Ripple is a crypto technology that features a protocol, digital payment network, and cryptocurrency called XRP. XRP's coins are a unique pre-mined form of cryptocurrency.
Ripple was released in 2012 and uses open-source software instead of blockchain technology that provides quick and inexpensive transactions.
Ripple is different from Bitcoin because it was never meant to be a simple form of payment. It was intended to be the primary choice for international transactions around the world.
The currency has its own platform, and users can create their own platform using RippleNet.
RippleNet is a network of payment-providers like money service companies and banks that use solutions created by Ripple to send money around the world. It also allows for payments in any currency with a minimal transaction fee of $0.00001 to discourage DDoS attacks against the platform.
XRP represents the value transfer across the network, and it is a token. It is meant to be the intermediary for other exchanges managing fiat currency and cryptocurrencies.
If you want to exchange Euro for British Pounds, to minimize the commission, the platform will handle the transaction as euros for euros and pounds for pounds. The fee on Ripple would still be $0.00001.
The working prototype for Ripple was developed in 2004. The company behind Ripple received funding from investors in 2013.
The founders of Ripple include Chris Larsen and Jed McCaleb. Chris Larsen is a privacy activist, business executive, and angel investor. He co-founded several financial service businesses and is considered to be the wealthiest person in cryptocurrency.
Jed McCaleb is an entrepreneur and famous programmer. He also helped found several cryptocurrency businesses.
Ripple is different from Ethereum and Bitcoin because it does not use a blockchain. It makes use of its own patented technology called the protocol consensus algorithm.
It means that each node is in agreement. The concept uses a consensus mechanism that works its way through several servers to confirm transactions. Every node has to agree to the transaction before any action is taken.
Ripple is used as a payment ecosystem where users can create their own currency to purchase items from other users.
In understanding how Ripple works, it is similar to a money transfer that takes place between two parties who choose to use intermediaries to send and receive money and complete the transaction.
In essence, Ripple uses a gateway to link the two parties making the transaction. It works as a mediator that receives and sends the currency over the Ripple network using the parties' public addresses.
It is also used to conduct quick international transactions, with the average transaction processing in only 4 seconds. Banks can take several days to process a foreign transaction, and even Bitcoin can take over an hour for international transactions.
Ripple is also a currency exchange with low commissions. It acts as an intermediator that is much more cost-effective for currency conversion.
As an official organization, Ripple's services are to be used by banks. It is different than other cryptocurrencies as they are not the focus of many regulation inspections.
It can be exchanged to any other currency or assets like gold, and transactions include a small commission.
The original design of Ripple was meant to be an essential system for payments with more security features than Bitcoin making payments faster and inexpensive.
Banks that support Ripple include: Union Bank of Switzerland (UBS), Union Credit, Axis Bank, Westpac, Yes Bank, Santander, and the National Bank of Abu Dhabi (NBAD).
Although quite a few banks are planning to use Ripple, most of them are still testing the services. A few banks are using the services, but they are not using the token. These banks are only using real money in their transactions.
Ripple can also freeze transactions as with when the founder of Ripple Labs, Jed McCaleb, attempted to sell more than $1 million in Ripple. His transaction was not processed, and it was reversed. The principles of crypto do not line up with having transactions frozen.
Industry experts predict that Ripple will increase in value as the market sees more projects being coded using other algorithms like XRP.
Another CEO in blockchain technology stated that there are several reasons why Ripple will not increase in value in the world of cryptocurrency. The first reason is the dollar amount of volume that distances each of the top currencies with regards to market cap. Ripple is in the third position, with less than half of the volume of Ethereum.
The second reason is that Ripple is mainly spent on assets and not used for everyday spending. In the upcoming years, consumers will want to use cryptocurrency as a currency, and not just for transactions that involve investments.
The third reason is that it cannot compete with Bitcoin because Ripple cannot be purchased using fiat currencies, only other cryptocurrencies, and this is a limiting factor.
An associate director at a university believes that it is only a matter of time before Ripple allows the exchange of fiat currency on its platform.
A CSO of an international fintech believes that although it is not truly a cryptocurrency, Ripple will naturally increase in value because of the declining markets of 2018.