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Ripple is a financial system that functions as both a cryptocurrency and a digital payment network. Unlike other cryptocurrencies that use blockchain mining, Ripple confirms transactions via a consensus mechanism involving a consortium of bank-owned computers.
There is a lot of confusion as to the Ripple network and its cryptocurrency XRP. This article aims to clear up any confusions that you may have with the Ripple network and XRP.
Not to be confused with the XRP currency token. The Ripple network was created to operate as a financial service. Ripple also has its own unique cryptocurrency XRP (often confused with the Ripple network). Ripple uses blockchain technology like other cryptocurrencies. The key difference being that Ripple adopts a consensus mechanism in order for transactions to be confirmed on the blockchain. This is achieved through a group of bank- owned servers. Some benefits that Ripple offers are faster transactions and saves energy with the benefit of cheaper transactions in comparison to Bitcoin and others.
Ripple is an open-source peer-to-peer decentralised platform for the purpose of transferring any and all forms of currencies. Ripple acts as a global payment network with a customer base that includes major banks and financial institutions. XRP is a product used and offered by Ripple to allow for rapid currency conversions.
Ripple offers the solution to the involvement of a middle man that is used to confirm a standard transaction. Ripple can be used as a trusted agent to rapidly confirm that an exchange is processed smoothly between two parties.
XRP is owned by the Ripple Network. It runs on its own ledger. Ripple and XRP work hand in hand with facilitating transactions. It aims to provide on-demand liquidity for financial service providers within the Ripple network. Essentially, it acts as a bridge currency to facilitate cross-border payments. The XRP ledger is an open-source project that is maintained by a global and autonomous community, of which Ripple is a member. Users that choose to complete transactions with XRP will experience faster patent settlements and reduce forign exchanges overall cost.
The original prototype was initially created back in 2004. Furthermore, Ripple Labs was later proposed to a handful of world rank investors by Jed McCaleb.
Chris Larsen is the richest person in cryptocurrencies. He is an angel investor, a business executive, and a privacy activist. He is most recognised for co-founding many online financial services firms, beginning with E-loan, an online mortgage lender, in 1996.
Jed McCaleb is an entrepreneur and a well-known coder. He co-founded many crypto-startups, including Ripple, Stellar, eDonkey, Overnet, and Mt. Gox, a cryptocurrency exchange that handled over 70% of all Bitcoin transactions globally at its peak (he sold his share and the platform was re-coded way before the infamous attack).
Jed McCaleb was the mastermind behind the Ripple Network while Arthur Britto built it. David Schwartz then approached Ryan Fugger who would act as a key player that would later transform OpenCoin into Ripple.
Ripple would later launch their very own form of cryptocurrency known as XRP. This enabled financial institutions to send money with minimal fees and wait times. Banks would later express interest in implementing the company’s payment mechanism in 2013.
Over 100 banks had signed up by 2018, although the majority of them simply used Ripple’s XCurrent messaging technology, eschewing the XRP token due to its volatility issues. The scaling difficulties of Ripple and other blockchain technologies remain unaddressed, restricting them to bilateral and intra-bank applications.
Ripple is a decentralised open-source based peer-to-peer network. Like other cryptocurrencies; Ripple has its own ledger that records each transaction. Independent computers across the globe operate to monitor these transactions. Ripple eliminates the need of a middle man to process transactions between two parties. This is achieved using a Hawala method which is used to transfer money across borders without physical money actually moving.
Ripple implements a medium called Gateway to link transactions together onto the Ripple network. Over the Ripple network, Gateway operates as a credit middleman, sending currencies to public addresses.
Furthermore, the Ripple network does not adopt the proof-of-work system commonly used to run other major cryptocurrencies. Alternatively, it relies on a consensus protocol to validate balances and transactions. The agreement aims to improve the system’s integrity by prohibiting double-spending.
Software To Exchange Assets
Ripple software allows banks and individuals to swap assets. Currently, this is accomplished through Swift, a system that requires banks to maintain separate accounts in each of the countries in which they conduct business.
Speedy International Transactions
The average transaction takes 4 seconds to complete. When compared to Bitcoin, which takes an hour or more to complete, and traditional banking institutions, which take a few days.
Payment Ecosystem
The user can essentially create his own currency for quick and low-cost transactions.
If you wish to compare the differences between Ripple and Bitcoin click here to check out our article What Is Bitcoin.