What Is Ripple?
Ripple is a technology that serves as a cryptocurrency and a digital payment platform for financial transactions. Ripple was co-created by Chris Larsen and Jed McCaleb and was released in 2012. Ripple’s principal process is a payment settlement asset exchange and remittance system. It is similar to the swift system for international money and security transfer, which is used by a lot of banks and financial middlemen dealing with currencies.
The cryptocurrency’s token, XRP, is premined and has the ticker sign XRP. The company and network are known as Ripple, and the cryptocurrency coin is known as XRP. The goal of XRP is to act as a form of temporary settlement layer denomination, acting as an intermediary mechanism of exchange between two currencies or networks.
Ripple is a peer-to-peer decentralized open-source platform that enables for the frictionless movement of money in any form, including dollars, yen, euros, and cryptocurrencies such as litecoin and bitcoin. Ripple is a worldwide payments network with a customer base that includes major banks and financial institutions. XRP is employed in the company’s products to allow for rapid currency conversion.
The Ripple network does not use a proof-of-work (PoW) or proof-of-stake (PoS) scheme like bitcoin or Nxt. Instead, to authenticate account balances and transactions on the system, transactions rely on a consensus mechanism. By avoiding double-spending, the consensus aims to improve the system’s integrity.
XRP is Ripple’s digital currency.
XRP, a digital currency, serves as a currency bridge between different currencies. It makes no distinction between fiat and cryptocurrencies, making it simple to trade one money for another. Each currency on the ecosystem has a corresponding gateway, for example, CADBluzelle, BTCbitstamp, and USDsnapswap. When using a gateway to hold balances, the user might experience a loss of the value of their money, which is also prevalent in the traditional banking system.
The user may lose the value of their money held at the gateway, if the gateway does not honor its duty. Users that are hesitant to use a gateway, can transact with a trusted gateway, which then deals with the “untrustworthy” gateway. The IOU will be negotiated through a trusted, creditworthy-certified gateway in this manner. Because a user’s bitcoin is not another user’s IOU or debt, counterparty risk does not apply to bitcoins (and most altcoins).
Particular points to consider
Ripple addresses some of the issues that traditional banks have. On the Ripple network, transactions are settled in seconds (even though the platform handles millions of transactions frequently). A wire transfer from a bank, on the other hand, could take days or weeks to execute.