Mining XRP is not possible because the XRP Ledger is not a proof of work blockchain like Bitcoin is. It’s also not a proof of stake network either so you can’t stake your XRP with an XRP validator. While XRP Ledger does use validators for its consensus mechanism these validators do not receive any monetary rewards for their validation efforts. That sounds weird but I will explain what their incentives are further down. In this post, I will walk you through how the XRP ledger validates transactions and why ripple XRP mining is not an option.
- Why can’t I mine XRP?
- How does the XRP Ledger consensus mechanism work?
- How does the XRP ledger issue new coins?
- How does XRPL’s consensus mechanism differ from proof of work?
- Can’t I just become an XRPL validator and earn XRP tokens?
- What’s the incentive to becoming an XRPL validator?
- What’s Ripple
- I watched a YouTube video that says you can mine XRP. Are you sure that you can’t mine XRP?
- Ripple mining scams
- Are there any other ways to earn free XRP?
- What about online cloud mining sites?
- Up Next
Why can’t I mine XRP?
There is nothing to mine. All XRP in existence was issued at one go. T
o understand why it’s not like Bitcoin or Ethereum where you can earn mining rewards let’s look at how the blockchain that uses XRP, the XRP ledger, works.
How does the XRP Ledger consensus mechanism work?
The XRP Ledger (XRPL), utilizes a consensus mechanism known as the Ripple Protocol Consensus Algorithm (RPCA).
Ripple Protocol Consensus Algorithm (RPCA):
- Validator Nodes: XRPL operates on a network of validator nodes. These nodes are responsible for validating transactions and reaching consensus on the state of the ledger.
- Initial Proposal: Any participant in the network can propose a new ledger state. This participant is known as the “leader.” The leader constructs a candidate set of transactions and proposes them to the network.
- Validation Rounds: Validator nodes independently validate the proposed transactions. Nodes share their validations, and a node can agree or disagree with the proposed transactions.
- Consensus: nodes iteratively communicate and converge on a common ledger state. The consensus is achieved when a supermajority of nodes (at least 80%) agree on a particular ledger state.
- Finalization: Once consensus is reached, the ledger is considered finalized, and the agreed-upon set of transactions is added to the ledger.
How does the XRP ledger issue new coins?
It doesn’t. The founders issued all coins during an initial coin offering and kept half of them for their company.
It’s important to note that XRPL differs significantly from the Proof of Work (PoW) mechanism employed by cryptocurrencies like Bitcoin.
How does XRPL’s consensus mechanism differ from proof of work?
- Energy Efficiency: One of the key differences is the energy efficiency. PoW, as used by Bitcoin, requires miners to solve complex mathematical puzzles to validate transactions. This means that mining farms need to purchase powerful machines called ASIC miners which consume a significant amount of energy. In contrast, XRPL’s RPCA is more energy-efficient as it doesn’t involve the resource-intensive mining process.
- Centralization: PoW systems may lead to centralization over time as mining becomes concentrated in areas with cheap electricity and large mining farms achieve economies of scale. In XRPL, the validator nodes are chosen based on trust and are not dependent on computational power. This reduces the risk of centralization.
- Transaction Finality: XRPL achieves transaction finality quickly. Once consensus is reached, the transactions are considered finalized. In PoW systems, finality is probabilistic, and participants often wait for multiple confirmations to ensure the security of a transaction.
- Scalability: XRPL is highly scalable, with the ability to process a large number of transactions per second. PoW systems face scalability challenges due to the time required to mine blocks and the block size limitations.
- Fees: because XRPL can scale its transaction costs are very low costing less than 1cent for a transaction to go through
Can’t I just become an XRPL validator and earn XRP tokens?
While anyone can become a validator for XRPL you can’t earn XRP coins like you can with other forms of crypto mining. Validators on XRPL do not receive rewards in the form of digital currencies.
XRPL focuses on maintaining a stable and efficient network rather than rewarding validators with cryptocurrency.
