Ripple is one of the top cryptocurrencies on the market, which is why Ripple appeals to both individual investors – and indeed, corporate investors. As you probably already know, investing is just one way to acquire a cryptocurrency. You can also build a stash of cryptocurrencies by mining a coin. So – is it practical to mine Ripple?
Well, the market for cryptocurrency is still thriving so it’s easy to see why big investors are trying to jump into the crypto market – given the hundreds of billions of dollars involved. Technological advantages can give some cryptocurrencies a head start, and that’s why Ripple has moved to the top of the market – it’s often been seen as the third most important cryptocurrency around the globe.
But, how do you mine Ripple (XRP)? Well, it’s “tough” to say the least.
Mining can look like a good option
The rapid inflation in cryptocurrency prices meant that investors tried everything they could to get a piece of the market – to get some coins in their pocket. Of course, you could choose to buy coins on the open market, but you can also earn coins by mining a cryptocurrency and it’s a route chosen by a lot of investors. All you need is computer hardware that is sufficiently powerful – in theory at least .
With the right setup there’s no hard work required: you just put down the hardware, make sure electricity is available and ensure the mining hardware is cooled. Over time the computational capabilities of your hardware will solve the complex math in crypto puzzles, allowing you to generate blocks that earn you rewards – while allowing cryptocurrency users to execute their transactions.
Unfortunately, the more coins that are mined, the more difficult it become to mine coins – and in reality, the difficulty of mining coins grows exponentially. Today, mining cryptocurrency like Ethereum or Bitcoin requires incredibly powerful mining equipment that can mine faster and harder compared to competitor miners.
The growing difficulty of mining some of the more popular cryptocurrencies has meant that many miners have decided to try mining altcoins – like Ripple. But, is mining XRP a realistic proposition?
Can you mine XRP?
You probably want to know whether you can mine XRP. The answer is – no. It may feel disappointing to hear that, but unfortunately the fact is that you cannot mine Ripple. But why is it that the builders of Ripple have constructed a cryptocurrency that cannot be mined? There are three reasons:
- Mining implies getting rewarded by newly released coins, in other words, mining creates new coins. Well, all of the Ripple coins that will ever exist has already been released – the full stock of Ripple coins is already out there.
- Ripple was intended to work as a digital currency that can be used by financial institutions like banks, it wasn’t really intended for consumer use. Banks could opt to use their own blockchain driven tech, but a universal crypto holds appeal. Over one hundred banks have chosen to adopt Ripple and this has played a large part in the popularity of Ripple.
- Decentralisation is a core tenet of all cryptocurrencies, but Ripple has tweaked the decentralisation principle. Yes, for Ripple, third-party nodes are involved in validation and authorisation of blockchain transactions, but overall Ripple Labs remains in charge of the workings of the XRP blockchain.
Ripple has made its intentions around the mining of XRP clear: it says that the number of coins it has released is sufficient to make sure that there is enough XRP circulating for at least five years. Ripple Labs has also said that the investments into XRP and the transactions taking place using XRP has proven that for the moment the amount of XRP available is sufficient to ensure that Ripple infrastructure performs optimally.
How does XRP work?
Cryptocurrencies that can be mined typically implies that miners receive block rewards through something called Proof of Work – in other words, by contributing computing power to solve blockchain puzzles. However, the difficulty of these puzzles grows over time as the number of coins available approaches the maximum number of coins that is available – as a result, new coins are “minted” more slowly.
The benefits lie in that the market can control the amount of computing power or “effort” that is invested into generating new blocks – i.e., in mining new coins. Where the price of a cryptocurrency is low it means that mining the coin is more expensive than the mining rewards obtained in terms of the value of coins – so, fewer miners are active in mining the coin. A rise in prices will mean a return to more mining activity.
When you think about XRP, there is no need to leverage the mining of Ripple – simply because the market capitalisation of Ripple belongs to financial institutions, not to individual persons. There is a total supply of 100 billion Ripple coins – that’s it’s, the 100 bn coins have already been emitted.
As founders, Ripple Labs kept 20 billion XRP for themselves, releasing the remaining 80 billion. In fact, 38.7bn XRP was distributed and 55bn XRP was put in an escrow account – this in December 2017.
So what is the Ripple Escrow all about? It’s simple really – one out of 55 escrow contracts will expire every single month, and this contract covers a billion XRP coins – coins that are then available to Ripple Labs to sell to financial institutions or to reward to people or institutions who have contributed to the XRP market.
Any coins not used for a particular month is sent back to the escrow account. The result is that the supply of Ripple doubles at regular periods – it could be every 3 to 4 years, for example. For example, by all estimates the full supply of XRP will go through escrow in just over fifteen years.
Financial institutions have a big influence on the development of Ripple – it depends on how quickly banks adopt XRP, and how quickly XRP becomes a medium of exchange. Unlike Bitcoin, with XRP individual use including payments with XRP has less of an effect on how well Ripple does in future.
So, is it impossible to mine XRP?
Clearly, Ripple coins simply cannot be mined. There’s no way around this fact. However, you could still choose to own XRP – simply buy it on a cryptocurrency trading platform. Stop searching for an XRP mining pool – just look for a cryptocurrency exchange that you can trust that sells XRP.
It’s probably not a bad idea to get some Ripple coins into your portfolio. First, XRP is a highly reliable cryptocurrency which carries a high probability of future profits. Ripple is also very liquid so you can easily dispose of your XRP, and it’s also worth keeping in mind that in the near future XRP will let you make international transactions with almost no fees – in other words, Ripple will be a low cost alternative to services like Western Union.
Yup, you can’t mine XRP!
To be clear – and for avoidance of any doubt – you simply need to ignore anything that says “XRP mining” or “Ripple mining rig” – these advertisements are false. There is no way to mine Ripple, you cannot “earn” XRP, they only way to acquire XRP is to buy it.
Likewise there is no “XRP cloud mining” because there are no cloud mining outfits that mine XRP. Why? Because XRP cannot be mined. Did you invest in an XRP cloud mining setup? Well, it’s almost certainly a scam.
It’s simple really – Ripple is different
The full supply of Ripple has already been released. Ripple one of very few cryptocurrencies where this is the case – you simply cannot mine new XRP coins, that’s it. However, it doesn’t mean that you cannot acquire XRP – you can, but you need to buy your XRP on a crypto exchange. It’s not hard either, Ripple is popular so you can buy XRP on most popular exchanges.
Mining aficionados don’t need to give up however – there is a whole long list of altcoins that you can mine instead of Ripple; and you can also exchange these altcoins for XRP. Even better: keep a close eye on the market and you could take advantage of a top exchange rate too.