Another altcoin of importance is Ripple, in this article, the coin is being explained in details, its concepts and purpose while also bearing in mind the advantages as well as its disadvantages.
To begin, it’s important to understand that Ripple is both a platform and a currency. The Ripple platform is an open source system that allows for quick and inexpensive transactions.
Unlike Bitcoin, which was never designed to be a simple payment system, Ripple is poised to become the global leader in international transactions. It’s a big goal, but who knows? Currency exchanges may go the way of Blockbuster stores in a few years.
The platform has its own currency (XRP), but it also allows anyone to establish their own through RippleNet.
What exactly is RippleNet?
RippleNet is a network of financial institutions, such as banks and money transfer companies, that use Ripple’s products to provide a seamless way to transport money around the world.
Let’s look at an example: To begin with, Mr. Jones resides in New York and owns a chocolate box that he does not require. He wants to go to a baseball game, but he doesn’t have a ticket. Ms. Smith, who resides in Los Angeles, has a rare stamp she’d like to give away in exchange for a chocolate box.
Finally, we have Mr. Brown, who lives in Alaska and is seeking a rare stamp as well as a baseball ticket to a game in New York.
These folks would most likely never find each other in our current system and would remain with their “not valuable” valuables.
In the Ripple universe, though, someone could say, “Hey, I have chocolate, and I want baseball,” and the system would find the quickest and cheapest way to make it happen.
Furthermore, the platform allows users to pay in any currency, including Bitcoin and has a low internal transaction commission of $0.00001, yep, one zero. The only reason it isn’t free is to safeguard against DDoS assaults.
What is XRP and how does it work?
The Ripple Network uses the XRP coin to symbolize the transfer of value. The primary function of XRP is to act as a middleman between other cryptocurrency and fiat exchanges.
A ‘Joker’ is the best word to define XRP. The card that can be any other card, not the creepy Batman foe. If you wish to exchange dollars for euros, you can do it dollar for dollar and euro for euro to save money. Ripple’s transaction cost is $0.00001, as previously stated.
An interesting aspect is that the sum of $0.00001 ‘disappears’ from the platform after the transaction and cannot be replaced. As a result, every transaction makes the world $0.00001 poorer. It’s set up that way to keep spammers at bay.
Ripple (XRP) was conceived by who?
The protocol was developed as a functional prototype in 2004.
However, the true narrative begins in 2013, when Jed McCaleb, the founder of the EDonkey network, persuaded a group of top-tier investors to join Ripple Labs.
Who are the founders of Ripple Labs?
Chris Larsen, the richest person in cryptocurrency, is an angel investor, business leader, and privacy campaigner. He is most recognized 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). ***
The Ripple Protocol Consensus Method (RPCA) is a consensus algorithm for the Ripple protocol.
Ripple, unlike Bitcoin and Ethereum, does not have a blockchain. A cryptocurrency without a Blockchain may appear weird; after all, how can it check transactions and ensure that everything is in order if it doesn’t have a Blockchain? Ripple has its own unique technology for this purpose: the Ripple Protocol consensus algorithm (RPCA).
The word “consensus” in the name refers to the fact that if every node agrees with the others, there is no problem. Consider the following scenario: there is an ancient arena with one hundred wise old men, and a city requires unanimous consent from all of them in order to make a choice.
You can start a war, terminate a war, raise taxes, declare Olympic games, and all sorts of other wonderful things if everyone agrees. If one of them doesn’t, nothing will happen until we figure out what’s wrong with him.
What is Ripple used for?
- Low commission currency exchange. There are many currencies that can’t be directly converted to each other. So, banks need to use the US dollar as a mediator.
- So, there is a double commission: converting currency A to USD and USD to currency B. Ripple is a mediator too, but much cheaper than USD.
- Fast international transactions. Average transaction time is 4 seconds. Compare it to hour or more for Bitcoin and a few days for regular banking systems.
- Payment ecosystem. User can basically issue his own currency for fast and cheap transaction. For example, one can create a currency to buy and see vintage vinyls or action figures between the collectors.
