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How to pay with XRP (Ripple): tips and guide by CoinsPaid

XRP, or Ripple, is a much cheaper and faster way to pay and send money than Bitcoin. In this post, we'll explain how to send Ripple to other users and pay with it in online stores – and also discuss why some people are sure that Ripple will fail.
Ripple vs. XRP: understand the difference
Most people use the words Ripple and XRP interchangeably, but they are actually two different things:
  • 1
    Ripple is the umbrella name for the settlement network and cross-border transfer system created by Ripple Labs, Inc. XRP;
  • 2
    XRP is a cryptocurrency running on XRP Ledger.
    Therefore, the coin is called XRP – and nothing else. We'll still use Ripple in this article to add some variety, but if you want to be 100% correct, use the term XRP only.

    Paying with XRP vs. BTC

    Most of online crypto payments are still in Bitcoin: according to CoinsPaid data, it accounts for over 90% of the transaction volume. However, it doesn't mean that BTC is the best option, since the average fee is around

    If you are looking for a much faster alternative, try XRP. A transaction usually takes less than 5 seconds to confirm, and the fee is less than $0.001. Therefore, for beginner crypto users, XRP is a good place to start, because you won't lose much on transaction fees.
    How to get an XRP address: wallet vs. exchange
    Before you can send or receive XRP, you'll need a blockchain wallet that supports it. Note that XRP uses a completely different blockchain from Bitcoin (XRP Ledger), so you can't use your BTC addresses for this purpose. However, the majority of popular wallets (and virtually all crypto exchanges) support both these coins. Popular wallets for XRP (and other cryptos) include Abra, Atomic Wallet, Edge, and Guarda Wallet.

    About the 20 XRP unspendable reserve

    Every account on XRP Ledger must hold at least 20 XRP (around $22 as of the time of writing) as an unspendable reserve. This is done so that people don't create too many XRP addresses, which would put a strain on the blockchain. If you use a non-custodial wallet like Atomic, you'll have to buy at least 20 XRP on an exchange using a card or other crypto first. These 20 XRP can never be withdrawn.

    By contrast, crypto exchanges don't have the 20 XRP requirement, because they use shared addresses. So when you register, you'll be assigned a Ripple address automatically, but the same address is used for many exchange customers: only the destination tags are different (see below). In this sense, storing XRP on an exchange is more convenient, as long as you want to experiment with small transactions. However, don't keep large amounts of crypto on exchanges, since hacks and thefts are quite common.
    Buying XRP with a bank card
    If you don't have any cryptocurrency yet, you can buy XRP with a credit card. Several exchanges and wallets offer this option: Binance, Coinbase, KuCoin, CEX.io, Trust Wallet, LOBSTR, and Freewallet, among others. The upcoming CoinsPaid wallet will also have this feature.
    You'll need to pass an identity verification (KYC) before you can buy crypto with a bank card. Usually exchanges require a picture of your ID and a selfie with it. Such KYC checks have become ubiquitous nowadays, so it's difficult to find a place where you can buy XRP without verification.

    Compare the fees before buying: sometimes they can reach 5%. If you already have BTC, ETH, or other cryptocurrency in your exchange account, it's better to purchase XRP through the trading interface. In this case you'll pay just the trading commission (usually below 0.5%).
    XRP address format and Ripple destination tag
    A standard Ripple wallet address (so-called r-address) looks like this: rl1ziGeXwwQoiDZ2ueFYTEXSwuJYfV2Jpn. It's an alphanumeric string beginning with an 'r', and it's all you need to send XRP to yourself or to someone if they are using a non-custodial wallet like Atomic or Edge, i.e. if they have an on-ledger account.

    However, there is another element to a Ripple account: an XRP tag. This creates a lot of confusion: in fact, the most common question asked online by people who are new to XRP is 'What is a destination tag in Ripple?'

