Ripple
What is Ripple?
Just like Bitcoin (BTC) and Ethereum (ETH), Ripple (XRP) is a Digital Asset. However, unlike Bitcoin and Ethereum, Ripple does not have a Blockchain. Nor is the purpose for payment for goods and services, like Bitcoin.
What is the purpose of Ripple?
Ripple was created to focus on global payment solution for banks and financial institutes. To create an efficient way to send cross-border payments while reducing cost and transaction times by removing the middleman.
Ripple and XRP, is it the same?
Ripple and XRP is often used interchangeably, but did you know it serves 2 different functions? XRP is the Digital Asset that uses the XRP Ledger. XRP transfers value across the Ripple Network and acts as a mediator for Digital Assets and Fiat-Exchanges to facilitate transactions and is independent of Ripple. Ripple is a digital payment platform and protocol, and also the US company. Jed McCaleb and Chris Larson in 2012 founded “Open Coin” and fast forward to 2015 till now, is known as Ripple.
If Ripple doesn’t use Blockchain, what does it use?
Ripple does not have a Blockchain, it does have its own patented technology called “Ripple Protocol Consensus Algorithm” (RPCA). RPCA is managed by a network of independent validating nodes by comparing transaction records. Anyone can set up and run Ripple validator but you can also choose which node to trust as a validator. It should be noted that Ripple recommends using a list of identified and trusted participants to validate known as the Unique Node List.
How does XRP work?
XRP uses XRP Ledger which is an open-source distributed ledger doing real time financial transactions. The ledger us secured and verified by participants through the RPCA which doesn’t require mining like Bitcoin. The reason why XRP doesn’t require mining is because around 100 billion XRP has been pre-mined during the start but only 38 billion are available while the rest will be periodically released, sort of like how Bitcoin goes through Halving. 60% of XRP tokens are owned by Ripple.
What’s the use/benefit of Ripple/XRP?
- Low commission platform. On a normal basis, there is usually a double commission by using USD as the mediator ( A to USD to B), Ripple is the mediator but it is cheaper. Every transaction cost is only 0.00001 which cannot be replenish, this is to prevent spammers
- Fast international transaction. It only takes 4 seconds for a cross-border transaction to happen using Ripple. Comparing to Bitcoin which takes an hour, or normal banks which may take days before the money is reflected in your international bank account.
- No inflation. Since XRP has been initially mined, there’s no inflation
Since the aim of Ripple is to be a global payment solution for banks and financial institutes, and a better way to send cross-border payments, Ripple has attracted some banks to work with them such as Santander, Axis Bank, Union Credit, Moneygram, HSBC Holdings PLC and more. Ripple as in the company and not the Digital Asset (XRP).
In conclusion, look at the 3 Digital Assets as this; Bitcoin being the 1st cryptocurrency in the world. Ethereum created the smart contract system leveraging on the idea of Bitcoin and improving it. Ripple as the currency exchange system that focuses on being a solution for banks and financial institutes. Who knows, Ripple might be how future banks looks like.
Ripple the platform is not available in Malaysia. XRP is available to be traded in Malaysia on Tokenize Xchange and the other 2 regulated exchange. It should be reminded that Digital Assets are not legal tender in Malaysia and can only be traded.