Validators contribute to the network by validating transactions, preventing double-spending, and ensuring the integrity of the ledger. Here’s how it works:
- Unlike PoW-based networks like Bitcoin, where miners receive a block reward for successfully mining a new block, there is no block reward for validators in XRPL.
- Validators do not receive transaction fees as direct rewards. Transaction fees on the XRPL network are collected to prevent spam and abuse. These fees are subsequently burned rather than being distributed to validators.
- Decentralized Nature: XRPL’s design aims for decentralization, and validators are chosen based on trust. The decentralized nature of the network is considered a reward in itself, as it enhances the security and resilience of the network.
What’s the incentive to becoming an XRPL validator?
Entities become validators for two reasons primarily:
- Entities running validators on the XRPL may have their own motivations. For example, they may be affiliated with organizations that benefit from a healthy and efficient XRP Ledger, such as businesses using XRP for cross-border payments.
- Running a validator on the XRPL is often seen as a way for individuals or organizations to contribute to the XRP ecosystem. This participation can be motivated by a desire to support the technology, contribute to decentralization, or align with the goals of the XRP community.
If those reasons sound generic and unconvincing then you need to understand what Ripple, the company behind XRPL, does. After all, they run 6 of the 150 validators.
Ripple refers to both a digital payment protocol and the company that developed it. The company was started by David Schwartz, Jed McCaleb, Arthur Britto, and Chris Larsen in 2012.
The Ripple protocol enables fast and secure money transfers, particularly for cross-border payments. The XRP ledger falls under the Ripple protocol and the digital asset associated with this protocol is called XRP.
Think of it this way:
XRPL is an independent and decentralized blockchain that no one can mess with. It uses its own consensus mechanism and describes how much XRP each public address owns.
Just like how the Bitcoin blockchain shows you how much BTC each address has.
Now if you look closely you will two things that stand out.
The first is that all XRP has been issued. It’s not like Bitcoin and Ethereum where more of the token gets issued over time.
Instead, all XRP was premined.
All 100 Billion of it.
What XRP and Ripple’s detractors don’t like about it is that about 50% of that XRP belongs to Ripple the company.
The SEC in the United States has even taken them to court for this. Some even refer to XRP and Ripple tokens or Ripple coins for this reason. You can find more on the XRP lawsuit here.
Ripple’s counterargument is that they have placed these funds in a cryptographically-secured escrow account that automatically releases 1 billion per month.
If they do not use the whole amount they put them back into escrow.
What’s Ripple’s game here?
Ripple wants to be a leader in cross-border payments for fiat currencies. Here’s how they envision things playing out.
- Ripple has a network called RippleNet, connecting different financial institutions such as banks and payment companies.
- Sending money across borders is often slow and costly because banks need to have accounts with each other in different currencies.
- Ripple created a solution called On-Demand Liquidity (ODL) to make cross-border payments faster and cheaper.
- Ripple uses its digital currency, XRP, as a “bridge” between different currencies. Instead of keeping money in various foreign accounts, they use XRP to convert money quickly.
How the Ripple Network Works:
- Imagine you want to send money from the US to Mexico.
- Ripple converts your US dollars into XRP.
- XRP is sent across the Ripple network.
- In Mexico, XRP is converted into Mexican pesos.
- The recipient gets the money in Mexican pesos.
- This process is much faster than traditional methods, settling in seconds instead of days.
- It’s also often cheaper because banks don’t need to tie up large amounts of money in foreign accounts.
I watched a YouTube video that says you can mine XRP. Are you sure that you can’t mine XRP?
There are many misleading videos out there that are not giving you a straight answer. While you can’t mine or stake XRP per se you can use your mining rig to mine another cryptocurrency and then convert your mined cryptocurrency into XRP. This is not mining XRP. It’s like me taking my salary in dollars, trading it for XRP, and then claiming I get paid in XRP.
However, there is a mining platform called unmineable.com that automates this process so that you mine a mineable coin of your choice and get paid in a non-mineable coin like XRP.
Here’s how to indirectly mine XRP using Unmineable.
