The predecessor to the Ripple payment protocol, Ripplepay, was first developed in 2004 by Ryan Fugger,[13][14] a web developer in Vancouver, British Columbia.[15] Fugger conceived of the idea after working on a local exchange trading system in Vancouver, and his intent was to create a monetary system that was decentralized and could effectively allow individuals and communities to create their own money. Fugger's first iteration of this system, RipplePay.com,[16] debuted in 2005 as a financial service to provide secure payment options to members of an online community via a global network.[15][17]

This led to the conception of a new system by Jed McCaleb of eDonkey network,[18] which was designed and built by Arthur Britto and David Schwartz.[19] In May 2011, they began developing a digital currency system in which transactions were verified by consensus among members of the network, rather than by the mining process used by bitcoin, which relies on blockchain ledgers.[16] This new version of the Ripple system[15] was therefore designed to eliminate bitcoin's reliance on centralized exchanges, use less electricity than bitcoin, and perform transactions much more quickly than bitcoin.[15] Chris Larsen,[16] who had previously founded the lending services companies E-Loan and Prosper, joined the team in August 2012,[18] and together McCaleb and Larsen approached Ryan Fugger with their digital currency idea. After discussions with long-standing members of the Ripple community, Fugger handed over the reins.[16] In September 2012 the team co-founded the corporation OpenCoin,[16] or OpenCoin Inc.[18][20]

OpenCoin and Ripple Labs (2012–13)
Main article: Ripple (company)
OpenCoin began developing a new payment protocol called the Ripple Transaction Protocol (RTXP) based on Ryan Fugger's concepts.[16] The Ripple protocol enables the instant and direct transfer of money between two parties.[21] As such the protocol can circumnavigate the fees and wait times of the traditional correspondent banking system,[21][22] and any type of currency can be exchanged including U.S. dollars, euros, renminbis, Indian rupees, yen, gold and airline miles.[23] To maintain security OpenCoin programmed Ripple to rely on a common ledger that is "managed by a network of independent validating servers that constantly compare their transaction records." Servers could belong to anyone, including banks or market makers.[21] The company also created its own form of digital currency dubbed XRP in a manner similar to bitcoin, using the currency to allow financial institutions to transfer money with negligible fees and wait-time.[24]

Among OpenCoin's early investors were[25] Andreessen Horowitz and Google Ventures.[21] On July 1, 2013, XRP Fund II, LLC (now called simply XRP II)[26] was incorporated as a wholly owned subsidiary of OpenCoin, and headquartered in South Carolina.[26] The following day, Ripple announced its linking of the bitcoin and Ripple protocols via the Bitcoin Bridge. The bitcoin Bridge allows Ripple users to send a payment in any currency to a bitcoin address.[27][28] Ripple also developed early partnerships with companies such as ZipZap.[29] On September 26, 2013, OpenCoin Inc. changed its name to Ripple Labs Inc.,[20] with Chris Larsen remaining CEO.[30] On the same day the Ripple reference server and client became free software, released as open source under the terms of the ISC license.[2] Ripple Labs continued as the primary contributors of code to the consensus verification system behind Ripple, which can "integrate with banks’ existing networks."[31] In October 2013, Ripple partnered further with ZipZap, with the relationship called a threat to Western Union in the press.[32]

Focus on banking market (2014–17)
By 2014, Ripple Labs was involved in several development projects related to the protocol, releasing for example an iOS client app for the iPhone that allows iPhone users to send and receive any currency via their phones.[33][34][35] This Ripple Client app no longer exists.[36] In July 2014, Ripple Labs proposed Codius, a project to develop a new smart contract system that is "programming language agnostic."[37]

"...we think that the bigger opportunity is not just to create another digital currency – there are plenty of those - but rather to use that technology as a way of building a settlement system with no central operator."
— Ripple CEO Chris Larsen in December 2014[23]
Since 2013, the protocol has been adopted by an increasing number of financial institutions to "[offer] an alternative remittance option" to consumers.[38] Ripple allows for cross-border payments for retail customers, corporations, and other banks, and Larsen was quoted stating that "Ripple simplifies the [exchange] process by creating point-to-point and transparent transfers in which banks do not have to pay corresponding bank fees."[23] The first bank to use Ripple was Fidor Bank in Munich, which announced the partnership in early 2014. Fidor is an online-only bank based in Germany.[39] That September the New Jersey-based Cross River Bank and Kansas-based CBW Bank announced they would be using the Ripple protocol.[3] By December Ripple Labs began working with global payments service Earthport, combining Ripple's software with Earthport's payment services system. Earthport's clients include banks such as Bank of America and HSBC, and it operates in 65 countries. The partnership marked the first network usage of the Ripple protocol.[40] In December 2014 alone, the XRP price value rose over 200%, helping Ripple surpass litecoin to become the second biggest crypto-currency, and setting Ripple's market capitalization at close to half a billion dollars.[41] On December 29, 2017, XRP briefly became the second largest cryptocurrency, with a market capitalization of 73 billion USD.[42]

In February 2015, Fidor Bank announced they would be using the Ripple protocol to implement a new real-time international money transfer network,[43] and in late April 2015, it was announced that Western Union was planning to "experiment" with Ripple.[32] In late May 2015, Commonwealth Bank of Australia announced it would be experimenting with Ripple[44] in relation to intrabank transfers.[45] Since 2012, representatives of Ripple Labs have professed support for government regulation of the crypto-currency market, claiming that regulations help businesses grow.[46] On May 5, 2015, FinCEN fined Ripple Labs and XRP II US$700,000 for violation of the Bank Secrecy Act,[26] based on the Financial Crimes Enforcement Network's additions to the act in 2013.[47] Ripple Labs agreed to remedial steps to ensure future compliance, which included an agreement to only transact XRP and "Ripple Trade" activity through registered money services businesses (MSB), among other agreements such as enhancing the Ripple Protocol.[26] The enhancement won't change the protocol itself, but will instead add AML transaction monitoring to the network and improve transaction analysis.[47] As of 2017, the current release of the server (known as rippled) is version 0.70.1.[1]

The year 2015 and 2016 marked the expansion of Ripple (company) with the opening of an office in Sydney, Australia in April 2015[48] and the opening of European offices in London, United Kingdom in March 2016[49] then in Luxembourg in June 2016.[50] Many companies have subsequently announced experimenting and integrations with Ripple.[51]

SBI Ripple Asia, a joint-venture company established by Japanese financial giant SBI Holdings and San Francisco FinTech startup Ripple will test Ripple’s enterprise blockchain solutions for cross-border payments. Seoul-based blockchain solutions provider DAYLI Intelligence, leads the South Korean team.[52]