Overview of Ripple
Digital Currency
· Developed by the
US-based technology company Ripple Blockchain Labs Inc. in 2012.
· Ripple is both a platform used
for the peer-to-peer transfer of currencies (RippleNet),
and a digital currency
(ripple XRP).
· The platform
itself is an open-source
protocol, designed to enable fast and cheap transactions between two parties.
· Any type of currency can be exchanged on the platform,
from fiat currencies
such as sterling, to cryptocurrencies,
to air miles.
· Ripple Blockchain
is a real-time gross
settlement system (RTGS), currency exchange, and remittance network.
· The most
distinguishing feature of Ripple Blockchain is its build schematics.
· Mounted on top of
a distributed open-source protocol, Ripple Blockchain supports tokens that
represent fiat currency,
cryptocurrency, commodities, and other units of value such as frequent
flyer miles and mobile minutes.
·
This
system aims at the enablement of secure, instant, and nearly free global financial transactions of any
size with no transaction charges.
· The idea of ripple
was first considered in 2004, but it wasn’t until 2012
that it gathered more traction. Jed McCaleb (a
well-known programmer and entrepreneur, and one of the co-founders of ripple)
invited a group of investors to invest in the network. Chris Larsen was one of
these angel investors, and is considered to be one of
the richest people involved in cryptocurrencies.
· Banks and individuals can
use ripple software to exchange assets. Currently, this is done using Swift, a
system which relies on banks having separate accounts in all the countries they
operate in.
· Ripple
offers an alternative with some benefits. For example, it could offer low commission currency exchange.
· At
present, there are many currencies that cannot be directly converted to
another, so banks need to use US dollars as a mediator.
· This
results in double
commission. Ripple could also be used as a mediator currency, but it is
much cheaper than USD.
· It
also offers much quicker international transactions than other, similar
alternatives.
· The
average transaction time on the ripple platform is four seconds, in comparison to around 10
minutes for bitcoin, or what can be up to a few days for traditional banking
systems.
· Xcurrent
is ripple’s existing service, offering an alternative to what many see as
Swift’s archaic messaging system.
· Xcurrent
is aimed specifically at banks and other financial institutions to offer a
quicker and more efficient solution to cross-border payments.
· A
recent innovation constantly linked with various financial institutions and
service companies is Xrapid.
· The
price of ripple rallied strongly at the end of September 2018, following
rumours of links to this new service.
·
Xrapid
works by enabling payment providers and banks to connect different currencies
around the world using XRP as a bridge asset, thus processing cross-border
transactions faster than ever.
·
Acting both as a cryptocurrency and as a digital payment network
for financial transactions, Ripple Blockchain uses a common ledger that is managed by a network
of independently validating servers that constantly compare transaction
records.
·
It works on a shared public database that incorporates a
consensus process for decision-making and validating servers to ensure
integrity.
·
The servers can belong to anyone from banks to
individual users.
Ripple Blockchain Logo
Working
Concept
·
The Ripple Blockchain protocol claims that it can enable the
near-instant and direct transfer of money between two parties.
·
Any type of
currency can be exchanged, from fiat currency to gold to
even airline miles, using the Ripple Blockchain protocol.
·
Although Ripple Blockchain validates servers and has a consensus
mechanism, IT IS NOT A BLOCKCHAIN.
·
Ripple Blockchain generally uses a Hash Tree to
summarize entered data into a single value which is further compared across its
validating servers to reach a consensus.
What’s the
difference between ripple and bitcoin?
There
are several differences between ripple and bitcoin,
including:
·
Technology:
o
Bitcoin is based on blockchain
technology, where a public record of verified transactions is recorded.
o
Ripple on the other hand, does not use
blockchain technology, but instead uses its own technology known as the ripple protocol consensus algorithm
(RPCA).
·
Mining:
o
Miners are used to verify bitcoin
transactions, and to issue new bitcoins into the network.
o
Instead of mining, ripple uses a unique distributed consensus
mechanism through a network of servers to validate transactions, and
all its XRP tokens are pre-mined.
·
Transaction times:
o
Ripple
can handle 1,500 transactions per second, and
scale up to 50,000 transactions per second, similar to
Visa for example.
o
Comparatively, bitcoin only has a
transaction speed of three to six transactions per second.
·
Supply:
o
Bitcoin has a total supply of 21 million
coins, whereas ripple has 100 billion pre-mined tokens.
Efficient use of
capital
·
Trading means you only deposit a small
percentage of the full value of a trade in order to
open a position. With mainstream cryptocurrency exchanges you would need to
deposit the full value of the contract. Remember that both profits and losses
will be magnified, and you could lose more than the amount you deposit to open
a position.
No exchange
account or wallet
·
Unlike buying the underlying XRP tokens,
there is no need to open an exchange account or wallet to hold the
cryptocurrency you have bought. This means no waiting for approval from the
exchange, no concerns about keeping your wallet secure, and no fees if you want
to withdraw funds later.
Trade with an established
provider
·
CMC Markets is a regulated provider. Have
experience in the industry and also offer support for
all our clients whenever the markets are open.
Trade responsibly
·
Cryptocurrencies are still relatively new
for most people and can be extremely volatile. Have access to in-depth
educational materials to support their trading.
Ripple’s price is driven by factors such
as:
·
Regulation: many cryptocurrencies are currently unregulated by
governments and central banks. If this changes in the next few years, this
could have an impact on the value of ripple.
·
Technology: ripple’s underlying technology as a platform for
international transactions is what makes it different to other
cryptocurrencies. Several large banks have announced testing of ripple’s
technology, and this could affect its price in the future.
·
Press: positive media interest and coverage of ripple’s
technology is likely to have a correlated positive effect on its value.