactions worth $600 million<\/strong>. The SEC claims that XRP's sale funded Ripple's operations and enriched its management.<\/p>\n<p>The lawsuit challenges whether XRP should be considered a security. Unlike Bitcoin, the SEC believes XRP fits this classification due to its funding of Ripple's platform. The Howey test, a legal precedent, evaluates if an investment contract is a security. The SEC claims XRP satisfies this test's requirements, as investors lack control over XRP's profit.<\/p>\n<p>In the legal battle, <strong>Ripple opted to fight rather than settle<\/strong>, arguing the SEC's bias. Ripple questioned the SEC's classification of XRP while exempting <a href=https://www.bitdegree.org/"//crypto//buy-ethereum-eth/">Ethereum./n

In a landmark ruling, <strong>Judge Analisa Torres partially favored Ripple<\/strong>, stating that only the XRP sales to hedge funds and institutional buyers were unregistered securities offerings. However, the case continues, with Ripple possibly appealing the decision or seeking a settlement.<\/p>\n<p>The outcome holds implications for crypto regulations and may shape future regulatory proceedings against crypto firms. Therefore, if things go in Ripple&rsquo;s favor&hellip; <strong>the future of crypto is surely going to be interesting<\/strong>. So, it&rsquo;s safe to say that Ripple&rsquo;s success is not only something that XRP holders are interested in.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>No, we have reached the point where it&rsquo;s time to wrap it up. We have answered such questions as &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;, &ldquo;<em>What is XRP cryptocurrency?<\/em>&rdquo;, &ldquo;<em>What is XRP used for?<\/em>&rdquo;, and ran through the overall story of Ripple, their product and their legal battles with regulatory authorities.<\/p>\n<p>If you want to find out more about other popular crypto projects, <strong>make sure to check out other sections in this Crypto 101 Handbook<\/strong>.<\/p>","definition":"Did you know that transactions on the XRP Ledger aren't grouped into blocks like on traditional blockchains?","status":"published","meta_title":"What is Ripple (XRP)? History, Purpose, and More","meta_description":"If you want to figure out what is Ripple (XRP), what is XRP used for, or how XRP VS Bitcoin comparison would unfold, check out this article!","meta_keywords":"what is ripple xrp, what is xrp crypto, what is ripple crypto, what is ripple cryptocurrency, what is xrp cryptocurrency, what is xrp used for, xrp vs bitcoin,","modified_content":"<p>In this section, we&rsquo;re going to talk about what is Ripple &amp; <strong><a href=https://www.bitdegree.org/"//crypto//buy-ripple-xrp/">XRP, and what&rsquo;s the difference between the two!<\/p>\n<p>Ripple is a name that <strong>has been causing ripples in the industry for a long time<\/strong>. It&rsquo;s a company that&rsquo;s behind not only one of the most popular cryptocurrencies on the market, but also one that&rsquo;s facing the regulatory authorities in the most intense manner, to date. You could even say that the future of crypto, in some ways, relies heavily on Ripple.<\/p>\n<p>To understand what&rsquo;s at stake, it&rsquo;s important to take a deep dive into <strong>what does Ripple offer<\/strong> to the crypto community, <strong>how does their project stand out<\/strong>, and, most importantly, <strong>how and why do people at Ripple refuse to agree with the US regulatory authorities<\/strong> about how cryptocurrencies are viewed.<\/p>\n<p>o, in this section, we&rsquo;re going to answer such questions as &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;, &ldquo;<em>What is XRP used for?<\/em>&rdquo;, and what conclusions can you draw if you take a look at it from the &ldquo;<em>XRP vs Bitcoin<\/em>&rdquo; perspective. It&rsquo;s a household name, and you cannot understand the contemporary crypto landscape without understanding the situation surrounding Ripple and XRP.<\/p>\n<p><em>Let&rsquo;s see what it is all about!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"What is Ripple? Beginner-Friendly XRP Explainer (Animated)\"\n title=\"What is Ripple? Beginner-Friendly XRP Explainer (Animated)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: Is Ripple \"it\" When it Comes to Cross-Border Transactions?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"Is Ripple \"it\" When it Comes to Cross-Border Transactions?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"G3QrL3Gp2s0\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">What is Ripple? Beginner-Friendly XRP Explainer (Animated)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-ripple-beginner-friendly-xrp-explainer-animated.