If you recently bought some XRP from an exchange and were looking to transfer them to your wallet, you might have come across something called a Ripple Reserve or XRP minimum balance. Basically, Ripple requires every wallet address to have a minimum XRP for activation and functioning. The base reserve requirement is 20 XRP right now.
What is this Ripple reserve and why is it needed?
Like you have a minimum balance in a bank account, Ripple network has its own minimum balance requirement and it is quite similar to the banking industry. The reasoning behind this requirement is actually very simple.
According to the Ripple team, the XRP minimum balance is aimed to protect the global ledger from becoming unnecessarily bloated. The reserve amount makes sure that spammers or other malicious parties don’t flood the ledger with unnecessary wallets and make it excessively large.
“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,” writes Ripple team on its website.
As I wrote earlier, the current base requirement for a Ripple wallet is 20 XRP. You won’t be able to use your Ripple wallet until you transfer 20 or more XRP to it. If you send less than 20 XRP to a new wallet, it will show zero balance until the 20 XRP reserve requirement is met.
In the cases when your Ripple wallet amount falls below the reserve requirement, it will stop functioning until you replenish the reserve. Basically, you will need 20 XRP in your Ripple wallet at all times for it to function.
So, are these reserve 20 XRP lost forever?
Not necessarily! According to the Ripple team, they have a mechanism to adjust the XRP reserve amount to keep it in line with changes in the value of XRP. Suppose in a few months or years, an XRP becomes worth $50, expecting 20 XRP reserve from every wallet holder is not financially feasible. So, whenever XRP’s value become high enough, the Ripple team will adjust the reserve amount to a smaller number. Following that the Ripple wallet holders will be able to spend or sell part of the 20 XRP reserve, depending on what the new reserve amount is.
Any changes to the Ripple reserve will be made after a consensus of Ripple Validators. Like full nodes on Bitcoin network, Ripple has its validators to keep the global ledger in good shape and free of fraudulent transactions.
Hopefully, this clears up any doubts that you might have about XRP reserve. If you have any other questions, feel free to ask them in comments and I will try and answer them.