The Mystery Behind 20 XRP Fee For Ripple Address

The Mystery Behind 20 XRP Fee For Ripple Address
Sudhir Khatwani

If you don't know, Bitcoin was introduced to us so that we have an option outside of traditional banking system and even opt out of it if required.

But after a surge in interest of Bitcoin numerous cryptocurrencies proliferated and now they are more than 1300 of them as we speak today!!

One of them is Ripple, at the moment of writing it is at spot #3 on the CoinMarketCap and has even threatened Bitcoin's dominance last week.

Just to put into perspective from January 2017 to January 2018 it has surged at a rate of +37,000% which is astonishing. So just imagine if you would have put $100 at the start of 2017 then by now it would have turned into $ 37,000.

But for a moment keeping aside these insane rally facts there are few fundamental differences when it comes to the usage of Ripple because it is not like Bitcoin or Litecoin. It is so because it is controlled by a company (Centralized) and made for banks. Also, for using Ripple in the day to day activities you need to pay attention to few things which you don't see in any other cryptocurrency as of now.

Top 5 Websites To Buy Ripple (XRP)

One of those things is '20 XRP' reserve that Ripple takes for using Ripple cryptocurrency which is very confusing and mysterious to many of us until now. And for today this mystery in my motivation to write and tell you what is the actual reason behind this '20 XRP reserve' thing.

In fact this is one of the most common questions that we have been asked by CoinSutra readers, as when they try to set up any Ripple wallet, they are asked to transfer 20XRP initially to activate the wallet. And this also brings up many questions like:

Is that 20XRP gone or we can spend it in future?
Is there is a way to bypass Ripple wallet 20 XRP fees?

What Is 20 XRP Ripple Reserve?

Ripple is a unique crypto asset which has built-in minimum rules of minimum balance for using its ledger.

Just like some traditional banks require you to maintain a minimum balance in USD, EUR or INR similarly in order to use Ripple ledger you must deposit and maintain a balance greater than 20 XRP at all times.

So once you fund you Ripple wallet address with 20 XRP or more then your account will be activated and usable. And this is an only a one-time thing for a particular new ripple address and you are always required to maintain 20 XRP on it.

After that, it is pretty much similar to using Bitcoin or Litecoin.

Why Ripple Wallets Require 20 XRP Minimum?

This 20 XRP fee structure is enforced on Ripple blockchain to make it basically an anti-spam ledger where people don't open unnecessary wallets. At this moment, once you deposit 20 XRP then these cannot be withdrawn. (Maybe this changes in future!!)

Ripple's Official Statement On The Reserve:

The XRP Ledger applies reserve requirements, in XRP, to protect the shared global ledger from growing excessively large as the result of spam or malicious usage. The goal is to constrain the growth of the ledger to match improvements in technology so that a current commodity-level machine can always fit the current ledger in RAM and the full ledger history on disk.

To submit transactions, an address must hold a minimum amount of XRP in the shared global ledger. You cannot send this XRP to other addresses. To fund a new address, you must send enough XRP to meet the reserve requirement.

–Ripple.com

What Do You Need To Do?

So now that you know that Ripple addresses or wallets have this special requirement then you should always first initialize/fund your ripple wallet address with at least 20 XRP.

Thumb Rule: Always ensure that your outgoing XRP funds are at least 20 XRP when sending to an unfunded XRP wallet

Best and easy way is to remember this thumb rule and you will never go wrong.

Also, to remember that if you send less than 20 XRP on an unfunded or initialized ripple address your transaction will fail because the protocol level requirement is minimum 20 XRP on an unfunded or unused address.

What Happens If You Don't Have Minimum 20 XRP?

Nothing happens if you don't have minimum 20 XRP reserve on you ripple addresses but you can use it until you have minimum 20 XRP on it. Any account under 20 XRP will be considered as not existent. So if you have less you won't be able to make transactions out.

Some wallets and services will also show you a message that you don't have a minimum reserve and your account is not active. To activate it you will need to send some XRP on it until it becomes minimum 20 XRP.

Conclusion

I know this is quite confusing but I have done my best in uncovering the mystery behind minimum 20 XRP required.

To make the matters even more confusing some exchanges charge you 20 XRP for deposit reserves like Poloniex whereas some like Bittrex and Binance don't.

I also know that 20 XRP is a lot nowadays (approx 80-90 USD) which is quite huge. So technically if you go to buy a $ 100 worth of XRP then in actuality you will only get worth of 10 USD because other 80-90 USD will be locked up as a reserve.

So that's all from my side in this article