    A Ripple wallet destination tag is a string of numbers, like 154746925. When sending XRP to an exchange or an app like Coinbase or Wirex, you'll need to attach the tag, because exchange addresses don't uniquely identify users. As we've said above, many customers share the same XRP address on such platforms – only the tags are different.

    About the new X-address format

    Ripple recently introduced a new address format, called an X-address. It looks just like a regular XRP address, only instead of an 'r' it starts with an 'X'. The advantage is that it wraps the address and the destination tag into one, so you don't have to attach the tag separately anymore.

    So far only some exchanges support the new format, but that should change in the future. If someone provides you with an X-address but you find you can't send XRP to it directly from your exchange account or custodial wallet, you can decode it to find out what its XRP destination tag is. Use the service https://xrpaddress.info/ - simply paste an address and click on the button.
    Sending XRP to someone else
    Now that you have an XRP address with some coins in it and understand how tags work, sending XRP to another person should be really easy.
    • Ask the recipient for their address and destination tag.
    • If you are using a non-custodial wallet, make sure you have enough XRP above the unspendable reserve of 20 XRP to make the transfer and pay the fee.
    • Copy and paste these data into the Send or Withdraw section of your wallet or exchange account.
    • If the recipient has an on-ledger account (such as Atomic or Guarda wallet) and no destination tag, insert 0 in the tag field.
    • Hit Send and confirm if needed. The transaction should be confirmed within seconds.
    Paying online with Ripple
    Thousands of online merchants accept XRP: e-Commerce platforms, casinos and betting platforms, even travel booking sites. The advantage of paying for goods and services with XRP as opposed to a bank card is that the payment acceptance rate for crypto is almost 100%, no matter where you live. A card can get refused, and sometimes banks even block cards if you perform certain types of transactions; but if you pay with Ripple, this won't happen.

    Merchants use the services of crypto processing gateways like CoinsPaid, which process all transactions for them. A processor will have a solid security and transaction tracking system, so you can be sure that the payment will be completed successfully, the merchant will get the money, and you'll receive your purchase.

    Paying online with XRP is even easier than sending it to another person. If the merchant uses a major processing provider like CoinsPaid, you should be able to complete the transaction without leaving the website. Upon clicking on 'Pay with crypto' (or something similar) or on the XRP icon, you'll get several choices:

    • A Ripple wallet address that you can copy and paste into your wallet, plus a tag;
    • A payment link that you can click to open your wallet (on both desktop and mobile). The amount to be paid, address, and XRP destination tag will be pre-filled already, so that you'll just need to hit 'Pay';
    • A QR code – very convenient if you have a mobile XRP wallet. Scan the code, and all payment data should be filled in automatically.

    Is there a risk that Ripple will fail?
    You can find a lot of articles on the internet with titles like 'Why Ripple will fail'. There are several potential reasons cited for why this could happen:
    • 1
      Ripple (the company) owns most of the XRP supply, which goes against the principles of decentralization. Centralized supply is considered a negative sign, because if something happens to the issuing company, the coin's price can collapse.
    • 2
      Ripple has a long-going court battle with the SEC (U.S. Securities and Exchange Commission), which claims that the original sale of XRP in 2013 was an unregistered security offering.
    • 3
      If (or, rather, when) governments start issuing their own centralized digital currencies, many cryptos can become obsolete, especially for cross-border transfers.
    In spite of all this, regular XRP users don't have to be concerned for the time being. Ripple recently scored a minor victory in its legal struggle with the SEC, so the company's position seems stable for the moment. Moreover, XRP developers revealed that they are looking to add smart contract support to the ledger using a system of sidechains, which is a very bullish fundamental sign for XRP. As for official digital currencies issued by countries, so far there's just the digital yuan in China, which is in a testing phase – and no sign that the US or EU countries will issue similar assets in the next couple of years.

    XRP is a great way to pay online and send money anywhere in the world. It can seem more complex than ETH or BTC at first because of the destination tags and the unspendable reserve, but do give it a try – and it can easily become your favorite crypto for payments.

    November 14, 2021

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