- Visit the Website and create an account
- Choose which coin you want to mine. For example, if you have a CPU you can mine coins like Monero. If you use a graphics card then you can mine Ethereum classic and if you own an ASIC then you can mine a proof-of-work coin such as Bitcoin
- Once you have selected your mining and reward pair click on Get Started to Download the Mining Software:
- Install the mining software by extracting files and configuring it with your account details.
- Configure your mining settings by specifying the cryptocurrency you want to mine, entering your wallet address, and the mining pool you will be using
- Start the mining process. The mining software will use your computer’s processing power to contribute to the mining network of the chosen cryptocurrency.
- Once you accumulate a certain amount of cryptocurrency, you can usually withdraw your earnings.
Ripple mining scams
Stay clear of anyone offering to mine Ripple or XRP. The XRP ledger does not use a mining algorithm to mine XRP since all of it has been pre-mined already. I would recommend you focus your mining efforts on other coins if mining is your thing. Check out my detailed guide on how to mine altcoins for more.
Are there any other ways to earn free XRP?
Here are a few ideas but none of them is going to make you rich
- Crypto faucets: these are platforms where you get paid in crypto for completing small tasks like commenting on social media or participating in a survey. See top crypto faucets here.
- Learn to earn: Some exchanges reward you in crypto for taking modules in their academy section and learning about crypto. See Coinbase earn as an example.
- Online trading: most people suck at this and lose money rather than make so encourage you to stay away from it.
- Lend your XRP in DeFi: You can lend your XRP on a decentralized finance platform to earn a yield. For example, you could put it in a liquidity pool on PancakeSwap and earn fees from traders. If you have no clue what I am on about check the crypto 101 section on Elementalcrypto.com
What about online cloud mining sites?
I would stay away from them. Since Ripple is unmineable these platforms are probably trying to lure you in to mine something else by giving them money that they invest in mining. However, because it’s so hard to know what they are doing with your cash there have been many scams in the industry.
How can I own XRP?
You can buy XRP on crypto exchanges just like you do with any other digital coin. The centralizes with the most trading volume for XRP are Binance, Coinbase, KuCoin, Bistamp, and Kraken. If you are comfortable with decentralized exchanges then consider using Pancake Swap but know that this is not XRP on XRPL. Rather it is wrapped XRP on the BSc ledger. They trade 1:1 in terms of price but they are not the same.
How much XRP can be mined?
All XRP has been pre-mined at issuance. This means there is no more XRP for anyone to discover. The only way to get your hands on XRP is to buy it on the cryptocurrency market.
What is the easiest coin to mine?
If you want to mine using mining equipment the easiest one is Monero (XMR). Mining Monero only requires a regular CPU which is more accessible than the custom gear required to mine other proof of work coins. However if by mining you also mean staking then sending your crypto such as Ethereum, Cosmos, and Polkadot to be staked is way easier as it does not require a mining setup
Is there a way to mine XRP?
Not directly no. All potential XRP has already been mined. All 100 billion of it. If you are hell-bent on mining and getting paid in XRP then you can do what's called indirect mining i.e. mine another coin and use a platform to automatically convert those rewards into XRP. I am not sure why you would do that though.
Why banks don't use XRP?
Banks are used to using legacy systems. They move slowly and conservatively when it comes to the adoption of new technologies. One of the things that scares them is the volatility of cryptocurrencies. Ripple Labs's counterargument here is that XRP transactions are so fast that the volatility of the coin hardly matters. They argue that converting dollars to pesos over days instead of seconds exposes institutional investors to way more volatility.
- Ripple official website
- How to run a validator node on XMRL
- All things XRP with David Schwartz
- YouTube video on how to indirectly mine XRP on unmineable
Mining Altcoins sounds like a good way to earn passive income without needing to make the massive upfront investment that you need for Bitcoin mining. But where do you start and how do you go about it? In this comprehensive guide, I will walk you through all you need to know about how to mine altcoins and the best practices you need to follow. I will tell you about how to choose the right mining equipment, what you need to know about mining software and wallets, and how to select the most profitable altcoins to mine. Additionally, we’ll explore the benefits of joining mining pools, optimizing mining operations, and managing costs effectively. Read more.