Ripple! What is it?

Friday, 20 September 2019

What is Ripple, and what Ripple is as cryptocurrency. How does XRP differ from bitcoin, what are the pros and cons of this platform and how to buy its tokens.

Ripple is a global settlement system that allows you to transfer almost any currency anywhere in the world in seconds. Compared to Ripple, traditional money transfer methods through SWIFT or Western Union seem to be outdated. At the moment, Ripple is fully focused on working with banks, offering them a more efficient and economical way to conduct real-time money transfers worldwide. Consider an example. It is almost impossible to transfer currency from Japan to Nicaragua (JPY / NIO), so individuals and banks usually have to exchange JPY for USD, and then USD for NIO. At each stage, you need to pay a commission, and as a result a money transfer becomes a rather expensive pleasure. Using Ripple, you can exchange JPY for XRP (internal currency of the platform, “ripple”), send XRP to the recipient — either an individual who has a Ripple wallet, or a bank in Nicaragua — who then exchanges XRP for NIO. Although the essence of the process remains the same, the commissions at each stage turn out to be much lower. In other words: XRP is an intermediary currency that makes it easy to exchange any other currencies on the Ripple platform.


So far, banks are generally not in a hurry to accept Ripple, but there is no doubt that the future is in real-time payments. The Ripple platform provides banks with a huge advantage both in competitor and financially. Ripple is focused on the principle of “Internet values” – this means that in a technological era money transfers must be made at the same speed as the exchange of information. With Ripple, you don’t have to pay a fortune and wait a few days before your money reaches the recipient, even if it’s on the other side of the world.

Why do banks use Ripple?

Several banks already enjoy the benefits of Ripple, including Santander, Axis Bank, Yes Bank, Westpac, Union Credit, NBAD and UBS. According to Ripple, thanks to the platform, banks can save an average of $ 3.76 on each transaction. Given that banks perform thousands or even millions of transactions per year, this is a very significant savings. If it is possible to attract the attention of banks with something, it is a technology that simultaneously allows you to earn more and save more. That is why Ripple, a low-cost global real-time settlement network, has a bright future. The company offers financial institutions a new way of doing business that will allow them to keep up with the times. Ripple is headed by Brad Garlinghaus, but the technology side of the business is David Schwartz, chief cryptographer. The Ripple team is constantly improving its algorithms and is looking for an approach to banks internationally. The San Francisco-based company hires the best specialists from around the world and seeks to simplify remittances between any countries and organizations. Ripple can rightly be called one of the most interesting FINTECH companies; Forbes even includes it in its Fintech 50 rating.

What does the Ripple rate depend on?

Large investors can invest in Ripple directly, but for the majority only one option is available – investment in XRP, the local currency of Ripple. This year, XRP bounce from less than $ 0.3 to almost $ 0.6 per token. Such a sharp surge is due to the growing popularity of the platform among both banks and speculators. Currently, Ripple ranks third in terms of capitalization in the cryptocurrency market after Bitcoin (Bitcoin) and Ether (ETH / USD), according to Coinmarketcap.

In a sense, XRP serves as a backup currency on the Ripple platform, which allows users to exchange virtually any currency on XRP to transfer electronic money anywhere in the world. The recipient can then exchange XRP for any currency of their choice. Every time a currency is exchanged for XRP and vice versa, Ripple liquidity increases due to rising demand — as does the cost of XRP. As conceived by the creators, sooner or later, XRP should turn into a global reserve currency, although so far this is far away. However, XRP transfer is the easiest and least expensive way to make money transfers using the Ripple protocol. At some point, it may turn out that the most reasonable solution is not to transfer XRP to some other currency, but simply to use them as the main means of payment. If private users and banks around the world decide to use XRP and do not exchange it back for fiat money, the cost of cryptocurrency will no doubt start to grow rapidly. For banks to accept XRP, it must become a stable currency with relatively low volatility. Right now, many banks do not want to deal with XRP, because the cost of cryptocurrency can change dramatically. To mediate these risks, Ripple has already begun to work with BitGo, so you can expect that the position of XRP in the banking environment will continue to strengthen.

