As the number of investors in bitcoin and other cryptocurrency trading rises, there is another emerging player- Ripple. Ripple is an RTGS (real-time gross settlement system) platform that provides currency exchange and remittance. It is an open source platform to facilitate cheaper and quicker transactions.
Originally, it began as a working prototype RipplePay in 2004. It was then iterated as Ripple in 2012. It was founded by Jed McCaleb, famous techie and entrepreneur and Chris Larsen, investor and business executive.
Is Ripple Just Another CryptoCurrency?
Though it is a payment machine like Bitcoin or Ethereum, Ripple is not based on blockchain technology. Ripple XRP, its own currency, is mined in a different process than many other cryptocurrencies. It is issued at its inception, similar to the way companies issues initial stocks.
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Though XRP is Ripple’s own currency, you can create your own through RippleNet. The token acts as a mediator for any kind of exchange. 100 billion Ripple XRP tokens were issued by the company.
Instead of depending on energy and computing for minting the coins, Ripple has patented its own algorithm- RPCA ( Ripple protocol consensus algorithm). It has a shared public database, where every node reaches a consensus and validates the transaction.
How Can You Use RippleNet
Banks or any service using money transactions can use RippleNet for rapid transactions in any kind of currency. For example, you can exchange fiat currencies, other crypto coins, metals, and frequent flyer miles. The platform looks for the cheapest combination and makes the exchange quickly. The minimum cost of the internal transaction is $0.00001.
What Are the Pros That Work For Ripple?
Here are the benefits of using Ripple that may help you decide to invest:
- Ripple transactions are cheaper and quicker. The average time of international transactions is 4 seconds.
- Even though Ripple acts as a mediator to convert currencies, the commission is much cheaper than US dollar.
- Ripple is not restricted by multiple regulations like other crypto coins because it started out as an official organisation.
- Its focus is on banks and day-to-day transactions, proving it to be safer than Bitcoin. If in future, there is a single bank currency, you can make a huge fortune with your Ripple investment.
- Any fiat currencies or valuable metals like gold can be exchanged with common minimal cost.
- The price won’t change as all the tokens are already mined. Hence there will be no inflation.
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What Goes Against Ripple
There are many who are sceptical about Ripple. Their criticisms are:
- Ripple platform uses a Unique Node List (UNL) to control network rules. It blocks malicious validating servers from 2013 after Ripple paid fine for FinCEN violation.
- Users of other blockchain currencies complain about Ripple’s centralised control, which goes against the concept of cryptocurrencies.
- Ripple Labs owns 61 percent tokens, which are already mined. So, it depends on Ripple developers whether to release and how much.
- Financial Times reported that out of the 18 financial institutes and banks which were in line to use Ripple, some are still testing the platform and token.
- Transactions can be frozen- it was proved when Jed McCaleb, the founder, had his transaction reversed. Moreover, the open-source code can be hacked.
Ripple’s Use In The Market Today And Its Future
Coinbase made an announcement in January 2018 denying that it was going to list Ripple. Prices of Ripple were brought down after this announcement.
Still, it is far behind SWIFT, a cumbersome platform in use worldwide. SWIFT signed up 11,000 financial institutions, whereas Ripple has over 100 banks.
Banks use Ripple platform to convert different currencies and are yet to fully utilise XRP token.