For anyone who has been following the cryptocurrency market and keeping a close eye on different cryptocurrency prices, it’s hard not to notice how big Ripple has become over the last year or so.
The value of the cryptocurrency grew by 7000%, which increased its market capitalization and global cryptocurrency market share by 7700%. With cryptocurrency prices continually on the rise, the total value of the cryptocurrency market, including this cryptocurrency, is currently estimated at around $488 billion. The $500 billion barrier is expected to fall very, very soon.
Ripple is currently listed as third on the market, with its market capitalization being close to $80 billion, far ahead of Litecoin and Cardano, more than $30 billion above Bitcoin Cash and quickly closing in on Ethereum, the only thing standing between Ripple and the king.
To put things in perspective, a month ago in December, Ripple’s market capitalization was still under $20 billion.
When it comes to trading volume over a 24h period, it has been consistently ahead of Bitcoin Cash, Bitcoin Gold, Qtum, Ethereum Classic and Litecoin for a while now.
All that considered, we can say with certainty that we’ve established that in terms of the cryptocurrency market and blockchain technology, this is kind of a big deal. But, if you’re reading up on it, you must already know that by now. Numbers and statistics, although superficially useful, do not answer any basic questions that an average person would want to know. So, what is Ripple?
In other words, what is the name of the Ripple cryptocurrency? How does it work? Who is behind its development and implementation? How does it compare to other cryptocurrencies? How do you buy/sell it? And perhaps most importantly, why would you want to buy/sell it as opposed to any other cryptocurrency?
We’ve got the answers to all of these questions and more, so get ready and strap yourself in, it’s going to be a wild ride!
When you talk about cryptocurrencies, seemingly superficial things like nomenclature matter and they matter a lot. When you say, “What is Ripple?”, the answers can be different depending on who is answering the question and what they are focusing on. That’s why we’ve decided to start this off with a little explanation.
The term “Ripple” itself can refer to one of three things: the company, the protocol and the cryptocurrency.
When it comes to Bitcoin, the term “Bitcoin” itself refers both to the coins and to the blockchain technology behind them. With Ripple, it is pretty much the same.
Unlike Bitcoin, however, it is not managed by the community. The “Ripple Payment and Exchange Network” is the product of a company called Ripple, formerly Ripple Labs, which was founded as Opencoin in 2012 by Chris Larsen and Jed McCaleb.
Jed McCaleb is a very prolific programmer who created various peer-to-peer technologies including eDonkey and Overnet, in addition to the Bitcoin cryptocurrency exchange Mt. Gox. He is among the world’s richest people, purely based on his token ownership, estimated at $20 billion.
Chris Larsen, who you may have never heard of up until now, is a business angel currently tied with Mark Zuckerberg for the title of the fifth richest man in the world. He is worth $59 billion. As a business executive, he was involved in a number of hugely successful startups, such as E-Loan, the biggest online mortgage lending company. Before Larsen stepped down in 2005, the lender had sold in excess of $18.9 billion in loans.
Jed McCaleb left the company in 2013 to create Stellar, while Chris Larsen, a very vocal advocate of financial privacy and consumer rights, took the reins as the CEO.
The cryptocurrency being developed and managed by a single company means a vastly different philosophy compared to some other big names on the cryptocurrency market. For example, Bitcoin prides itself on being a decentralized payment system, which doesn’t have a single administrator or a central bank influencing it and calling the shots.
However, a single company in charge also means a clear purpose, a defined sense of direction, consistency and reliability. Even more importantly, it means no disagreements, no forks and no long periods of stalled development because of the community’s inability to make a decision.
And all of these advantages show. American Banker, one of the most influential daily trade publications covering the financial services industry, wrote that “from banks’ perspective, distributed ledgers like the Ripple system have a number of advantages over cryptocurrencies like bitcoin,” with price and security being the most important ones.
