Ripple Coin

Ripple is the name of the company that created the Ripple payment platform as well as the XRP token. The company aims to build a global enterprise blockchain solution to process payments in a faster way. Ripple (XRP) is the platform’s cryptocurrency. The platform is designed to enable real-time global payments anywhere in the world.

The Ripple payment protocol is built on OpenCoin, which was founded in 2012. Its blockchain is maintained by a group of just 36 nodes who work together to process transactions and maintain the security of the blockchain. Ripple controls the majority of the asset supply and has significant oversight of the ecosystem, including control of 6 of the 36 nodes.

XRP is Ripple’s cryptocurrency token used to move funds across borders in a low-cost, trustless, and instant way. Its primary purpose is as a bridge currency, providing financial institutions with a more cost-effective way to exchange cryptocurrencies and fiat currencies.

However, using XRP to bridge assets could create risks for financial institutions that rely on the Ripple network to provide necessary transfer liquidity. Transfers using XRP and other cryptocurrencies are riskier given their volatility, which does not make them suitable units of exchange.

Ripple’s selling point for XRP has been its lowest transaction fees and fast settlement status of transactions. The minimum transaction cost required for a standard transaction on the network is 0.00002 XRP. Another advantage of Ripple is its scalability, with 1,500 transactions per second, and its inherent green properties, making it carbon neutral and energy efficient. Ripple is pre-mined, meaning many of the coins were created or mined before the project was launched to the public. The company has always assured that the premine solution is necessary to reward project founders, developers, and early investors.

History of Ripple

Ripple is a centralized financial technology (fintech) company building different products to solve global payment problems through its remittance system, payment settlement and exchange. Originally called Ripplepay, the company was founded in 2004 by software developer Ryan Fugger. Bitcoin, the cryptocurrency that had not yet become the dominant cryptocurrency during this period, came into the spotlight. Ripple was later co-founded in 2012 by Chris Larsen and Jed McCaleb.

The goal behind Ripple is similar to the vision of Bitcoin creator Satoshi Nakamoto, which was to foster a simpler, faster, and more secure way to transact globally. The difference with Ripplepay is that it does not rely on blockchain. Instead, it is centralized.

In 2011, McCaleb, David Schwartz, and Arthur Britto began developing the Ripple ledger as a recourse to the inherent limitations of Bitcoin. When the XRP ledger launched in 2012, it incorporated the native token XRP to help it function. The team of engineers was soon joined by Larson, now executive chairman and co-founder of Ripple.

From 2012 to 2015, Ripple changed its name multiple times, first in 2012, from Newcoin to OpenCoin. Then, in 2013, it changed its name to Ripple Labs. Finally, in 2015, it changed its name and became known as Ripple today.

The original idea behind Ripple was simple from the beginning, described as a peer-to-peer network of trust. Ripple considers XRP to be a faster, cheaper, and more energy-efficient digital asset that can process transactions in seconds and consume less energy than some of its cryptocurrency counterparts.

Now, Ripple was created to act as a settlement layer, facilitating transactions with the Ripple network. It is already traded as a cryptocurrency and is available on multiple exchanges, including futures, options, swaps, spot exchanges, custodial exchanges, and non-custodial exchanges. 

How Does Ripple Work?

Like other cryptocurrencies, Ripple's blockchain maintains an unchangeable record of transactions through its electronic ledger, XRP. XRPL is also responsible for recording transaction data such as balances, accounts, and transfers and cryptographically protecting them using key pairs. The private key holder is the only person who can approve transactions.

Ripple transactions settle in seconds, enabling both parties to pay in local currencies and allowing institutions to bridge currencies. Transactions are confirmed by a network of over 150 validators (servers) that may earn a spot on Ripple’s unique node list.

The unique node list includes 35 validators, Ripple runs 6 of them. Validators must agree on a set of transactions for a specific ledger entry based on the Ripple Protocol Consensus Algorithm (RPCA). The network is responsible for validating all outstanding XRP transactions, on average every three to five seconds.

