What is Ripple? The Ultimate Guide to XRP

The underlying Blockchain technology responsible for the creation of Bitcoin has also given rise to alternative cryptocurrencies, popularly known as “altcoins”. These altcoins, while sharing the same underlying Blockchain technology with Bitcoin, aim to address the shortcomings of the dominant currency while aiming to fill certain application niches. One such altcoin is Ripple(XRP) which was designed to leverage crypto technology in order to process settlements within banks while reducing overhead costs. The great cryptocurrency boom of 2017 has changed Ripple’s fortunes for the better, and today it stands as the second largest currency behind Bitcoin in terms of market capitalization.


What is Ripple and what does it do?

Originally conceived as a settlement system between transnational banks for fast settlements, Ripple is an open-source payments system based on the blockchain technology. It was designed to reduce overhead charges for banks while they transacted transnationally and reduce fees. Banks were to transact using the digital currency, also called Ripple(XRP), whose records are kept on a shared ledger accessible to all users. The currency was also designed for swiftness, so that the time taken to transfer money is as less as possible. The creators of Ripple have an interesting blog up on their site which explains the traditional headaches involved in the transfer of money from one place to another.

David Schwartz, a Ripple team member states,

“Payment systems today are where email was in the early ‘80s. Every provider built their own system for their customers and if people used different systems they couldn’t easily interact with each other. Ripple is designed to connect different payment systems together.”

Who are the Creators of Ripple?

The company behind the cryptocurrency, OpenCoin, was founded by two people, Chris Larsen and Jed McCaleb. Both of them have a background in providing financial services, with McCaleb working in the ill-fated Mt. Gox while Larsen was the co-founder of E-Loan, a digital finance company. Many other people working in Opencoin have a similar background, either working in cryptocurrencies or working in financial companies.

Ripple When Compared to Bitcoin

The underlying technology behind Ripple is the same as in Bitcoin. Both are based on having a blockchain as well as a shared ledger to keep record of all transactions. Both currencies can be transferred from one account to the other easily and both provide security to protect against counterfeiting.

But unlike Bitcoin, Ripple is designed to allow for faster transactions. Also, unlike Bitcoin which need to be mined (generated by solving cryptographic equations using computer hardware), Ripple does not require to be mined, as the whole currency is available for circulation. Also, the total number of Ripple in the market is 100 billion, while the total number of Bitcoins which can be generated is only 21 million. Ripple has more acceptance among banks, when compared to Bitcoin, as latter is seen as a competitor to the traditional banking system. But, on the other hand, Ripple has a long way to go before having the widespread acceptability factor which Bitcoin currently enjoys.

The Reason Behind Ripple’s Meteoric Rise

The value of Ripple has increased considerably in the cryptocurrency rush of 2017. Much of this rise has been attributed to be coming from Asia, post the Ripple Company’s joint venture with Japanese financial company SBI Holdings. This, in turn, has further led to more joint ventures, including a partnership with American Express, which have given an air of credibility to the currency.

Hedge funds are also getting in the play, with many people including Michael Arrington announcing a $100 million investment in the venture by the end of 2017. All these actions continue to attract investment and interest in the company as well as the currency, which has led to an increase in its demand as well as its total value.

Concerns Regarding Ripple

While the digital currency has went on to become one of the most important cryptocurrencies to exist in the market today, many have expressed concerns about its dominance. The primary issues people are concerned with is with regarding Ripple’s centralization as well as privacy problems while using the currency. Unlike other currencies, Ripple is centralized with it’s parent company holding most of the cryptocurrency in the market. This can pose a problem as releasing more amounts of currency is dependent on the decisions of the Ripple Company. People are also concerned about Ripple’s closeness with banks, as they think that it may provide an outlet to banks to keep an eye on all their transactions.

The Way Ahead for Ripple

The Company aims to address the currency’s shortcomings at the earliest, while implementing more technologies to make the backend behind the currency even more secure and safe. It is speculated that more financial institutions are planning to invest in the company, which would lead to more surges in value for the currency. As of now, the currency has shown no signs of stopping, with its total market value going over $100 billion. It remains to be seen how 2018 would change the fortunes for Ripple as well as its users.


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