The idea for Ripple was conceived back in 2004 by Ryan Fugger and was called Ripple Pay. In 2012 it was passed to Jen McCaleb and Chris Larsen, who founded OpenCoin, later called Ripple Labs. Ripple Labs focuses on serving banks and payment providers, so they can lower costs and accelerate settlements.
How does Ripple work?
Ripple Net is a network based on some rules called Ripple Transaction Protocol, or RTXP. It consists of computers spread all over the world, known as validators. They maintain a ledger of who owns what and ensure every transaction follows the RTXP rules. Anyone can run a validator and help in the maintenance of the Ripple network.
Companies that want to access the Ripple network can use gateways, which act as a link between two parties who want to make a transaction. Ripple products like xRapide, xVia, and xCurrent are offered to optimize companies’ current solutions for transferring money anywhere.
Unlike other cryptocurrencies that support only their own asset, Ripple provides two types of currencies, IOUs and XRP. IOUs are tokens that can be stored in any Ripple wallet. Each IOU has a name that consists of who issued it and what it represents, and it can be released for any kind of real-world asset.
An IOU represents something you owe, not something you own. It’s basically a debt, a commitment to pay back an asset you have in real life. When you transfer an IOU to a person, it means you owe them something. That’s why trust is important when it comes to IOUs. To accept an IOU from somebody, you must trust they will pay you back. This is known as a trust line.
On the other hand, XRP is provided by RippleLabs to make transfers through the Ripple network. Unlike IOU, XRP is considered a tradable asset by anybody on the network. Once you receive a payment in XRP, the transaction is final, and there are no risks that parties won’t meet their obligations. Even though IOUs are more valued, XRPs are fast and scalable. It will only take 4 seconds to make a transaction.
When a transaction is made, the validators maintaining the network consult with each other and vote if it’s valid or not. These people don’t get compensated as miners do from Bitcoin. When the Ripple Labs was established, a total of 100 billion XRP were pre-mined, and no more will be created. The amount of XRP will be decreasing over time by demolishing the transaction fees. Theoretically, this will increase its value.
How to get started with XRP?
Firstly, you have to open an account on an exchange platform and then deposit an amount of money into it. You have to follow different steps on different platforms, but they are very similar to each other. After you’ve terminated all the requested procedures, you’ll be able to purchase XRP in your wallet. The minimum deposit is 20 XRP.
- Ripple isn’t just a cryptocurrency, but a qualified company. It has over 500 specialists in different fields working there.
- Ripple is now trading for 0.29$ per coin, making it one of the most affordable cryptocurrencies at the moment. This makes it possible to purchase a large number of coins, for little money. Analysts have projected a rise in the next 10 years, allowing you to make significant profits.
- Banks are interested in using blockchain technologies because of the fees they will avoid during transactions. Being a “for-profit” company, Ripple is very focused on moving value globally, aiming at the banking industry and payment providers.
- XRP is one of the principal cryptocurrencies nowadays, with a market cap of more than 25 billion $. This increases the investors’ trust and makes Ripple less predisposed to business cycle volatility.
- Ripple is devoted to observing any anti-money laundering signals across the network and reporting suspicious activity to authorities.
- When someone invests in XRP, hopes that in the future, the banking system and other institutions will use it to transfer assets, making its price rise. But there is no assurance for that. If they use IOUs, the price would be static.
- Ripple won’t be producing any more coins, and senior board members of the company own the majority of them. When assets are centralized in just a few hands, the price could be overinflated.
- Ripple isn’t decentralized like its other rivals, and that is a major concern for blockchainers.
- You ultimately have to depend on trust to use the IOU tokens.
Ripple focuses on serving banks and payment providers, so they can lower costs and accelerate settlements. It is based on the Ripple Transaction Protocol, or RTXP, that ensures every transaction follows the rules. Ripple provides two types of currencies, IOUs and XRP. An IOU represents something you owe, not something you own, while XRP is fast, scalable, and used for trading and payments. A total of 100 billion XRP were pre-mined, and no more will be created. It is one of the principal cryptocurrencies nowadays, with a market cap of more than 25 billion $. Ripple’s biggest issue is that it’s not decentralized like its rivals. That is a major concern for blockchainers.
Follow us on Twitter!