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-ripple-beginner-friendly-xrp-explainer-animated.jpg?tr=w-760 1000w\"\n alt=\"What is Ripple? Beginner-Friendly XRP Explainer (Animated)\"\n title=\"What is Ripple? Beginner-Friendly XRP Explainer (Animated)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"What is Ripple? Beginner-Friendly XRP Explainer (Animated)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What is Ripple?<\/h2>\n<p>To put it very simply, the answer to &ldquo;<em>What is Ripple crypto?<\/em>&rdquo; would sound something like this: <strong>a <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">blockchain-based technology and cryptocurrency company with a focus on revolutionizing cross-border payments<\/strong>. These &ldquo;cross-border payments&rdquo; are exactly what they sound like - money transfers that take place between the parties from different countries, and that are settled with the help of blockchain technology.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): cross-border payments.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-01.jpg/" alt=\"What is Ripple (XRP): cross-border payments.\" width=\"1000\" height=\"567\"><\/p>\n<p>So, Ripple offers solutions to financial institutions to <strong>enable faster, more cost-effective and transparent international transactions<\/strong>. Now, to get a full picture, it&rsquo;s important to address the question, &ldquo;<em>What is XRP crypto?<\/em>&rdquo; XRP is Ripple's native cryptocurrency, and it serves as a bridge currency to facilitate these transactions.<\/p>\n<p>But that&rsquo;s only the surface-level answer to these questions. In order to fully get the picture of what is XRP crypto, and what role it plays in the whole crypto ecosystem, we have to zoom out and take a look at the entire <strong>Ripple timeline<\/strong>, what challenges has this company faced, and what milestones has it achieved.<\/p>\n<h2>Ripple, a Timeline<\/h2>\n<p>So, <strong>Ripple&rsquo;s story began in 2004<\/strong> when Ryan Fugger created <strong>RipplePay<\/strong>, an early iteration that laid the groundwork for what would later become the Ripple we know today. Fugger's concept aimed to establish a decentralized digital currency system, sparking the initial inspiration for the project.<\/p>\n<p>Fast forward to 2011, and <strong>RipplePay caught the attention of Jed McCaleb<\/strong>, a programmer and entrepreneur with a vision to create a digital currency solution that seamlessly integrates with traditional finance.&nbsp;In 2012, <strong>McCaleb joined forces with Chris Larsen<\/strong>, a fintech veteran, to co-found OpenCoin.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): Ryan Fugger and Jed McCaleb.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-02-v1.jpg/" alt=\"What is Ripple (XRP): Ryan Fugger and Jed McCaleb.\" width=\"1000\" height=\"549\"><\/p>\n<p>Chris Larsen and Jed McCaleb recognized that the global financial system was ripe for disruption, and that blockchain technology held the potential to revolutionize the way value was transferred and financial transactions were conducted.<\/p>\n<p>Fueled by this conviction, they embarked on a journey to create a solution that would <strong>bridge the gap between the existing financial infrastructure and the emerging possibilities of blockchain tech<\/strong>.<\/p>\n<p>Their mission was to develop a <strong>digital payment protocol that could redefine the way money moves globally<\/strong>. OpenCoin's evolution led to the introduction of the Ripple protocol, which aimed to streamline cross-border transactions using blockchain technology. With the protocol came the birth of <a href=https://www.bitdegree.org/"//crypto//buy-ripple-xrp/">XRP, Ripple's native cryptocurrency, designed to facilitate fast and cost-effective international money transfers.<\/p>\n<p>We&rsquo;re going to get into specifics of XRP and the way Ripple functions in a minute. But before doing so, let&rsquo;s finish the overview of Ripple's journey.<\/p>\n<p>So, the years that followed saw the company expressing a strategic focus on forming partnerships with traditional financial institutions. <strong>In 2014, Ripple began collaborating with industry giants like American Express or Standard Chartered<\/strong>, aiming to leverage its technology for more efficient global transactions. As these partnerships took shape, Ripple's role in the financial landscape began to solidify.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): Ripple journey in 2014.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-03.jpg/" alt=\"What is Ripple (XRP): Ripple journey in 2014.