It might be a bit confusing for most people to understand Ripple in the beginning. But, once they start reading and studying about this cryptocurrency in detail, their confusion will eventually start diminishing.
Ripple is a private company who owns XRP, the digital asset, as the company likes to call it, or simply the native cryptocurrency of the platform which is also called as Ripples.
XRP is one of the leading cryptocurrencies and has been consistently ranked as the top 3 cryptocurrencies by market cap since April of this year. At the time of writing, it is priced at $0.544487 and has secured the third position on the market cap.
At the time of Ripple’s inception, 100 billion XRP were created, which is in fact, the currency’s cap according to the protocol’s rules. Of the 100 billion XRP created, 20 billion XRP were reserved by the company, Ripple, itself and the remaining 80% were handed over to Ripple Labs for sale to other investors.
Ripple offers three unparalleled products; xCurrent for processing cross-border payments; xRapid for providing source liquidity and lowering liquidity costs; and xVia for sending payments globally.
Understanding the XRP Ledger
Ripple went on to build an open-source protocol, the XRP Ledger, formerly known as the Ripple network. The XRP Ledger is an open network without any central authority. Since it is an open-source, global exchange, anyone can access it anytime and can exercise an equal right for using it. Ripple, the company behind the XRP Ledger, does not control the network, collect fees, or limit access.
The XRP Ledger is a distributed, real-time payment protocol for anything that has a value. It supports fiat currency, cryptocurrency as well as commodity exchanges and remittances. It’s a shared public database, with a built-in distributed currency exchange, operating, as some may call it, the world’s first universal translator for money. Anyone can trade currencies on the global protocol using the XRP Ledger. Trades are not only peer-to-peer but also automatic and have no fees or margins. No brokers, intermediaries or middlemen are involved in the trades as they are automatically processed by the network.
This public ledger is being progressively adopted by banks and payment networks as settlement infrastructure technology. In fact, bigger corporations such as Standard Chartered, UniCredit, MoneyGram, and Santander are already making use of it because it offers so many incredible features – the payment’s speed within the network is super-fast, the stability of the technology is commendable and the ability to its coin as a bridge currency is also praiseworthy.
The XRP Ledger routes every transaction to the cheapest price available in the market at super-fast speed. Anybody can put a bid-ask on anything of value in this global exchange. In fact, XRP, the native cryptocurrency of the network, can find the best route for a dollar to become a pound or airline miles to become Bitcoin. XRP will look at every transaction in the global order book.
While forming a basic understanding of Ripple, the XRP Ledger, and the XRP, you should also know about RippleNet.
Ripple’s current focus is on the global settlement and it has been pushing XRP to settle international payments. Ripple is developing a compliant payments network called as RippleNet, on top of the XRP Ledger which is an open settlement network and a distributed global exchange open and accessible to anyone. The company claims RippleNet to be world’s only enterprise blockchain solution facilitating global payments.
While RippleNet is an exclusive product of the company, the XRP Ledger, as discussed above, is open and available to everyone.
Using RippleNet, Ripple connects banks, payment providers, digital asset exchanges and corporates to provide one frictionless experience to send money globally.
Unlike Bitcoin, there is no mining equivalent in RippleNet, which means validators are welcomed to run the nodes but validating transactions will not reward them with XRP.
Can Ripple Be Mined?
Unlike Bitcoin and other altcoins, Ripple cannot be mined. The only individuals who can generate XRP are the ones who actually created it. As already mentioned above, 100 billion XRP were released at the time of inception and with every transaction, the XRP used would be eliminated. Once an XRP has been used, it cannot be further used in the next transaction.
Basically, this means that XRP would be eventually exhausted as more users continue to use the Ripple network for processing transactions or using XRP, consequently raising its value in the process.
Since Ripple cannot be mined, what option is left for the users is to mine other cryptocurrencies first and then look for exchanges that could help them convert their cryptocurrency to XRP. This will help you get your hands on XRP directly without having to pay for the process of Ripple mining separately.
Is Ripple Better?
RippleNet network, in some ways, is comparatively better than the other cryptocurrencies’ networks. It has incredibly low fees with the current base transaction fee amounting to 0.00001 XRP. The actual transaction fee varies with the load on the network. The transaction confirmation time for RippleNet is 4 seconds whereas Bitcoin has a 10 minutes confirmation time and Ethereum has 2 minutes confirmation time.
RippleNet can consistently handle 1,500 transactions per second, with an upper limit of 50,000 transactions per second. This characteristic can be compared to VISA. On the other hand, Ethereum can constantly handle about fifteen transactions per second with an unbounded upper limit and Bitcoin can only handle up to seven transactions per second.
Lately, many debates and arguments regarding whether XRP is a digital asset or a security are still going on. No concrete solution has been reached up till now. However, Ripple is trying its best to cancel out all the arguments being made against it and prove how valuable XRP is going to be for everyone in near future.