What Is Ripple?

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3 min read

What Is Ripple?

WHAT IS RIPPLE AND HOW IS IT DIFFERENT FROM BITCOIN?

Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network. Using a common ledger that is managed by a network of independently validating servers that constantly compare transaction records, Ripple doesn’t rely on the energy and computing intensive proof-of-work (POW) used by Bitcoin. Ripple is based on a shared public database that makes use of a consensus process between those validating servers to ensure integrity. Those validating servers can belong to anyone, from individuals to banks.

The Ripple protocol (token represented as XRP) is meant to enable the near-instant and direct transfer of money between two parties. Almost any type of currency can be exchanged, from fiat currency to gold to even airline miles. They claim to avoid the fees and wait times of traditional banking and even cryptocurrency transactions through exchanges.

What’s more, Ripple’s token, XRP, isn’t mined like Bitcoin, Ethereum, Litecoin, and many other cryptocurrencies. Instead, it was issued at its inception, similar in fashion to the way a company issues stocks when it incorporates: It essentially just picked a number (100 billion) and issued that many XRP coins.

HISTORY OF RIPPLE

Ripple was originally released in 2012 as a subsequent iteration of Ripplepay.
XRP was conceived by its founders, Chris Larsen, Jed McCaleb, and Arthur Britto in 2012 with a 100 billion supply. Of which, 20 billion XRP were retained by the creators (Jed, Chris, and Arthur — also founders of and shareholders in OpenCoin) and the remaining 80% were gifted to OpenCoin, Inc.

By mid-2013, an XRP community had begun developing, with the XRPTalk forum spinning off from Bitcointalk members that saw the potential XRP had to offer. Though eventually replaced by XRPChat, the forum was the catalyst behind the growth of the XRP community, which is now one of the largest in the crypto world and active across various social media platforms.

XRP then began to increase its trading volume, though initially dependent on a small number of exchanges, including Bitstamp and Gatehub. The volumes were small compared to today’s standards, but an important step in establishing XRP as one of the most widely exchanged cryptocurrencies post 2016.

WHAT’S THE VALUE OF RIPPLE?

The XRP Ledger is fast: settling payments in 4 seconds and aiming to improve on that. That’s hard for anyone to beat.
It can handle around 1,500 transactions per second 24/7 and can scale to handle the same throughput as Visa.
It has a minimum transaction fee of just 10 drops (0.00001 XRP). This is not paid to any party however and is irrevocably destroyed as an anti-spam feature (along with the XRP account reserve balance) designed to make it prohibitively expensive to DDoS the XRP Ledger network. Whilst the transaction cost is pretty nominal, there are others like IOTA for example that offer a zero transaction fee.

The Ripple network strives to provide on-demand liquidity to banking institutions for the fast processing of exchanges occurring around the globe. Moreover, the company has brought attention to the growing need of an international economy to establish a banking system that allows the quick and seamless processing of cross border transactions. Essentially, this is what sets Ripple apart from the rest.

4 min read

What Is Ripple?

Ripple is the name of a cryptocurrency network that took the industry by storm in 2018. With the promises of extremely fast transaction speeds and a highly scalable consensus protocol, Ripple’s XRP coin exchanged on this network usurped Ethereum as the cryptocurrency with the second highest market cap. Which begs the question, what makes this coin so appealing?

THE PHILOSOPHY OF RIPPLE

To put it straight, Ripple has emerged as a company dedicated to transforming the banking industry. Their purpose is to draw attention to some of the major problems with the current banking system like extremely high fees, low accessibility, and slow processing times for cross border payments. These are all issues the Ripple network claims to address.

XRP, which is Ripple’s intrinsic currency, boasts one of the highest transaction rates of any crypto asset. In comparison to Bitcoin’s 6 transactions per second (tps) and Ethereum’s 15 tps, the Ripple network is capable of processing up to 1500 tps. This means that individual XRP transactions require less processing time and charge lower fees.

Essentially, Ripple addresses some major problems with an archaic banking framework by using blockchain technology to streamline how transactions are executed. By providing an easy to access, globally functioning and highly liquid cryptocurrency, the Ripple network can solve a lot of the long processing times and high fees commonly attached to cross border payments.

WHAT IS THE RIPPLE PROTOCOL CONSENSUS? (RPCA)

The functional value of any crypto asset shines through the consensus protocol of its underlying blockchain network. Essentially, the consensus protocol is the process through which the different nodes on a blockchain network agree to validate a set of transactions by adding them as a block to the growing chain. Therefore, the consensus algorithm is crucial for deciding how secure, scalable and decentralized a cryptocurrency actually is.

The Ripple Protocol Consensus Algorithm (RPCA) is a democratic consensus achieved amongst a pre-assigned Unique Node List (UNL) instead of involving every individual node. This Unique Node List is a subset of the Ripple Network, which is considered trustworthy enough to validate transactions. The RPCA executes in rounds, where transactions waiting for confirmation must be validated by at least 80% of the UNL servers. Basically, the Ripple network is able to execute transactions in an extremely fast yet secure manner by only requiring consensus from a trusted subset of the network rather than querying every node.

Those who appreciate the decentralized nature of cryptocurrency and blockchain might be seeing a major tradeoff with this approach. By authorizing a certain subset of nodes over others, the Ripple Network is employing a hierarchical system to process transactions. One could argue through this process, the decentralized characteristics of this blockchain are diminished.

PROS AND CONS OF RIPPLE

Sending money in under four seconds to the other side of the world with minimal transaction fees is a blockchain promise being made from the early days of Bitcoin. Judging by its current trajectory and company stated mission, Ripple seems to be the cryptocurrency positioned to accomplish this even more successfully. Granted with the consensus protocol run on the Ripple network being more centralized, there are still trade-offs this currency makes to boast such impressive traits.

Here are some pros and cons of Ripple:

All in all, Ripple has established itself as a big player in the crypto world. Big names like Money Gram, Standard Chartered and American Express have jumped on the Ripple train and are listed as customers on their site. Although there are drawbacks with running the Ripple Protocol Consensus Protocol as far as decentralization is concerned, XRP has become a major cryptocurrency solution for the long wait times and high transaction fees involved with traditional banking procedures.

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