\" width=\"1000\" height=\"601\"><\/p>\n<p>However, Ripple's journey was not without its hurdles. <strong>Regulatory uncertainties<\/strong> surrounding the classification of cryptocurrencies posed quite a challenge. In 2018, debates emerged about whether XRP could be classified as a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-security/">security or <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-utility-token/">utility token<\/strong><\/a>.<\/p>\n<p>The debate intensified as the cryptocurrency market experienced rapid growth and volatility. Amid these challenges, Ripple introduced the <strong>Interledger Protocol (ILP)<\/strong>, a groundbreaking initiative to facilitate seamless transactions across various payment networks.<\/p>\n<p>The legal landscape became even more complex in 2020 when the <strong><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-securities-and-exchange-commission-sec/">U.S. Securities and Exchange Commission (SEC)<\/a> filed a lawsuit against Ripple<\/strong>. The lawsuit alleged that the sale of XRP constituted an unregistered securities offering. Ripple responded by firmly asserting its position that XRP is not a security and defending its actions.<\/p>\n<p>This legal battle raised pivotal questions about the regulatory classification of cryptocurrencies and their implications for the industry.<\/p>\n<p>We&rsquo;re going to get into the specifics of the infamous SEC vs Ripple case at the end of this section, because this isn&rsquo;t just a simple legal question. <strong>It&rsquo;s a battle that may redefine the future of crypto<\/strong>.<\/p>\n<h2>How Does Ripple Work?<\/h2>\n<p>Now, as I&rsquo;ve already mentioned, one of the key challenges that Ripple sought to overcome was <strong>the sluggishness of cross-border transactions<\/strong>. Traditional methods of sending money across borders were characterized by lengthy processing times, intermediaries, and high costs. This created a significant barrier to businesses and individuals alike, making things run slower than they could.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): lengthy processing times, intermediaries, and high costs.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-04.jpg/" alt=\"What is Ripple (XRP): lengthy processing times, intermediaries, and high costs.\" width=\"1000\" height=\"595\"><\/p>\n<p>Ripple's solution to this challenge came in the form of its <strong>innovative payment protocol and digital currency, XRP<\/strong>. Ripple introduced a network that enabled real-time, cross-border transactions with reduced costs and enhanced efficiency. XRP played a pivotal role in facilitating these transactions by serving as a bridge currency that could be easily converted to various fiat currencies.<\/p>\n<p>But to continue answering the question of &ldquo;<em>What is Ripple cryptocurrency?&rdquo;<\/em>, let's delve into <strong>how Ripple works<\/strong> and unveil the mechanics behind their products.<\/p>\n<p>At the core of Ripple's operation lies <strong>the Ripple Protocol<\/strong>, which serves as the technological foundation. This protocol employs a unique consensus mechanism that sets it apart from other blockchain networks. Instead of energy-intensive <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-mining/">mining, Ripple employs a consensus algorithm known as the <strong>Ripple Protocol Consensus Algorithm (RPCA)<\/strong>.<\/p>\n<p>This mechanism enables the network to reach consensus without relying on <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-proof-of-stake-vs-proof-of-work/">Proof-of-Work (PoW) or Proof-of-Stake (PoS)<\/strong><\/a> methods, making it faster and more energy-efficient.<\/p>\n<p>The second ingredient that&rsquo;s partially accountable for Ripple&rsquo;s success is <strong>Ripple's distributed ledger, also known as the XRP Ledger<\/strong>. This ledger doesn't just store transactions - it records a wide range of data, including offers to buy or sell assets and even <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-are-smart-contracts/">smart contracts<\/strong><\/a>.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): Ripple's Distributed Ledger.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-05.jpg/" alt=\"What is Ripple (XRP): Ripple's Distributed Ledger.\" width=\"1000\" height=\"570\"><\/p>\n<p>But here's the twist: <strong>transactions on the XRP Ledger aren't grouped into blocks like traditional blockchains<\/strong>. Instead, they're individually validated as they occur, resulting in near-instant transaction confirmation.<\/p>\n<p>That being said, we also have to talk about <strong>RippleNet<\/strong>. Imagine a digital highway connecting financial institutions across the globe. That's RippleNet. It's a <strong>network of banks, payment providers, and other financial institutions<\/strong> that facilitates seamless cross-border transactions.