Once verified, transactions are recorded on the XRP ledger in accordance with the RPCA and permanently timestamped on the blockchain, ensuring that ledger data entries remain unchanged. Consensus is reached when at least 80% of validating nodes agree on the legitimacy of a transaction, and a new block is added to the XRPL blockchain. There will always be some defective validators, but they will never make up more than 20% of the total. If the number exceeds 20%, the network will stop functioning.

Uses of Ripple

Ripple created XRP to operate the network as an alternative to SWIFT, increasing transaction speeds for more efficient international payments and faster cross-border transactions.

Ripple is convenient for low-volume currencies that may require an intermediary medium of exchange to be exchanged cheaply. This intermediary currency is usually the U.S. dollar, but Ripple can replace it at a fraction of the cost of each transaction. Traditional wire transfers can take days to clear and carry hefty fees. They can be replaced using Ripple due to its high transaction speed and low cost.

Ripple supports the open-source XRPL ledger, a scalable and sustainable blockchain that provides a permanent and immutable record of transactions authorized only by the holder of the private key. The platform is managed by a global developer community, leveraging low cost and rapid value transfer for many use cases. The decentralized exchange (DEX) — XRPL DEX — is the longest-running decentralized exchange, enabling users to trade XRP and other cryptocurrencies with minimal fees since 2012.

XRP Ledger DEX offers unlimited currency pairs with on-demand tracking when users initiate trades. An XRPL trade is known as a "quote" - a limit order to buy or sell a certain amount of one currency in exchange for a specific amount of another currency at the best rate available.

Cross-chain bridging solutions provider Allbridge integrated support for XRPL in April 2022. It opens up new opportunities for Ripple in the decentralized finance (DeFi) space by linking the platform to the Ethereum Virtual Machine (EVM) and non-EVM compatible chains such as Solana, Near Protocol, BNB Chain, and Fantom — etc. wait.

Advantages of Ripple

Quick Settlement Possible

Ripple’s transaction confirmations are incredibly fast. They typically take four to five seconds, whereas it can take days for a bank to complete a wire transfer, or minutes or even hours to verify a Bitcoin transaction.

Low Transaction Costs

The cost to complete a transaction on the Ripple network is just 0.00001XRP, which is a fraction of a penny at current exchange rates.

Multifunctional Switching Network

The Ripple network uses XRP to process transactions, but it can also be used with other fiat currencies and cryptocurrencies.

Used by Large Financial Institutions

Large businesses can also use Ripple as a trading platform, with Santander and Bank of America being among the few companies using the network, indicating that it already has greater institutional market adoption than most cryptocurrencies.

Disadvantages of Ripple

Relatively Concentrated

One of the reasons for the popularity of cryptocurrencies is that they are decentralized, taking control away from large banks and governments. Due to the default validator list, the Ripple system can be a bit centralized and goes against this philosophy.

Large Supply of Pre-mined XRP Coins

While the majority of uncirculated XRP is stored in escrow, large amounts can be introduced at inopportune times, which could impact XRP's value.

SEC Controversy

In December 2020, the SEC filed a lawsuit against Ripple, saying that since it could decide when to issue XRP, the company should register it as a security. The company denied the accusation.

Can I Get XRP Coins Through Mining?

Ripple is unlike any other cryptocurrency. Some people don’t consider Ripple a cryptocurrency at all, and that’s because it has a governance protocol that doesn’t require proof-of-work (PoW) or proof-of-stake (PoS) mining. Instead, it uses the RPCA system to verify transactions for other cryptocurrencies such as Bitcoin without relying on mining.

The Ripple protocol verifies transactions and maintains the integrity of the network through a system of trusted validators. If users want to earn XRP through mining, they must first mine other cryptocurrencies such as Bitcoin or Ethereum (ETH) and then exchange the mined coins or tokens for XRP through an exchange. Users should be cautious when seeing suggestions on how to mine XRP as they are likely to be scams.

Should I Invest in XRP?

There has been controversy over whether investing in Ripple is a wise decision. Nonetheless, there are many reasons why many investors choose to invest in XRP. These include Ripple, which is currently one of the largest coins by market capitalization, ahead of Cardano, Solana and Polkadot. Considering its efficiency in transaction execution and time, it can become a huge store of value and contribute to a greener environment compared to cryptocurrencies that use proof-of-work. These reasons may make Ripple a good investment.