ripple trust lines xrp logo

WTF is an XRPL Trustline?

Ripple is one of the most popular cryptocurrencies in circulation today.  It's also one of the first, having launched back in 2012 when very few people knew what cryptocurrency was.

Ripple is a crypto coin (XRP). The Ripple Ledger (XRPL) is the blockchain or ledger, that powers the Ripple network. So Ripple is the native coin on the Ripple Ledger.

But Ripple isn't the only coin you can store and use on the Ripple network. By using Ripple trust lines, you can store various cryptocurrencies that are native to other blockchains, in your Ripple wallet.

But what exactly is a trust line, and how do they work to make managing your crypto portfolio easier? Keep reading below to find out now. 

What Is the Ripple Network?

Ripple was built to function as a global payment network. Unlike bitcoin, which is slow and cumbersome, or Ethereum which is very expensive, Ripple makes it fast and easy to make global transactions. 

Without the need for mining, Ripple is much more energy-efficient than proof of work cryptocurrencies like bitcoin. This helps to keep transaction costs down and ensures they are confirmed in seconds, not minutes. 

What's unique about Ripple, however, is that the network is designed to work with other forms of money, such as dollars, euros, or cryptocurrencies based on other blockchain networks. 

The Ripple network acts as a facilitator, handling transactions between two parties; the sender and the receiver. The middleman in this case is called a gateway. 

The gateway receives money from the sender and sends it to a public address via the Ripple network. Anyone can register to become a gateway, which is what keeps the network decentralized and secure. No single company or entity is facilitating the transactions on the Ripple network. 

Chains of Trust

There are many gateways on the Ripple network. These gateways are usually managed by financial institutions. Bitstamp is an example of a gateway.

When sending various currencies across the Ripple network, different gateways will interact, depending on the level of trust.

For example, you might be sending Yen, and the receiver would like LiteCoin. If there aren't two gateways that trust each other regarding these currencies, they'll have to go through another gateway.

So rather than going from gateway A to gateway B, you'll have to add a third gateway that trusts both A and B.

So it will go from gateway A to gateway C since these two gateways trust each other already. Then, the currency can move from gateway C to gateway B, since these two gateways also trust each other. 

It can get confusing fast, but Ripple relies on these chains of trust between numerous gateways to securely handle transactions in just a few seconds. 

What Is the Ripple Cryptocurrency?

Ripple (the coin) functions as a bridge currency. It's designed to work with any type of fiat or cryptocurrency, not discriminating against any form of money. 

Each form of currency has its own gateway on the Ripple network. So US dollars have their own gateway, as do euros, bitcoin, Ethereum, and Litecoin.

The use of these gateways allows a sender to choose their preferred currency, such as US dollars. The receiver can specify which form of payment they'd like to receive, such as bitcoin, and use that gateway to retrieve their funds. 

This chain of various gateways is where the term "ripple" comes from. With multiple gateways, a chain of trust is formed, rippling its way across the network. 

What Is Trust Line?

So what are trust lines, and what do they have to do with Ripple?

When you send any type of currency other than XRP on the Ripple network, you are not sending that cryptocurrency across the network. Bitcoin does not work with the Ripple blockchain.

Rather, when a non-XRP currency exists on the Ripple network, it is referred to as an "issued currency." They are essentially tokens or IOUs that represent the original currency. 

These issued currencies are tracked in accounting relationships known as trust lines. 

So if you have bitcoin on the Ripple network, you don't have the actual bitcoin. You have an IOU that represents real bitcoin on the bitcoin network. 

Using Ripple Trust Lines

So how does this work in practice? Let's tie it all together.

Let's say you want to send bitcoin to a friend, and they want to receive LiteCoin.

You'll initiate a transaction in your Ripple wallet. You do this by selecting a gateway that you'd like to use. That gateway will receive your bitcoin and hold it.

They then create an issued currency, on a trust line in your wallet, that represents the bitcoin on the Ripple network. For example, a common gateway to use is GateHub.

If you use GateHub, then a trust line indicates you are trusting GateHub with your original bitcoin. 

You can then use the issued currency (IOU) to transact on the XRP Ledger. While your assets are tokenized on XRPL, you can swap them for other tokenized assets (other cryptocurrencies) with ease, thanks to the decentralized exchange that powers the network.

You can send those tokenized assets to other users. And when you are ready to withdraw your funds from the XRPL, the trust line you created will dictate which address your funds are sent to. 

Creating Trust Lines

Every time you want to specify a new asset (other than Ripple) to send or receive on the network, you are adding a trust line. You can do this from your XRP wallet.

Many people use XRP Toolkit, which is a user interface for interacting with the Ripple Network. 

You'll navigate to the Assets section, then click "Add an Asset." Any asset in the dropdown menu is considered a reputable asset. While you can add other assets, you should be careful when doing so. 

You can technically create a trust line for any cryptocurrency, fiat currency, commodities like gold or oil, stocks, and utility tokens. Most people will stick to fiat and crypto, however. 

Investing in Ripple the Easy Way

Now you have a better idea of the XRP network works, and what role Ripple trust lines play in the use of the network. Trust lines are foundational to Ripple, as they allow users to use nearly any form of currency on the Ripple Ledger.

Are you interested in investing in Ripple, and other cryptocurrencies like it, without having to own the individual coin? Then check out our fund here at Gasbox. You can invest US dollars, and we'll manage the portfolio, making it easy for you to gain exposure to various assets. 

Back to blog