Ripple is a payment platform designed to provide solutions for cross-border payments. It’s also one of the only cryptocurrencies designed to assist fiat currency rather than replace it. Because of this, and the fact that it is not truly decentralised, it’s one of the more controversial digital currencies around. Read on for more about how Ripple works and what it’s used for.
What is Ripple?
Ripple is a cross-border payment platform owned by the Ripple organisation. Ripple combines the Ripple payment platform and the XRP currency as a means to provide frictionless and more efficient transactions globally using blockchain technology.
Ripple shares a few traits with Bitcoin, but there are a few fundamental differences, which we have outlined below.
Ripple is not 100% decentralised
Unlike many digital currencies, Ripple isn’t 100% decentralised. This is because Ripple (the company) currently owns about 60% of the currency, thereby controlling its distribution.
Another reason why Ripple isn’t completely decentralised is the way their validator ecosystem works, which we’ll explain below.
Ripple does not run a proof of work system
Ripple utilises blockchain technology to process and record all transactions on the Ripple network using a digital ledger which is monitored and supported by a full-time team of engineers and trusted validators.
However, these engineers and validators are chosen by Ripple the company, which is different to Bitcoin, where anyone can be a miner and validate transactions. Ripple is taking steps to diversify their validator ecosystem.
Ripple is a digital currency
Ripple is purely digital, meaning it has no physical bills and coins. The limit for Ripple is yet to be determined. The token ticker for Ripple is XRP.
Visit the Blockchain section of A Beginners Guide to Digital Currency: Bitcoin for further information on the blockchain.
What is Ripple used for?
Fast and scalable global payments
Not only does Ripple settle transactions at a faster rate than Bitcoin (4 seconds according to their website), it also has lower transaction fees. By cutting out the middlemen, there is no need to worry about the spread between different currency exchanges in the market or for a third party fee to enable the transaction.
The Ripple network also handles more transactions per second than Ethereum and Bitcoin.
Built for enterprise use
Ripple offers banks and payment providers an on-demand option to source liquidity for cross-border payments. Using the network, companies can instantly transfer monetary assets globally through the Ripple network using the XRP currency as a digital asset. For more information about Ripple’s use case for banks, read Ripple’s XRP Cost Model paper.
Where did Ripple come from?
Ripple was founded and created by the Ripple organisation in 2012. The company’s goal was to develop a solution involving creating a common standard for cross-border payments to bring together currently disconnected ledgers.
Ripple was designed to work alongside banks to allow for the seamless transfer of any form of currency. The platform connects banks and institutions to allow them to transfer money through the network.
The Ripple network is a distributed open source payment system that is still in its beta stage of development.
Where to get Ripple?
You can buy and sell Ripple on an exchange, or receive it from someone else into your digital currency wallet. You can’t, however, mine it.
All coins that will eventually be released into circulation have already been created by Ripple. Meaning the only way to own XRP is to either purchase it or to be paid in it.
As Ripple requires no mining, this makes it the most energy efficient cryptocurrency as traditional mining does require power.
Where to store your Ripple
We recommend getting a digital currency wallet that will store your coins securely. To discern the best wallet for you, read the ‘Keeping your Coins safe’ section of this guide.