Daan Werkheim, 8 months ago

What is Ripple (XRP) and how did it originate?

Ripple is a private software company founded in 2012 by Jed McCaleb and Chris Larsen in California. The unlisted company was first called OpenCoin, but later renamed Ripple. The company began developing the Ripple protocol in 2012, which is a decentralised peer-to-peer (P2P) network that offers banks and other financial institutions a payment protocol. XRP is the native token of the Ripple network and is issued and developed only by the Ripple company. Ripple's open source protocol is already being used by banks and other institutions.

In this article you will learn more about the foundations of Ripple, its purpose and the future of its native token (XRP) and the network.

What is Ripple’s goal?

Ripple's goal is to act as a global settlement network to improve existing infrastructure and services. Unlike Bitcoin, which is operated by a decentralised peer-to-peer network and managed by no single entity, the cryptocurrency XRP was created by a company called Ripple. Ripple's main goal is to create a network that allows as many transactions as possible to be carried out simultaneously, as quickly as possible. Ripple wants to attract companies such as large banks, remittance services and payment providers who are interested in the technology. The Ripple network is therefore positioning itself not as a direct rival for cryptocurrencies, but as a more updated version of the SWIFT system used by banks.

The difference between Ripple and XRP

Ripple is the overall network and XRP is the native token of the Ripple network. So when we talk about the cryptocurrency, it is formally called XRP, with ticker XRP. However, in popular speech, this crypto is often called "Ripple", perhaps because XRP is harder to pronounce.

Can you mine XRP?

Unlike many other cryptocurrencies, you cannot mine XRP. All XRP tokens are pre-mined and the total stock counts 100 billion XRP tokens. Of these, 47.74 billion tokens are in circulation at the time of writing and the rest are held by Ripple itself.

How does Ripple work?

The Ripple network does not operate on a blockchain and the native cryptocurrency XRP does not rely on a Proof-of-Work algorithm like Bitcoin or Ethereum. For this reason, it does not require as much energy and computing power, while also enabling faster transaction speeds. Instead, transactions on the Ripple network are conducted through validating servers, which constantly compare the information they receive and process with a common ledger. Ripple's validating servers use a consensus mechanism called HashTree.

How is Ripple different from other cryptocurrencies?

Ripple is more than just the cryptocurrency XRP. While Bitcoin and other cryptocurrencies position themselves as independent alternatives to traditional currencies and (central) banks, Ripple's goal is more or less the opposite. Ripple wants to act as a global settlement network and therefore works closely with banks, payment providers and other financial institutions. The goal of Ripple is to serve as a flexible intermediary "currency" to facilitate the exchange of any unit of value, rather than completely replacing banks and financial institutions.

The main difference between the Ripple network and a Proof-of-Work (PoW) blockchain is that consensus is achieved by not comparing all data, but only a single value, which is derived by summarising the data of the legder. These independent validating servers are operated by individuals or by banks and institutions. According to the Ripple Technical FAQ, the electricity needed to run a validator is similar to the electricity needed to run an email server.

Another interesting aspect of Ripple is that it is older than Bitcoin. A precursor to the Ripple protocol was developed in 2004 and was called "Ripplepay" at the time.

What are the advantages of Ripple?

Ripple or XRP is a large and by now very well-known project and there are both supporters and opponents. Some notable advantages of Ripple include:

  • Processing speed: The Ripple network can process about 1500 transactions per second. This is a huge number of transactions when compared, for example, to Ether (10-30 p/s) and Bitcoin (7 p/s). The company's aim is therefore to process as many transactions with different assets or currencies as quickly as possible.
  • Attracting banks: The network is working closely with banks and financial institutions to become the largest exchange network in the world. Many banks have already implemented the technology. The Ripple protocol is therefore intended to improve existing payment systems of banks.

What are the disadvantages of Ripple?

Like any project, Ripple also has some disadvantages, including:

  • A large portion of XRP stock is owned by the Ripple company.
  • Unlike other cryptocurrencies, the Ripple network is centralised and XRP tokens are issued by the company itself.

The biggest criticism of this is that it would go against the spirit of most cryptocurrencies, namely decentralisation and unbanking.

Ripple and XRP: What can we expect next?

Since 2012, the Ripple protocol has been designed to enable transactions across borders in a fast, cost-effective and reliable manner. Ripple aims to revolutionise the payments industry and at the same time work towards a certain standardisation of international transactions using financial technology. Ripple is also encouraging regulators around the world to introduce blockchain into traditional payment operations. Ripple is a promising cryptocurrency with ambitious goals for the future. The coin has a volatile price development and it will be interesting to see how it will develop further.

How can you invest in Ripple (XRP)?

Buying XRP is very easy at LiteBit. Both in your browser and via the app you can buy, sell or send XRP in just a few clicks. The XRP will be stored in your personal wallet at LiteBit, or you can choose to send your XRP to an external (hardware) wallet.

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