What is Ripple: The Blockchain Project that Banks Use and Love

Ripple is a low-priced coin linked to a speedy network for international transactions. Learn more about what this cryptocurrency has to offer.

Ripple sits right next to the big guns in the world of cryptocurrencies- even after the birth of Bitcoin Cash, it still holds number 4 on the CoinMarketCap chart. And yet this coin is something different from the usual array of mining equipment made up of GPU units. Ripple has its fan base and vocabulary and offers a different manner of work compared to other coins or tokens. Its network is also organized differently, busy with achieving consensus instead of mining. Ripple is faster, more energy efficient than currently available blockchains and the whole project has all the signs of a staple in the world of digital currencies and the free flow of value over the Internet.

Ripple (XRP) Tokens in Circulation

What immediately strikes about Ripple is the vast amount of coins in circulation. The Ripple network relies on having a large coin supply for reasons of speed and security. New Ripples are constantly created and destroyed. There are currently 38,343,841,883 coins in circulation. Ripples are the native coins of the network, but they are not necessary. The Ripple Transaction Protocol (RTXP) may work without the Ripple (XRP) coin, and settles and carries transactions in fiat currency. Also, the Ripple Protocol has a bridge to the Bitcoin system. Ripple users may pay Bitcoin users without having to own or buy Bitcoin.

Ripple is also called "a digital asset for payments." The Ripple network can, in theory be used to exchange anything of value, but by using the native token as a carrier of value.

The team behind Ripple claims it is:

"It’s the fastest and most scalable digital asset, enabling real-time global payments anywhere in the world. "

The native currency provides liquidity and settlement for interbank transactions, as it handles 1500 instant transactions per second. The creators also claim to handle up to 50,000 transactions per seconds as of July 2017, as the network of servers grows. As of July 2017, the network has 55 validation nodes that deal with trading volume and deal with the problem of malicious servers.

The Ripple coin, or asset, is rather old. The technology behind the protocol first appeared in 2004, and Ripple in its current form has five years' track record. After 2015, Ripple became the digital currency that banks chose for international settlement.

Ripple Token Creation

Ripple is not mined or minted. All the potential XRP coins already exist. Instead, Ripples are constantly destroyed with each transaction within the network. This process, sometimes called "proof of destruction," serves as a fee to discourage attacks of malicious, frivolous transactions to clog up the network. Destroying Ripples with every transaction serves instead of "proof of work", which the Ripple team considers unnecessary energy expenditure. In addition to token destruction, a manual statement of trust is required, as users declare trusted validation servers.

XRP Market Price

Ripple currently trades around $0.15, after moving down from a recent peak above 26 cents. For institutional clients, the Ripple team offers special conditions to acquire XRP tokens. For other users, open cryptocurrency exchanges ensure free market trading.

[caption id="attachment_283" align="alignright" width="1087"] source: coinmarketcap.com[/caption]

Coin Price as of August 2017 Market Capitalization 24-Hour Trading Volume
Ripple(XRP) $0.157160 $6,026 bln $86.6 mln
Bitcoin $4,063.87 $67.13 bln $2.47 bln
Litecoin $46.94 $2.46 bln $180 mln

 

According to company information, in the second quarter of 2017, institutional investors bought $21 million worth of XRP directly from the organization. The company itself sold $10.3 of its XRP holdings. This is just 0.9% of the overall trading volume of the currency, amounting to $11 billion for Q2.

In 2017, XRP surged both in price and volume, following a general revival in cryptocurrencies.

The company plans to put 55 billion XRP in escrow to ensure the supply. But this move will not flood the market, as the unused XRP would be taken back and released the next month. The lockup will ensure market stability, as only 1 billion new XRP could be released. The escrow should limit fears that the Ripple company may decide to sell off its holdings. There is still no exact date for the lockup, to prevent market panic.

In the second quarter of 2017, there was a significant uptick in trading fiat for XRP, mostly propped up by interest on South Korean exchanges. XRP/BTC pairs lost their prevalence on speculative trading of the coin, and interest in USD/XRP and EUR/XRP pairs increased shows the market report.

Who Created Ripple

The company behind the XRP token is XRP II, LLC. The mission of the company is to bring on "the Internet of value", a system where transactions move as freely as information moves now.

