When people talk about Ripple, the first thing that might come to mind is the XRP cryptocurrency. However, XRP was created to be used in specific areas of the Ripple ecosystem. Ripple’s business, technology and ecosystem are not entirely synonymous with XRP.
What is Ripple’s purpose?
We can say that Ripple has significantly changed the transfer speed and transaction fee of cryptocurrencies with the advancement of technology.
Faster transfer of coins became possible with blockchain technology. For example, it can be thought of as the transition from letters to email.
Cryptocurrencies have made significant improvements in the field of money transfer in general. We can say that XRP is one of the first popular “altcoins”.
However, in general, cryptocurrencies do not work in harmony with traditional monetary systems. Ripple’s overall goal is to make money transfers faster and easier by using blockchain technology.
Ripple’s most popular products are XRP Ledger and XRP Coin. However, it should be noted that XRP Ledger and XRP Coin are also independent of Ripple in some respects.
Ripple’s History
Ripple, originally known as RipplePay, can be defined as a platform founded in 2004 by Ryan Fugger, a software engineer. Jed McCaleb, Arthur Britto and David Schwartz are some of the key names working at blockchain project.
After the launch of bitcoin in 2009, the three engineers wanted to create their own solution. So these three engineers thought of looking outside the bitcoin network and creating their own network. Then, in 2012, the three engineers launched the Ripple (XRP) coin and ledger projects.
McCaleb, the founder of the former Mt. Gox exchange, left Ripple in 2014. He went on to start his own project, Stellar (XML).
Stellar is known as Ripple’s brother in the cryptocurrency market, and they tend to move in the same direction in price. After Chris Larsen left the CEO position in 2016, Brad Garlinghouse became Ripple’s CEO in 2017.
What Business Areas is Ripple Interested in?
Banks use the World Society for Interbank Financial Communication (SWIFT) system to perform international money transfers.
We can say that the SWIFT process is a nationally preferred money transfer model. However, new transfer technologies have been developed after cryptocurrencies. Therefore, we can say that SWIFT is slow and expensive compared to new money transfer systems.
We can say that Ripple was designed to be a solution to this problem. Compared to SWIFT and other traditional money transfer systems, Ripple is cheaper, safer, faster and more transparent.
Ripple is trying to implement a concept it calls the “Internet of Value” or IoV. If we talk briefly about this concept, IoV is a concept where data transfer is easy, cheap and reliable.
Blockchain technology supports this vision by facilitating the transfer of value. Ripple believes that people should be able to transfer money and information at the same speed. Imagine, for example, being able to send money at the same speed as sending a text message.
Ripple is a company focused on taking the historically slow and costly world of payments one step further. You could also say that it has multiple solutions under its own brand. For example; RippleNet, XRP Ledger, XRP Coin and RippleX.
What is RippleNet?
In a nutshell, RippleNet is a global network that financial institutions or banks can use to transfer money faster through a new system with greater transparency and lower costs, unlike traditional ecosystems that have worked together in the past.
RippleNet can only perform transactions through an API. Ripple also previously had products called xRapid, xCurrent and xVia. However, the company combined these solutions to create RippleNet in 2019.
XRP Ledger and XRP operate independently of the Ripple company, but Ripple uses both for various solutions.
XRP Ledger, also abbreviated as XRPL, acts as a blockchain where users can create solutions similar to the Ethereum blockchain.
XRP is also a cryptocurrency that is traded on cryptocurrency exchanges. XRP is used in several places in Ripple’s solution ecosystem.
RippleX is a platform that provides blockchain-based solutions that interested parties can use for various money transfer situations.
The platform appears to serve as an easier method of using blockchain-based solutions, as opposed to interested parties building their own solutions from scratch. RippleX uses the XRP ledger and aims for simplicity in terms of overall compatibility.
There are two other protocols under RippleX, Interledger and PayString. Interledger ensures payment compatibility when several different systems are involved. PayString works to simplify payment addresses.
How does XRP Ledger work?
XRP Ledger (XRPL) does not use the PoW algorithm found on the Bitcoin blockchain or the PoS algorithm found on the Ethereum 2.0 blockchain. Instead, XRP Ledger uses its own proprietary algorithm, called the XRP Ledger Consensus Protocol, to verify account balances and execute transactions.
The XRP Ledger is maintained by independent participants. For each transaction to be successful, there must be an agreement between independent verifiers. While PoW blockchains create blocks on the chain, each containing specific information, XRPL creates “ledgers”.
Each ledger contains information that links it to the old ledger on the chain, such as dates, account balances and more. Because of its algorithm, XRP creates its own chain as a ledger, not a block. Transactions and network changes take place after a certain number of validators have agreed.
The XRP ledger takes three to five seconds to validate each block (ledger) and complete transactions. This is relatively faster than bitcoin’s 10-minute block time.
Advantages of Ripple
Typically, cross-border payments can take days to complete, depending on the type of payment and the regions involved. With Ripple, it can take just seconds to make a transfer. However, many cryptocurrencies can now do what Ripple can do.
XRP’s solutions are designed to reduce costs and increase speed and efficiency.
As more companies from the traditional sector join Ripple, the impact XRP will have in the future will be even greater. The institutions that XRP typically works with are typically banks.
Disadvantages of Ripple
Ripple is operating in a crowded financial technology space and is seeking to establish itself as an alternative to market leader SWIFT. Changing the established order in the traditional world can also be difficult or time-consuming. Ultimately, this transition can be achieved if it is accepted by companies and nations.
The XRP ledger will be maintained by independent participants. For any transaction to be successful, there must be an agreement between independent validators. While PoW blockchains create blocks on the chain, each containing specific information, XRPL creates “ledgers”.
Each ledger contains information that links it to the old ledger on the chain, such as dates, account balances and more. Because of its algorithm, XRP creates its own chain as a ledger, not a block. Transactions and network changes take place after a certain number of validators have agreed.
The XRP ledger takes three to five seconds to validate each block (ledger) and complete transactions. This is relatively faster than bitcoin’s 10-minute block time.