<\/p>\n<p>RippleNet's suite of tools, including <strong>xCurrent and On-Demand Liquidity (ODL)<\/strong>, empowers participants to send money across borders with speed and transparency that traditional systems could only dream of.<\/p>\n<p>All of these features fit under the category of <strong>Liquidity Solutions<\/strong> because that&rsquo;s essentially what Ripple aimed to improve. To rephrase it in a simple way, think of liquidity as the <strong>speed at which you can turn stuff into cash<\/strong>. It's like having a vending machine for your assets &ndash; the easier and faster you can get your hands on the cold, hard cash, the more liquid your assets are. So, apply this definition to cross-border payments, and you have liquidity solutions that work.<\/p>\n<p><strong>Picture this<\/strong>: financial institutions need liquidity in foreign markets to process transactions. Traditionally, this required pre-funded accounts in each country, tying up capital. But the already-mentioned On-Demand Liquidity flips the script.<\/p>\n<p><strong>It leverages XRP to provide instant liquidity on demand<\/strong>. Financial institutions can convert one currency into XRP, send it across borders in a flash, and then convert it back into the local currency on the other end. Voil&agrave;, instant and affordable liquidity without the hassle that was taken for granted before introducing these novelties.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP): multi-signature transactions and conditional payments.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-06.jpg/" alt=\"What is Ripple (XRP): multi-signature transactions and conditional payments.\" width=\"1000\" height=\"584\"><\/p>\n<p>At this point, the question of &ldquo;<em>What is XRP cryptocurrency?<\/em>&rdquo; must be addressed. <strong>XRP is the digital glue that holds Ripple's vision together<\/strong>. It serves as a bridge asset, offering a means of transferring value between different currencies. Whether it's converting from dollars to euros or yen to pesos, XRP acts as the intermediary, enabling cost-effective and efficient cross-border transactions.<\/p>\n<p>But Ripple's XRP Ledger isn't just a one-trick tool. <strong>It supports smart contracts and escrows too<\/strong>. Smart contracts enable automated, self-executing agreements without intermediaries, revolutionizing business processes. Escrows, on the other hand, provide a secure way to hold funds until predefined conditions are met. Whether it's complex multi-signature transactions or conditional payments, the XRP Ledger has it covered.<\/p>\n<p>Now, all of this pretty much sums up what made Ripple kind of a big deal, and answers the question of &ldquo;<em>What is XRP used for?<\/em>&rdquo; Yet, we&rsquo;re in crypto, which means that we have to take a better look at XRP, since, when it comes to trading, the XRP cryptocurrency is where it&rsquo;s all at.<\/p>\n<h2>XRP Tokenomics<\/h2>\n<p>Created back in 2012, when <strong>Ripple was known as OpenCoin<\/strong>, <a href=https://www.bitdegree.org/"//crypto//buy-ripple-xrp/">XRP's purpose wasn't just to play the role of another cryptocurrency. It's not mined like <a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin; instead, <strong>all the 100 billion XRP coins were created at once<\/strong>, which means that the concept of mining farms is foreign when it comes to Ripple.<\/p>\n<p><em>By the way, to understand what these mining farms are all about, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-crypto-mining/">check out this section<\/strong><\/a>.<\/em><\/p>\n<p>Okay, back to answering the question of &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;<\/p>\n<p><strong>XRP had an initial supply of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//cryptocurrency-prices//xrp-xrp-price/">100 billion tokens<\/a><\/strong>. But as of now, the circulating supply is around 46 billion. <em>Why the shrink?<\/em> Ripple decided to lock up a chunk of those XRP tokens in escrow accounts to ensure a <strong>controlled release into the market<\/strong>&nbsp;to keep inflation levels low. Every month, a portion of these escrowed tokens gets released, and any unused ones are sent back to the backroom for safekeeping.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is Ripple (XRP):\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//images//what-is-ripple-xrp-07.jpg/" alt=\"What is Ripple (XRP):\" width=\"1000\" height=\"513\"><\/p>\n<p>When it comes to XRP&rsquo;s importance in the Ripple ecosystem, it plays multiple roles: <strong>as a bridge currency for cross-border payments, a tool to help secure transactions, and a way to help fight spam<\/strong>.