Ripple (XRP) is a cryptocurrency token that drastically reduces transaction costs by migrating transactions from central databases to a more open infrastructure. Because XRP transactions are quick, and inexpensive, they are advantageous for cross-border transactions. Ripple is an economic system that functions as a cryptocurrency and a digital payment network. It was started in 2012 by Chris Larsen and Jed McCaleb with the purpose of payment settlement asset exchange and remittance system, comparable to the SWIFT system for international money and security transfers.
Briefly Understanding Ripple
Ripple is a decentralized open-source network that allows for frictionless money transfers in any currency, including Altalix‘s Litecoin and Bitcoin. Ripple is a global payment network that intends to replace the SWIFT system. It makes use of XRP to provide quick currency exchange. Consider a money transfer in which both parties choose their own intermediaries to receive the funds. Ripple is a service that facilitates digital hawala transactions.(Hawala is an informal money transfer method in which no real money is exchanged.) Ripple uses a gateway to establish trust between two parties seeking to transact, allowing for peer to peer transactions. Tokens are received and sent to Ripple addresses that are open to the public. Anyone who registers and creates a gateway can handle the network’s currency exchange, liquidity management, and payment transfers.
Briefly Understanding Ripple
The digital currency XRP represents how much Ripple is worth and serves as a medium of exchange for other currencies. Each currency in the ecosystem is connected through a unique gateway. XRP allows users to quickly exchange different currencies and make transactions globally.
How XRP Works
The Ripple network does not operate on a proof-of-work (PoW) model similar to bitcoin or on a proof-of-stake (PoS) one similar to Nxt. Rather than that, transactions depend on a consensus process to confirm account balances and system transactions. The consensus seeks to strengthen the system’s integrity by eliminating duplicate expenditure. When a Ripple user launches a transaction with numerous gateways but tries to transmit the same $100 to each gateway system, everything except the first transaction will be destroyed. Consensus across distributed nodes determines which transaction was initiated first. Confirmations are immediate and take around five seconds. The Ripple platform is regarded as decentralized since no central authority determines who may establish a node and verifies transactions. Ripple maintains a record of all IOUs issued in a particular currency by any user or gateway. IOU credits and transaction flows between Ripple wallets on the Ripple consensus ledger are publicly viewable. However, although financial transactions are publicly recorded and made accessible on a Blockchain, the data is not tied to any person or business’s ID or account. However, since all transactions are recorded publicly (through the Blockchain), the information is accessible to de-anonymization methods.
The Difference Between Ripple & XRP
Occasionally, specific stories and publications use the terms Ripple and XRP interchangeably. However, are they identical? Alternatively, what is XRP? And what does this have to do with Ripple? It’s critical to grasp the distinction between the two: XRP is a cryptocurrency, while Ripple is a for-profit firm that assists in the promotion and development of XRP, the software that powers it (the XRP Ledger), and a variety of other transaction-focused initiatives. The business maintains categorically that the two companies are distinct. On its website, Ripple promotes XRP as “faster, less expensive, and more scalable” than any other digital currency. It leverages the XRP Ledger to “power new payments technologies.” The company characterizes its participation with XRP as follows: “Ripple is focused on developing technologies that will enable XRP to achieve new usefulness and alter global payments. Additionally, other parties are researching additional XRP-related use cases.” Ripple was formed as OpenCoin in September 2012, one year after development on what would become the XRP Ledger began. In 2013, OpenCoin changed its name to Ripple Labs, eventually settling on Ripple in 2015. Initially known as the Ripple Open Payments System, the XRP Ledger was renamed the Ripple Consensus Ledger before rebranding as the XRP Ledger. Following the successful launch of the XRP Ledger, its creators decided to give 80 billion tokens to a private firm that would collaborate with the community to sustain the cryptocurrency. Ripple claims to have been selling XRP systematically to “incentivize market maker activity to improve XRP liquidity and strengthen the general health of the XRP markets.” Initially, XRP served as the ticker symbol for “ripples” or “Ripple credits,” but these terms were eliminated in favor of just XRP to minimize confusion so we will not see a ripple NFT.
How To Get XRP
Ripple (XRP) is generated using a crypto ledger akin to Blockchain technology and is federated by financial institutions and payment processor networks. While miners cannot mine Ripple (XRP) directly, it is theoretically feasible to use other cryptocurrencies. For example, one may mine other cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) and then trade the mined coins for Ripple (XRP) through exchanges, which is one of the most practical methods of mining XRP. However, people without a cryptocurrency miner may purchase Eth, BTC, or LTC via a reliable gateway like Atlalix and use them to purchase XRP.
What’s Ripple’s Overall Goal
Ripple addresses some of the disadvantages that users faced. On the Ripple network, transactions are settled in a matter of seconds (even though the platform handles millions of transactions frequently). Other methods might take days or even weeks to process. The cost of transactions on Ripple is similarly low, with the minimum cost of a normal transaction set at 0.00001 XRP, compared to the high costs imposed by banks for cross-border transfers. Ripple was founded to collaborate with the XRP community to expand its use cases. Over time, it developed several technologies that enabled the cryptocurrency to be used for cross-border payments, with remittance companies such as MoneyGram using Ripple’s products before their collaboration. The business has now consolidated all of its XRP-related products under the RippleNet service, which “provides links to hundreds of financial institutions worldwide through a single API and simplifies transferring money.” RippleNet removes the requirement for pre-funding accounts by using XRP to obtain liquidity for cross-border transactions dubbed On-Demand Liquidity. RippleNet is used by remittance companies and banking titans such as Santander, Bank of America, SBI Remit, American Express, and Banco Rendimento.
In a nutshell, Ripple’s XRP-powered technology enables network users to conduct payments in real-time, increasing payment efficiency and certainty. XRP is utilized to obtain liquidity on-demand and to lower the amount of money needed in Nostro accounts to conduct global payments. Additionally, Ripple finances the Interledger Protocol, a software platform to facilitate transactions between cryptocurrencies and bank ledgers. Although the Interledger Protocol is not dependent on XRP, it may be linked to the XRP Ledger. Finally, XRP uses RippleX, a platform that enables developers and entrepreneurs to incorporate Blockchain technology into their applications through tools and services created on top of the XRP Ledger. As with other cryptocurrencies, XRP can be used on it’s own Blockchain. Remember when you get your crypto before converting to XRP make sure you got your crypto from a reputable source with a Trustpilot review that looks something like this.