For about 10 years, people have been treated to new technologies that are out to change how fiat currencies work. The blockchain technology and introduction of Cryptocurrencies are the most remarkable. In 2008, Satoshi introduced the first Cryptocurrency, Bitcoin, which served as the pioneer for the ever growing number of cryptos in the market. While there is no doubt that the world’s financial, and indeed most of the other sectors, are headed the blockchain way, a lot of challenges lay on the way. Some of these challenges include scalability, the speed of transactions, anonymity, mass mining, and difficulties linking to fiat currencies.
To address these challenges, Cryptocurrencies have demonstrated the capability to evolve rapidly and introduce new features. One of these cryptocurrencies is the Ripple. In this post, we look at Ripple to establish when it was found, who founded it, the core goals, and main features. We will also compare its operations with other platforms so that you can make the right decision on whether to join it or other Cryptos.
What exactly is Ripple?
Ripple is an entirely new kind of Cryptocurrency from what people are used to. It is a real-time gross settlement system, remittance network, and currency exchange platform designed by Ripple Inc. It is also referred as RTXP (Ripple Transaction Protocol) designed on a distributed open-source protocol, consensus global ledger and its native currency (ripples).
Though the Cryptocurrency was started in 2012, by Ripple Inc, its history traces back to 2004. Ryan Fugger had the idea of a decentralized system of payment even before Satoshi founded Bitcoin in 2008. In 2004 he established RipplePay.com and later teamed with Jed McCaleb and Chris Larsen to launch OpenCoin. The OpenCoin was used to develop RTXP and the exchange network that finally changed to Ripple Cryptocurrency in 2012.
The main goal of creating Ripple was designing a completely decentralized monetary system that could empower communities and individuals to come up with their own money. This idea appears broad and more comprehensive compared to what the pioneering few cryptocurrencies espoused. It is because of this that all the money in the Ripple network is represented as debt. All the transactions simply reflect balances that are shifted on imaginary credit lines from a payer to a receiver.
Ripple created 20 billion XRP when it was created and released 80% to Ripple Labs for incentivizing the market. The Ripple creators retained the other 20%. Because Ripple has a larger number of coins compared to Bitcoin and most cryptocurrencies, more people have developed an interest in the network. In 2013, Ripple Labs had a giveaway offer when it released 200 million XRP (about 0.2% of the entire XRP) to charities like Computing for Good Initiative. Following the emerging concerns of XRP supply, Ripple agreed to place 55 billion of the remaining XRP to an Escrow account.
How does Ripple work?
Ripple allows users to carry cross-currency transactions in about three to five seconds. The first step before carrying any transaction is signing up for an account and downloading the Ripple wallet that will make you one of the nodes in the network.
The network encrypts and algorithmically verifies all the accounts and transactions. Once you authorize a payment, it is processed automatically without involving third parties. It also validates the sender’s account balances for payments and sends payment notifications to the recipient.
Using the Ripples Search Finding Algorithm, the network looks for the fastest and cheapest path between two currencies when a user wants to send money in varying currencies. Today, Ripple allows deposits in a couple of fiat currencies including JPY, USD, GBP, AUD, NOK, BTC, XRP, and NMC.
The platform employs consensus as opposed to the Proof-of-Work system employed at Bitcoin. The main objective of consensus is ensuring that every server applies the same set of instructions to all nodes in the ledger. As servers progressively receive transactions in the Ripple Network, they determine the transaction that should be verified based on the node that sent it. For validation to be completed, a super majority has to confirm it. If the supermajority does not come to a consensus, it means that the node tried to transact a very high volume. Such volumes are discouraged to prevent high volume of Ripple resources being held by a few nodes.
Every user/node in the Ripple network has an encrypted Unique Node List (UNL) for validating related transactions. This is a list of users that the network believes cannot collude against the system. The list is likely to have competing businesses, trusted community members, non-profit entities, and gateways that are known to work hard to grow the system.
The main features of Ripple
• Ripple Gateways: A gateway is any organization or person that allows users to add or withdraw cash from the Ripple liquidity pool. Gateways also accept direct currency deposits into the distributed ledger. Note that depending on the type of the user, a Gateway might have Know Your Customer policies.
• The customer ledger: Ripple utilizes a shared ledger. This is a distributed database that holds info on all Ripple accounts. The ledger is maintained by independent validating servers that progressively compare transaction records.
• The Bitcoin Bridge: This is the main link between Bitcoin and Ripple ecosystems. Because Bitcoin has been in the system for longer, its ecosystem is highly developed. Its link even to conventional stores has been growing steadily with emerging acceptance of Cryptocurrencies. The bridge with Bitcoin is important to Ripple users because they can send Bitcoins without going via third parties.
• Open API: The Ripple protocol was engineered to be highly friendly to the developer community. To make this possible, it has an API based on popular REST API. One notable app from the community was the Ripple extension that allowed Magento to read the Ripple public ledger and generate an invoice.
• XRP: This is the native Ripple asset that can only exist in the Ripple system. A total of 100 billion XRP was created at inception, and no more can be created within the protocol.
Pros of using Ripple
- Ripple has implemented one of unique models of allowing automated scripts. In most Cryptocurrencies, once a transaction is confirmed, there is no way of reversing it. However, the automated scripts allow a user to schedule payments and get refunded if the target is not met. For example, you can tell the system, ‘if the account does not receive $250 by November 12th, 1400 hrs, the amount received should be returned to sender.
- As a currency converter, Ripple has made it easy for users to have a different view of cryptocurrencies. It has managed to reduce the gap between fiat currencies and cryptocurrencies with a great margin.
- The transactions are completed very fast. By applying the consensus model as opposed to proof of work, transactions can be confirmed in about 5 seconds.
- By applying the consensus model. Ripple has managed to eliminate the problem of few nodes holding a very high number of coins.
Cons of using Ripple
- XRP cannot be used to make direct payment to stores. This means you have to convert your XRPs to a different crypto that is accepted by local stores.
- Though Ripple is a decentralized system, Ripple Labs Inc. plays a great role as the central authority. This means it requires a license that it could be sued in some countries where it has direct operations.
Where to Buy and Sell Ripple in Australia?
Crypto Currency for Fun recommends buying Ripple at CoinSpot. CoinSpot is a multi cryptocurrency wallet with built-in trading features. Users can store many coins, including Ripple and they offer Instant Delivery or your coins right into your account.
The unique model of the Ripple network has demonstrated that Cryptocurrencies can, at last, be directly linked to fiat currencies. Besides, its highly experienced team that keeps improving the main features has made the demand to continue on an upward trend. Whether you are on another platform or looking for a new crypto, Ripple is no doubt a great option.