<\/p>\n<p>Now, there's this term called \"<em>burning<\/em>\". When transactions happen on the Ripple network, a small amount of XRP gets destroyed. This reduces the total supply of XRP over time, giving it a hint of <strong>deflationary nature<\/strong> to the cryptocurrency.<\/p>\n<p>It&rsquo;s thanks to Ripple&rsquo;s active involvement in looking for serious, long-term partnerships, that XRP didn&rsquo;t tank and continued to stay relevant as one of the top cryptos in the market. But like any successful story, <strong>XRP has its share of drama<\/strong>. The question of whether XRP is a security or not has sparked legal, seemingly never-ending disputes with regulators.&nbsp;<\/p>\n<h2>Ripple vs SEC<\/h2>\n<p>When trying to answer the question of &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;, you often end up with the finding that <strong>Ripple is at the avant-garde of the crypto industry&rsquo;s battle with the regulatory authorities about the official, legal status of many cryptocurrencies<\/strong>. Here&rsquo;s the gist of this landmark case.<\/p>\n<p><strong>The SEC filed a lawsuit in 2020<\/strong>, alleging Ripple's unregistered XRP sales during an initial public offering (IPO) back in 2013 when the company founders were raising funds.&nbsp;The lawsuit accused Ripple&rsquo;s co-founders of <strong>unregistered XRP transactions worth $600 million<\/strong>. The SEC claims that XRP's sale funded Ripple's operations and enriched its management.<\/p>\n<p>The lawsuit challenges whether XRP should be considered a security. Unlike Bitcoin, the SEC believes XRP fits this classification due to its funding of Ripple's platform. The Howey test, a legal precedent, evaluates if an investment contract is a security. The SEC claims XRP satisfies this test's requirements, as investors lack control over XRP's profit.<\/p>\n<p>In the legal battle, <strong>Ripple opted to fight rather than settle<\/strong>, arguing the SEC's bias. Ripple questioned the SEC's classification of XRP while exempting <a href=https://www.bitdegree.org/"//crypto//buy-ethereum-eth/">Ethereum./n

In a landmark ruling, <strong>Judge Analisa Torres partially favored Ripple<\/strong>, stating that only the XRP sales to hedge funds and institutional buyers were unregistered securities offerings. However, the case continues, with Ripple possibly appealing the decision or seeking a settlement.<\/p>\n<p>The outcome holds implications for crypto regulations and may shape future regulatory proceedings against crypto firms. Therefore, if things go in Ripple&rsquo;s favor&hellip; <strong>the future of crypto is surely going to be interesting<\/strong>. So, it&rsquo;s safe to say that Ripple&rsquo;s success is not only something that XRP holders are interested in.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>No, we have reached the point where it&rsquo;s time to wrap it up. We have answered such questions as &ldquo;<em>What is Ripple XRP?<\/em>&rdquo;, &ldquo;<em>What is XRP cryptocurrency?<\/em>&rdquo;, &ldquo;<em>What is XRP used for?<\/em>&rdquo;, and ran through the overall story of Ripple, their product and their legal battles with regulatory authorities.<\/p>\n<p>If you want to find out more about other popular crypto projects, <strong>make sure to check out other sections in this Crypto 101 Handbook<\/strong>.<\/p>","youtube_video":{"id":126,"channel_id":1,"sort":8,"video_title":"What is Ripple? Beginner-Friendly XRP Explainer (Animated)","description":"What is Ripple & XRP? What is XRP used for?\n\nRipple and its native cryptocurrency & token XRP are household names when it comes to crypto. Not only because XRP is among the most popular cryptos, but Ripple itself has become a flagbearer of the entire crypto industry when it comes to facing challenges with regulatory authorities, and, thus, fighting for the industry's future.\n\nIn this video, I'll explain what are Ripple & XRP, what is XRP used for and how does XRP differ from other cryptos, when evaluated from the XRP vs. Bitcoin perspective. I'll illustrate how Ripple became what it is today, and how they ended up in such an intense situation when it comes to facing legal & regulatory challenges.\n\nDo you have any experience with Ripple? Have you been following Ripple's throughout its journey of legal battles? Do you think that the case will conclude in Ripple's favor? Leave your comments and guesses in the comment section below!\n\nVideo Time Table:\n\n0:00 Introduction\n1:07 What is Ripple?\n2:02 Ripple's Timeline\n4:44 How Does Ripple Work?\n8:46 XRP Tokenomics\n10:16 Ripple vs SEC\n12:01 Wrap-up: What is Ripple?\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#Ripple #XRP #RippleNews","video_id":"G3QrL3Gp2s0","duration":752,"view_count":584,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-ripple-beginner-friendly-xrp-explainer-animated.