Ripple (XRP) Explained
Bitcoin and Ethereum, the two best-known cryptocurrencies, have quite a lot of similarities in terms of content. Although both digital currencies have often appeared in the news for quite some time, some altcoins are gaining much popularity. Ripple (XRP), introduced in 2002, is one of these altcoins, fundamentally different from the above cryptocurrencies.
Ripple was created in San Francisco as a centrally controlled payment system with a technology similar to Blockchain. The system provides a payment protocol that customers in the financial industry can integrate into their systems.
Features of Ripple
Now, what are the features of XRP? Some of them are briefly described below.
Financial services
As briefly indicated above, Ripple is a digital currency and a payment system. Financial transactions within the payment system occur on a Ripple Transaction Protocol (RTXP) network. This makes it clear that the idea behind Ripple, an international and fast payment infrastructure, is more focused on financial service providers like banks than consumers like you and me. Ripple offers a centralised payment network where Bitcoins are used to capture value and settle money transactions on a decentralized network.
Centralization and trust
Many cryptocurrencies are mentioned in the same breath as decentralization. Although transactions with Ripple are decentralized, the technology behind Ripple is centrally managed. Ripple aims to form a bridge between different currencies with an assigned value. With this vision, Ripple has created a substantial support base of various banks. This is in contrast to Bitcoin, where, through decentralization, banks (and governments) can be sidelined. Partial centralization may also lead to faster technological development by facilitating consensus building. Ripple is succeeding in gaining the trust of external parties with the above aspects.
Transactions and fees
Current international banking transactions can sometimes take days. Since Ripple is not dependent on national borders, international trade can happen within seconds. The transactions on the RTXP network are also almost free of charge.
Technology behind Ripple
Ripple is powered by blockchain technology, but what technology has Ripple developed for Ripple’s network?
Ripple Consensus Ledger
On Ripple’s network is a ledger called Ripple Consensus Ledger. Unlike Bitcoin’s catalogue, the Blockchain, the Ripple Consensus Ledger is flexible and applicable in various areas without needing altcoins. For example, the Ripple network supports multiple currencies and has a currency exchange built in. This makes it possible to receive a certain currency, convert it directly to another currency and then buy something with it. Think of a purchase you make from an American seller with Euros. The Ripple network takes care of the conversion of Euros to USD.