How to invest in Ripple?

The long-term rise in XRP value is the main goal and strategy of Ripple, since the company owns the majority of the issued tokens. This means that investing in XRP is not much different from investing in the company itself. It should be noted that Ripple also offers consulting services to financial institutions and has no problems attracting investments, so it can be called a suitable object for long-term investments.

How many XRP exist in the world?

A total of 100 billion XRP tokens were issued, with Ripple owning 61 billion. To win investor confidence, Ripple blocked 55 billion owned by XRP with 55 smart contracts, one for every billion tokens. Each month one of the contracts expires, freeing up the corresponding amount. For the past year and a half, the company has spent about 300 million XRP per month to cover operating expenses. Such operational transparency should convince skeptical investors that Ripple does not plan to abruptly withdraw from the market by selling its reserves and thereby bringing down the value of XRP.

What are the benefits of Ripple?

The main advantage of XRP compared to other cryptocurrencies, of course, is that Ripple works directly with banks. Some principled investors will not want to invest in Ripple because of their unwillingness to maintain a banking monopoly, but they are clearly in the minority. From a business point of view, Ripple has definitely made a sensible decision, having established connections specifically with those corporations that control global finance. Most likely, investors will be able to earn on a constant increase in value, simply by making a long-term investment in XRP. Simply put, a good solution would be to buy XRP and forget about it: in the long run, the value of your assets can grow tens or even hundreds of times. Ripple works amazingly fast – it takes less than four seconds to confirm a transaction. In other words, the platform can be used for daily purchases – of course, if it gets enough distribution. In addition, Ripple boasts good scalability: the system regularly processes up to 1000 transactions per second. It was shown that with the same success it is able to process more than 50,000 transactions per second – as much as Visa.

What are the advantages of Ripple compared to Bitcoin?

Bitcoin is an excellent cryptocurrency, but, unlike Ripple, it is not really a fast and convenient means of payment. In addition, the cost of transactions in the Bitcoin system has increased significantly, and the transfer of XRP is still inexpensive; Moreover, it is known that Ripple will not “get bogged down” in a large number of transactions, as it happens with Bitcoin. The initial goal of Ripple was to develop a platform that would not consume such a huge amount of electricity as mining bitcoins. To completely abandon mining, all 100 billion XRP tokens were released in advance. Many criticize Ripple for being centralized, but the company makes every effort to change the situation. The platform is becoming increasingly decentralized due to the variety of validator nodes. The company’s management claims that now its system is more decentralized than Bitcoin. One of the biggest advantages, at least from an investor’s point of view, is that Ripple builds connections with banks all over the world, while many consider Bitcoin and other cryptocurrencies to be part of the guerrilla struggle with established financial order. In other words, banks are more likely to support Ripple and XRP, rather than Bitcoin.

What are the disadvantages of Ripple?

Since Ripple was originally declared as a system that would allow ordinary people to make money transfers around the world, the company’s focus solely on banks causes a lot of criticism. However, if you like the platform itself, but you don’t like the company, you can use Stellar, fork of Ripple from Jed McCaleb, based on more altruistic principles. As mentioned earlier, all XRP tokens were released at once, and Ripple owns most of these tokens. Despite the fact that now these funds are blocked, and the probability of sale is small, this problem still worries many. In a sense, Ripple is the central bank of XRP. Researchers at Purdue University determined that the Ripple platform had some vulnerabilities: because of the open nature of the network, its nodes could be attacked, which would prevent some users from gaining access to their funds. Many may decide not to invest in XRP for personal reasons – especially if they invest in cryptocurrency to avoid banking and government control. On the other hand, investors who want to make a profit and do not see anything wrong with the Ripple business model have every reason to buy XRP.

Although Ripple’s future is quite bright, the future of XRP, like that of many other cryptocurrencies, is unclear.

by Sergiu Marandiuc

Author: Editor

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