The fundamentals of Ripple accounts

Basics of Accounts 

Ledger is an open-source, decentralized, permissionless blockchain that anyone can contribute to and develop solutions on. Therefore, in terms of transactions, anyone can perform transactions or view transactions that have already been recorded on the ledger. To carry out a transaction on the ledger—which involves sending, receiving, or proposing an exchange of money or other forms of value—you need to have an account. These accounts are sometimes also called wallets. 

An account has two important components: the public address and the private key. The public address serves as the identifier of an account on the blockchain or, in other words, how payments are addressed to that account. The private key ensures that only the account owner can access the account and perform transactions. 

Accounts in the XRP ledger have several notable features that are useful to understand: 

1. An account can hold multiple currencies or types of assets simultaneously. 

2. For accounts requiring access by multiple people, key rotation allows the account’s address owner—such as a charity—to periodically change the key. This means different individuals can hold the key at different times. If one person leaves, their key can be revoked and replaced with a new one. As a result, the account remains intact even when individuals change. 

When creating an account, a deposit known as a reserve is required. This reserve acts as a safeguard and is a small amount of XRP that activates the account. The reserve ensures that people don’t create empty accounts that occupy excessive space on each ledger node and helps prevent fraud that could block the ledger. When a user closes and deletes their account, a portion of the reserve is refunded to them. 

The amount of the reserve and the refund is not fixed; these values are voted on every 256 blocks by validator nodes. Additionally, the reserve and refund amounts can be adjusted based on the XRP price. Therefore, as the price fluctuates, these values are reviewed and adjusted to compensate for the change. 

There are also accounts that act as aggregators, consisting of multiple users—for example, a large cryptocurrency exchange. When a user’s account is part of a larger aggregate, the public address corresponds to the entire aggregated account, which also owns the private key. The user is identified by a label or tag associated with that address. 

In this scenario, you can think of the public address as the street address of a large residential building, and the label or tag as the apartment number where an individual user might reside.