Ripple is quickly picking up steam, having been adopted as settlement infrastructure technology by a number of banks and companies. Among its users, we can find big names like UBS, a global financial services company and the biggest bank in Switzerland focusing on services such as asset management, wealth management and investment banking. UniCredit is another big name on the list. It is an Italian global financial services company, with a banking network spanning 17 countries and 50 markets, meaning the group has one of the highest market shares in both Eastern and Western Europe.
But perhaps the most prominent user of the currency is Spain’s biggest bank, Banco Santander, the 37th biggest public company in the world according to Forbes, with profit in 2016 totaling € 10.768 billion and total assets in excess of € 1.339 trillion.
Facilitated by its deal with Santander, in November 2017, the company also partnered with American Express, who were looking for ways to implement blockchain technology to speed up international payments between the U.S. and the U.K. These payments exceed tens of billions of dollars and are bound to become increasingly more important in the post-Brexit era.
The American Express partnership was particularly well publicized, which is one of the biggest reasons why the coin price exploded like crazy all over the cryptocurrency market. Even greater growth is expected in 2018.
Although the company’s involvement makes Ripple the superior choice for banks, businesses and companies that require clear-cut goals and long-term stability, the network and the Payment Protocol can, in fact, operate without the company.
In May of 2017, Ripple unveiled its strategy to “become more decentralized than Bitcoin”.
Even though Bitcoin takes pride in being decentralized, while it has been exposed to incessant attacks and criticism for being a centralized network, it has been revealed recently that Bitcoin is not as decentralized as previously thought.
51% of the Bitcoin network is controlled by just five major mining pools confirming the transactions. Although unlikely, if these mining pools wanted to, they could work together to achieve an attack to double spend and reverse transactions at their leisure. With Ethereum, only three pools control the majority of the network, making a concerted attack even easier.
The company’s blockchain technology is called the XRP Ledger, formerly the Ripple Consensus Ledger (RCL). It was created with the intention of being an enterprise-ready public blockchain – unlike Bitcoin – prioritizing processing international payments for payment providers and banks.
The transactions utilizing XRP are confirmed via so-called validator nodes and not through mining. In order for Ripple to be enterprise-ready at launch, these validator nodes were operated by the company. But it wasn’t meant to stay that way forever. In fact, the company made decentralization its main priority in 2017 and 2018.
The strategy to achieve decentralization focuses on three steps. The first step is to diversify the validator nodes across different software platforms and geographical locations to bypass the risk posed by there being a single point of failure.
The second step is concerned with finding and recruiting reliable third-party validators that meet certain objective criteria.
The final step focuses on Ripple’s Unique Node Lists (UNLs), lists of trusted validator nodes that are operated by Ripple. As the company recruits third-party validators, slowly it will phase out the nodes under its control and replace them with attested third-party validators. In the end, no single validator will control a majority of trusted nodes on the RCL blockchain.
To overcome Bitcoin’s level of decentralization, it needed only 16 trusted third-party validators. As early as July 2017, Ripple’s distributed ledger network passed its 50-validator milestone.
But perhaps the biggest advantage of the platform’s validators lies in the fact that they are chosen based on their merit, as opposed to Bitcoin’s miners, who are sought out solely due to their mining power.
Among the notable validators, we feel like we should point the Massachusetts Institute of Technology, Microsoft and Google, which was among the first companies to invest in Ripple back in 2013 through its subsidiary Google Ventures.
With the drive and focus of a private company, combined with its unique efforts to surpass the decentralization of other cryptocurrencies, it brings us the best from both worlds. Companies and big banks can rely on its enterprise-focused dedication to connectivity, speed and certainty of global payments, while its users can appreciate the evolving decentralization of the XRP Ledger, which enables them to exert influence over the native Ripple cryptocurrency.
Apart from American Express, UniCredit and Santander, Ripple’s innovative approach has led to a number of other partnerships. In 2016, Ripple created the Global Payments Steering Group, a venture which attracted Bank of America/Merrill Lynch, Standard Chartered, Westpac Banking Corporation, and Royal Bank of Canada.
