Ultimate Newbie Guide to Ripple
Understanding Ripple, Ripple XRP, and Ripple network
The word Ripple is often used interchangeably for the fast money transfer network named Ripple, its own associated token named XRP as well as the holding company named Ripple. As the holding company, Ripple is a privately owned, cashflow positive company that has created a new payment system that improves speed and reliability while reducing the cost of a transaction. According to Ripple, the global network using Ripple software is called the “Internet of Value” — a new system to reshape the business world and change the old order.
Ripple is standing against what is called the “walled gardens” of financial networks, which includes credit/debit cards, banking institutions, PayPal and other companies that limit the circulation of money with processing delays, forex charges, and fees.
As a cryptocurrency
The XRP ledger is an open-source product created by Ripple to resolve a significant point of friction in international payments, which is the pre-funding of Nostro/Vostro accounts. XRP can be used by banking institutions to create liquidity on demand instantly, and can also be used by payment providers to lessen forex costs, provide faster payment settlements, and expand reach into new markets.
As a network
Ripple is the only business blockchain solution on the globe for global payments. The developers behind Ripple noticed that despite the numerous improvements in technology, the facilities for payments that are being used today were developed before the internet was invented. Since that time, the payment systems have seen little revisions and have become dated. Ripple, has created a fresh payment system that enhances speed and reliability while reducing cost. XRP can be purchased or exchanged on multiple popular cryptocurrency market segments.
Who controls Ripple?
Ripple is a global company with offices all over the world — NY, San Francisco Bay Area, London, Luxembourg, Singapore, India, and Sydney. The business is run by a team of experts with years of experience in technology, financial services, and compliance. The team includes CEO Brad Garlinghouse, SVP of Global Sales John Mitchell, SVP of Business Development Patrick Griffin, VP of Money Cameron Kinloch, CTO Stefan Thomas, Key Cryptographer David Schwartz, Key Compliance Official Antoinette O’Gorman, and Global Brain of Strategic Accounts Marcus Treacher. The board of directors has experience in finance, regulation, and policy.
The unique value proposition of Ripple
The global payments industry is surprisingly still making use of outdated technology and methods. One must wonder why the global payments industry is behind, considering the fact that the technology for easy global payments already exists.
Finance institutions collectively make trillions of US dollars in payment fees, so they are not in a hurry to innovate a system that eliminates the need for fees. Ripple fundamentally is a global settlement network that is designed to utilize the existing financial world, allowing anyone to transfer money from one currency to another currency in a matter of seconds.
Among various issues that exist in the current infrastructure for payments, Ripple solves a few major ones. Such as the incredibly slow processing time that typically takes between three and five days to settle. Ripple also provides a solution to the high failure rates experienced when making transactions using traditional financial systems. It comes in response to the demands for a smooth, cost-effective, and reliable system.
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An example may help you understand how Ripple can save you money and the headaches of waiting on payment processors to process your payment. Every year, approximately $155 trillion is transferred across borders. If everyone used PayPal, which charges a 2.9% cost for every transfer, this would be regarded as high-end for payment fees. However, we are all probably familiar with PayPal taking a percentage of our payments at some point, which means that around $4.495 trillion of these global payments would go right to PayPal, and to make matters worse, these payments may take time to process.
How the Ripple network, Ripple company, and Ripple (XRP) work together
To be able to understand how Ripple functions, it is beneficial to know how the Real-time Gross Arrangement System (RTGS) and Ripple Exchange Protocol (RTXP) functions. For example, when money is dispatched via Bitcoin, the value is determined in real-time regardless of any Bitcoin delays, and that is what RTGS means.
Ripple uses something called “gateways”. That is best describes as a worldwide ledger consisting of something such as private blockchains. It is essentially an electronic portal that finance institutions, companies, and government authorities use to become listed on the Ripple network. That is called the RTXP, officially known as RippleNet.
Once other financial institutions, company, or federal government joins RTXP, it can transact with other gateways at a fraction of the cost and a considerably faster rate. RTXP can help you receive payments from any cryptocurrency (BTC, ETH, etc.) and fiat (USD, EUR, etc.).