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2023-09-28T14:03:34.000000Z","created_at":"2023-09-28T23:00:13.000000Z","updated_at":"2024-01-09T23:00:03.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}},"featured_image":null}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin Killer","status":"published","modified_content":null},{"chapter_id":2,"order":10,"slug":"what-is-solana-in-crypto","title":"Is Solana an Improved Version of Ethereum?","status":"published","modified_content":null},{"chapter_id":2,"order":11,"slug":"what-is-polkadot-in-crypto","title":"The Bridge Between Blockchains: Polkadot","status":"published","modified_content":null},{"chapter_id":2,"order":12,"slug":"what-is-polygon-in-crypto","title":"Polygon: the Essential Scaling Solution for Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":13,"slug":"what-is-luna-crypto","title":"The Bumpy Road of Terra (LUNA)","status":"published","modified_content":null},{"chapter_id":2,"order":14,"slug":"what-is-fantom-crypto","title":"Is Fantom (FTM) Yet Another Ethereum Killer?","status":"published","modified_content":null},{"chapter_id":2,"order":15,"slug":"what-is-aave-crypto","title":"Aave: Crypto Lending Trailblazer","status":"published","modified_content":null},{"chapter_id":2,"order":16,"slug":"what-is-algorand-crypto","title":"Did Algorand Truly Solve the Blockchain Trilemma?","status":"published","modified_content":null},{"chapter_id":2,"order":17,"slug":"what-is-olympus-dao","title":"Does Olympus DAO Have Anything to Do With Mythology?","status":"published","modified_content":null},{"chapter_id":2,"order":18,"slug":"what-is-avax","title":"Is Avalanche Network (AVAX) Rightfully Called the Future of DeFi?","status":"published","modified_content":null},{"chapter_id":2,"order":19,"slug":"what-is-monero-coin","title":"Monero: Where Cryptocurrency Meets Cryptography","status":"published","modified_content":null},{"chapter_id":2,"order":20,"slug":"what-is-ripple-xrp","title":"Is Ripple \"it\" When it Comes to Cross-Border Transactions?","status":"published","modified_content":null},{"chapter_id":2,"order":21,"slug":"practical-use-of-cryptocurrencies","title":"The Practical Use of Crypto","status":"published","modified_content":null}]},{"id":3,"title":"Crypto Exchanges","slug":"crypto-exchanges","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-exchanges.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-exchanges-101.jpg","rating":80,"sections":[{"chapter_id":3,"order":1,"slug":"how-do-cryptocurrency-exchanges-work","title":"How do Cryptocurrency Exchanges Work?","status":"published","modified_content":null},{"chapter_id":3,"order":2,"slug":"dex-vs-cex","title":"DEX VS CEX: Two Sides of the Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":3,"order":3,"slug":"crypto-day-trading","title":"Crypto Day Trading: The Difference Between Buying, Trading, and Swapping","status":"published","modified_content":null},{"chapter_id":3,"order":4,"slug":"kyc-crypto","title":"KYC & AML: The Key to Complying With Legal Industry Standards","status":"published","modified_content":null},{"chapter_id":3,"order":5,"slug":"how-to-buy-crypto","title":"From Fiat to Crypto: How to Buy Crypto for the First Time","status":"published","modified_content":null},{"chapter_id":3,"order":6,"slug":"fiat-to-crypto","title":"Taking Profits: Turning Crypto Into Fiat","status":"published","modified_content":null},{"chapter_id":3,"order":7,"slug":"how-to-use-crypto","title":"You\u2019ve Got Crypto: What Can You Do With It?","status":"published","modified_content":null}]},{"id":4,"title":"Crypto Wallets","slug":"crypto-wallets","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-wallets.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-wallets-101.jpg","rating":80,"sections":[{"chapter_id":4,"order":1,"slug":"what-is-a-crypto-wallet","title":"What is a Crypto Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart Contracts?","status":"published","modified_content":null},{"chapter_id":6,"order":7,"slug":"what-is-a-dao-in-crypto","title":"The Notion of a Decentralized Autonomous Ogranization (DAO)","status":"published","modified_content":null},{"chapter_id":6,"order":8,"slug":"what-is-staking-in-crypto","title":"What is the Goal of Staking Crypto Assets?","status":"published","modified_content":null},{"chapter_id":6,"order":9,"slug":"what-is-liquidity-pool-in-crypto","title":"What is a Liquidity Pool and How Does It Work?","status":"published","modified_content":null},{"chapter_id":6,"order":10,"slug":"what-is-automated-market-maker","title":"Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":6,"order":11,"slug":"what-is-yield-farming-in-crypto","title":"The Main Yield Farming 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