But what is it about Ripple that makes it so attractive? More than anything, it is Ripple’s dedication and ability to solve the issues of speed, scalability and cost when it comes to global transactions. Ripple’s blockchain technology makes possible a revolutionary new way of transferring money anywhere around the world, with incredible speed and instant settlement between banks – and all of it made possible by the Ripple Payment Protocol. This new liquidity makes Ripple better than any competitors when it comes to servicing financial institutions. According to Ripple creators, banks can save $3.76 per payment on average, just by using their network. Judging by its partners, this claim appears to be true.
Often referred to as the Ripple Transaction Protocol (RTXP) or, more simply, the Ripple protocol, Ripple is a currency exchange, remittance network and, most importantly, real-time gross settlement system (RTGS).
As a real-time gross settlement system, Ripple is a specialized system for transferring funds between banks. The transaction happens in real time, meaning there is no waiting period at all. The transactions are settled one by one instead of being bundled together and processed in bulk on a daily basis, as it usually happens with transactions between banks.
The payments are final and cannot be revoked once they are processed. Traditionally RTGS systems are used only for very large transactions that need to be cleared urgently, since they are very expensive and typically operated by central banks in most countries.
Ripple is revolutionary in that it offers “secure, instantly and nearly free global financial transactions of any size with no chargebacks.”
XRP is the coin of the Ripple network, a digital asset similar to a cryptocurrency, with some differences. XRP is called Ripple’s native currency due to the fact that it exists only within the Ripple infrastructure. Ripple’s network also accepts other currencies, which exist as balances and debt instruments in the network.
With XRP, there is no counterparty risk like with other currencies. This means that the other currencies in the Ripple network depend on third parties to be redeemed.
So, you can use the Ripple network and all of its benefits, but you are not obligated to use its native currency.
Apart from these differences, XRP is similar to Bitcoin in many ways. Primarily, both are divisible, with the smallest unit of Bitcoin (a satoshi) equalling to one hundred millionth of a Bitcoin, while the smallest unit of XRP equals one millionth of a single XRP. The smallest unit is called a drop.
XRP is also designed to be a limited resource with the supply decreasing over time. 100 billion XRP were created when Ripple was founded.
The creators of the currency retained 20% (20 billion) XRP, while 80% (80 billion) went to Ripple Labs. The company slowly releases the XRP, with the goal of incentivizing market activity, strengthening XRP liquidity and maintaining the overall health of the XRP cryptocurrency market.
Ripple Labs regularly orchestrates substantial giveaways, primarily to charities, while simultaneously focusing on distribution strategies that aim to strengthen or stabilize the XRP exchange rate compared to other currencies.
To address community concerns over the XRP supply, Ripple placed 55 billion XRP (almost 90% of their current holdings) into a cryptographically-secured escrow. An escrow is a separate account with specific terms and a contractual arrangement dependent upon third-party mediation.
This special account allows the company to use no more than 1 billion XRP on a monthly basis. The unused amount is returned back to the escrow at the end of each month. This makes it easier to monitor the amount of XRP that gets distributed.
What makes Ripple different from other cryptocurrencies and digital assets is its focus on becoming a currency exchange and a distributed real-time gross settlement system (RTGS), while other cryptocurrencies are overwhelmingly preoccupied with asserting themselves as alternative currencies aiming to replace traditional payment methods and fiat currencies.
That is why within the Ripple network, its native currency, the XRP, acts as a bridge currency. If two currencies are rarely exchanged and there is no direct exchange available at a given time, the Ripple XRP makes it possible to go through with a transaction anyway.
For example, if you want to use Ripple to transfer funds from China to the USA directly, you can trade CNY to XRP and send the XRP the recipient. The recipient can either have an online wallet or an account in one of the banks in the USA (Ripple has contracts with over a hundred of them). If they wish to do so, they can then trade the XRP back into USD or any other currency.