Ripple essentially created a platform for nearly any kind of entity that regularly transfers huge amounts of money across borders, for example, companies such as eBay and Amazon are already spending billions across borders.
Also, the Ripple Network functions as forex between all sorts of fiat money, but to get this done, it should be able to ensure liquidity. That is where XRP will come in. XRP is the digital advantage that was designed for businesses as an on-demand choice for sourcing liquidity in cross-border payments. Banks can use XRP to source liquidity in real-time on demand without the need to invest in Nostro accounts beforehand. Payment providers put it to use to reduce the price tag on foreign exchanges, increase the speed of payment settlements, or reach into other market segments.
As you can see, Ripple’s infrastructure is practically designed for large enterprises and not geared towards the common consumer. The Ripple Transaction protocol (RTXP) doesn’t provide the average consumer with much advantage. So, Ripple will likely not change how you will personally send and receive money anytime in the future. Nonetheless, Ripple seeks to revolutionize how money is moved around the world on a large scale.
Ripple XRP and its uses
In comparison to other cryptocurrencies like BTC and ETH, XRP settles extremely quickly, taking only four seconds. In comparison, it takes BTC an hour to settle, and ETH requires over two minutes to settle. Traditional systems take 3 to 5 days, meaning they are a whole lot worse compared to the other cryptocurrencies.
XRP is also highly scalable. ETH only has 15 trades per second, BTC only facilitates three to six, whereas the XRP ledger is designed to handle more than 1500 trades per second.
XRP Market Cap
It is important to note the total amount of Ripple (XRP) available. All XRP tokens have already been created with a max supply of 100 billion, and by Sept 17, 2017, Ripple had released 38,531,538,922 XRP and kept 6,462,128,816 XRP.
Ripple is Centralized?
Considering the fact that Ripple Labs hold around 61.4 billion XRP tokens, it is said that Ripple is centralized, or at least way more than nearly all other cryptocurrencies. The amount of ripple tokens held by Ripple lab is over fifty percent of the total tokens available. The company has stated that it has strategies to release the others. That is like controlling the acquisition and on-boarding of new partners in the Ripple network.
Brad Garlinghouse (CEO and Creator of Ripple), views it differently. He explained “Ripple is not centralized. To be clear, if Ripple vanished today, XRP would continue to function, also to me, that’s the main way of measuring whether something is decentralized.”
How to Buy and Store Ripple
Ripple can be purchased at some of the most popular cryptocurrency exchanges such as Poloniex, Bitfinex, Kraken, Binance, and Bittrex, as well as through the exchange and wallet provider Gatehub, or through any brokerage websites such as Changelly. Most of the exchanges mentioned offer real-time trading of ripple; therefore, an individual can buy and sell to make profit or cut loses as the price of cryptocurrency changes.
I recommend using a hardware wallet, such as; the Ledger Nano S or wallets created to store ripple for a long time. Hardware wallets are usually much safer because they are offline and also have better security than other online wallets and exchange. But the challenge is that these wallets are suitable for someone trading ripple infrequently. Online wallets such as the ones offered by exchanges are best for people who intend to trade currency frequently. However, there is a risk involved because they are linked to the web (they are prone to attacks by hackers).
Is it advisable to invest in Ripple (XRP)?
The decision to invest is personal. That said, what is important to note is the fact that ripple investment like other financial investments can be highly rewarding and can also lead to loss of investment or trapped funds due to loss of value.
Your ability to make profit from ripple depends on your investment approach. If you are in for the long term, you can wait out negative prices until the value of the currency appreciates, and you sell at a profit.
Ripple looks promising on every front; however, it is important to note that the total supply of XRP in the marketplace is 100 billion). And as though that supply wasn’t limited for traders, Ripple holds around 62 billion Ripple, meaning they can practically inject massive amounts of their XRP into the market to regulate the purchase price and keep it generally low.
Conclusion
Ripple is one of the very few legitimate practical competitors to the old guard financial system. Ripple and RippleNet can be considered a very helpful tool for banks and other financial institutions, as well as businesses of all types. It could play a significant role in how money goes around the world. Ripple simplifies the payments for corporate and business entities; banking institutions can make use of it to get new income, while payment providers will benefit from being able to expand their reach.
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