What are the advantages of Ripple?
- Because Ripple was created as a day-to-day payment system, it is far more powersafe than Bitcoin. As a result, transactions are significantly faster and less expensive.
- Ripple began as an official corporation with the goal of being used by banks. As a result, unlike many other cryptocurrencies, it is not subject to multiple regulatory examinations.
- Ripple can be exchanged for any money or asset (such as gold) with a single, low commission.
Which banks back Ripple?
- Axis Bank
- Yes bank.
- Union Credit
Is it wise to invest in Ripple?
Disclaimer: There is no such thing as a risk-free investment, and each option comes with its own set of dangers. In any case, the choice is yours. However, to assist you, below are some advantages and disadvantages.
Ripple is an official institution with numerous banks’ trust – it’s not just another Blockchain startup from a no-name firm, as previously said.
There is no inflation. All of the tokens were mined from the start and are now in circulation.
The more banks that use it as a transaction platform, the more valuable XRP becomes. If all of the banks decide to use it as a unified bank currency instead of performing redundant currency exchanges, it will be a windfall for all of the early Ripple investors.
It’s a really centralized system. The entire point of cryptocurrency is to circumvent centralized control. Because the tokens have already been mined, the Ripple developers can choose when and how much to release. As a result, it’s similar to putting money into a bank.
In addition to centralization, Ripple Labs now owns 61 per cent of the currency, thus making it a monopoly.
It’s open-source, which is great, but once the code is out there, there’s a fair likelihood that a lot of people will try to hack it. Some of them might even succeed.
Why is Ripple being chastised?
Although there is a big list of well-known institutions that aim to adopt Ripple, the Financial Times reports that most of them are still in the testing phase.
The platform, but not the token, is used by the handful who transact real money. As a result, it’s possible that banks “aren’t really into Ripple.”
It has the potential to halt your transactions.
The most notable case is when Jed McCaleb, the founder of Ripple Labs, attempted to sell over a million dollars worth of Ripple. It was decided to reverse the transaction.
Although there are reports that Jed broke the contract, the notion of suspending a transaction goes against basic cryptocurrency rules.
Ripple’s Future. What the experts are saying?
Roman Guelfi-Gibbs, the CEO and Lead Systems Designer for Pinnacle Brilliance Systems Inc.:
“Ripple certainly has the potential to move up a notch in 2018, but I think it will be more likely in 2019. As the market observes more projects being coded in other algorithms such as XRP, ETH will likely take a backseat to the next big coin/token. It will take some time for the markets to digest this, so I am projecting 2019 to be the likely time for it to take place. Of course, with crypto, anything can happen, so watch closely.”
Shidan Gouran, president of Global Blockchain Technologies:
“Ripple is unlikely to go up by one or two notches in the cryptocurrency world in 2018, and this is the case for three reasons. The first reason is the sheer dollar volume that separates each of the three currencies in the top positions, in terms of their market cap. Bitcoin is at over $191 billion, Ethereum is at over $84 billion, and Ripple is at over $35 billion. To displace Ethereum would require a deficit of about $49 billion to be closed (which is more than double Iceland’s entire national GDP). The second reason is that the use cases for Ripple are mostly for the trade of assets, not for day-to-day spending. As consumer awareness of cryptocurrencies will rise significantly in 2018 and beyond, the interest of the masses will be on cryptocurrencies that can be used as currencies, not just for investment transactions. Finally, the third reason is that because Ripple cannot be bought with fiat currencies, one must purchase existing cryptocurrencies such as Bitcoin and Ethereum to purchase XRP. This goes on to feed demand for Bitcoin and Ethereum, and will only solidify their positions as the top two cryptocurrencies on the market. “
John-Paul McCaffrey, associate director at Long Island University:
“Although currently there isn’t a platform to exchange fiat currency for Ripple (XRP) this may change sooner than you think.”
Samson Williams, CSO of Ireland-based fintech firm SeedUps:
“Though not a cryptocurrency at all, it is the child of banks. So it’ll get the natural bump from [the] 2018 Recession.”