Ripple is, in fact, a mixing of two projects. The initial Ripple payment protocol was built in 2004 by Ryan Fugger, and RipplePay.com worked from 2005 onward. In 2011, Jed McCaleb and Arthur Britto built a blockchain without mining but instead running on consensus. McCaleb and Britto, along with Chris Larsen of E-Loan approached Fugger and built the current version of the Ripple network.

The Ripple project is well-supplied with information and achieves transparency through regular postings at Ripple.com.

Trading and Exchanging Ripple

Ripple has shown significant price gains, and it may be attractive to buy and sell for profit. But moving the XRP token is not so simple. Unfortunately, the Changelly tool does not offer to exchange XRP for other currencies.

# Source Pair Volume (24h) Price Volume (%) Updated
1 Bithumb XRP/KRW $24,487,000 $0.157312 28.25% Recently
2 Poloniex XRP/BTC $17,011,500 $0.156524 19.62% Recently
3 Coinone XRP/KRW $11,222,100 $0.158191 12.94% Recently
4 Korbit XRP/KRW $8,621,770 $0.157312 9.95% Recently
5 Bittrex XRP/BTC $7,194,100 $0.157132 8.30% Recently

Ripple is most actively traded on BitHumb, and Poloniex is a close second:

 

Ripple Wallets

Because Ripple is so different, there is the question of whether there is something like a wallet to hold the tokens.

There are three options to store and use Ripple.

One is to use the exchange wallets on Kraken, Poloniex or other online traders. But the disadvantage is that users do not hold their private keys, and so there is no protection from loss of funds.

The second option is to use the Gatehub online storage option. This online wallet is made to resemble a bank account as much as possible, and it also has trading features. So Ripple turns out to be a gateway to general trading in traditional assets or cryptoassets. Be careful and load up the correct information the first time- profile changes may result in being locked out of the account until resubmitting the information. There is a multi-step verification process for Gatehub. At the end, you will need to upload passport data or proof of residence. You may think twice if you are comfortable with this process, but XRP is no longer anonymous to acquire and hold.

The third option is to rely on Rippex, the open source desktop wallet. With this option, you can store XRP offline. To exchange it, you would need to send it to an online exchange and make a sell order.

Due to wallet difficulties, XRP may not be the right cryptocurrency for beginners.

The Ripple Network

Ripple works through a distributed ledger updated every second. It is not running on a decentralized network of graphic cards. Instead, the Ripple Protocol software uses specialized bank servers or other servers of transactional parties. The work done on the network is a constant communication between servers to compare new transactions and achieve consensus. Instead of "blocks," the Ripple network produces new ledgers every two seconds, each a perfect record of all transactions on the network. Running a Ripple server is available to anyone who can install the open-source software and provide the right system requirements. The Ripple server machine is not specialized, although hard drive and processor power are needed.

Sometimes, a transaction may not be validated, despite the presence of honest servers. The Ripple network is open to problems with malicious servers, and therefore the validation process is complex. Lost transactions may be processed through the system again.

All transactions on the network are easily visible in a dedicated network explorer.

So far, the network has a limited number of powerful servers achieving consensus, but there are expectations the network of servers would grow.

Banks Use Ripple

Banks and companies use the Ripple system, and some have bought the native token for transactions. The Ripple network, or subdivisions of the network, can be used without the token. The Ripple project started offering its option to banks after 2012, but widespread acceptance came after 2015. Among the users of the system and the network are Bank of America Merrill Lynch, Canadian Imperial Bank of Commerce, Mitsubishi UFJ Financial Group, Royal Bank of Canada, Santander, Standard Chartered, UniCredit and Westpac Banking Corporation. They are a part of the Global Payments Steering Group, by information from April 2017.

The Future of Ripple

Ripple has moved from sub-penny prices into the cents range. From now on, usage of Ripple is a matter of finding new users, who would try out the products and trust their transactions with the network, instead of the traditional way of sending money through the bank system.

The price of XRP as a cryptoasset may be volatile. In the fall, some Redditors expect a new upward trend after the Ripple company voluntarily locks away its stash of XRP, to release it gradually on the market.

As cryptocurrencies move into the mainstream, Ripple may find a loyal user base, as well as attract investment from financial companies, who are right now very cautious about the emerging financial technology.