Although users of the network are not obligated to use the Ripple XRP, everyone who owns a Ripple account must have a small reserve of the native cryptocurrency (20 XRP) in order to make a trade of any kind.
The amount is there to ensure that the account has enough XRP to pay the transaction fee. However, the fee is not there to cover for any perceived expenses or to serve as a source of revenue for the Ripple company. The system works so well that it could practically be free – and it almost is, with the fee starting at 0.00001 XRP, almost a millionth of a USA dollar. Also, the fee is never collected. Instead, the XRP is destroyed after the transaction is completed. So, you must be asking yourself, “If it’s so cheap and if it could easily be free, then why have a fee at all?”
The answer is simple: to prevent attacks on the network. If there weren’t a fee, attackers could use fake accounts and fake transactions to flood the network with an overwhelming number of transactions, potentially overloading it and causing it to crash.
Since there is a fee, such an attack could be too expensive, especially because the network recognizes patterns and increases the transaction fee if a user trades thousands of times per minute or at a similarly enormous rate.
On Ripple’s website, the creators claim that the Ripple XRP is the fastest and most scalable digital asset, focused on enabling real-time international payments anywhere in the world. XRP is built to be used by companies, enterprises and banks, allowing them to expand and reach new markets by lowering the costs of foreign exchange and ensuring faster and more reliable payment settlement.
And it’s not even a contest. With XRP, payments settle in 4 seconds. Ethereum takes more than 2 minutes, while Bitcoin can take 10-20 minutes at best and more than an hour at worst. Needless to say, all three eclipse the glacial pace of traditional systems, which can take between 3 and 5 days to settle global payments.
When it comes to the number of transactions per second, XRP hopes to challenge Visa by achieving comparable or superior throughput. At the moment, the Ripple cryptocurrency can consistently handle as many as 1,500 transactions per second, compared to Ethereum’s 15 transactions per second and Bitcoin’s 3-6 transactions per second. Scalability has long been a very contentious issue within the Bitcoin community, but Ripple has no such issues. It could potentially scale to handle up to 50,000 transactions per second.
Like other digital assets on the cryptocurrency market, the Ripple XRP can also be bought from any cryptocurrency exchange using Bitcoin or other cryptocurrencies. Its price is currently settled at $1.88 per XRP unit (coin). It is currently unavailable on many popular apps such as Coinbase. Binance and Bitsane offer Ripple in exchange for Ethereum.
Additionally, users can purchase it on Bitstamp with their local currency, which is arguably the best option. In order to purchase XRP, users will first have to open and then verify a Bitstamp account. After the account verification process is successfully completed, in order to purchase XRP, users need to deposit funds.
Selecting a market is the next step. Market selection depends on which currency you intend to use to buy XRP. It is possible to trade XRP/USD, XRP/EUR and XRP/BTC.
Bitstamp also acts as a wallet, since the XRP is added to your XRP balance on Bitstamp after purchase.
To store the Ripple cryptocurrency, you can also use an online wallet, such as GateHub for example.
Alternatively, you can pick a cryptocurrency exchange that works best for you from the following list:
In any case, we are here to help you make all your decisions easier. Check out our other articles and see what else we have in store for you.
Details not provided. This is demo widget.
Cryptotradingreview.com has made every reasonable effort to make sure the information provided on this website is accurate. Be aware, however, that this information is subject to change and as such may not always be completely accurate. Everything you read here should be treated as an opinion expressed by the author and not as an incentive to invest in a particular project or execute a trade in a particular manner.
Cryptotradingreview.com is also not liable for any losses that may occur as a consequence of using this website or information found on this website. Cryptocurrency trading comes with a considerable risk and is not suitable for everyone.
Cryptotradingreview.com may also have a financial relationship with companies, products and services represented on this website. We may be financially compensated if our readers decide to click on links on our website and sign up for the aforementioned companies, products and services.
The owner of this website is Next Media Corp.