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What is Ripple?

By Shawn Gordon

What is Ripple? Technically speaking, is Ripple a cryptocurrency in the Bitcoin mold? The short answer is probably "no", but that does not prevent it from being often grouped in the same category.

What is Ripple?

Originally released in 2012 as subsequent iteration of Ripplepay, Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network. Using a common ledger managed by a network of independent validation servers that constantly compares transaction records, Ripple is not based on the energy and intensive use of test software used by Bitcoin. Ripple is based on a shared public database that makes use of a consensus process between the validation servers to guarantee integrity. These validation servers can belong to any person, from individuals to banks.

The Ripple protocol (token represented as XRP) is intended to allow almost instantaneous and direct transfer of money between two parties. You can change any currency, from fiat currency to gold and even airline miles. They claim that they avoid the fees and waiting times of traditional banking transactions and even cryptocurrencies through exchanges.

How is it fundamentally different from Bitcoin?

It is the validation of the servers and the consensus mechanism that tends to lead people to suppose that Ripple is a blockchain-based technology. While it is consensus-oriented, Ripple is not a chain of blocks. Ripple uses a HashTree to summarize the data into a single value that is compared on all of its validation servers to provide consensus.

It seems that banks like Ripple, and payment providers are joining more and more. It is designed for companies and, although it can be used from person to person, that is not its main objective. The main objective of the Ripple platform is to move a large amount of money around the world as quickly as possible.

So far, Ripple has been stable since its launch, with more than 35 million transactions processed without problems. It is capable of handling 1,500 transactions per second (tps) and has been updated to be able to scale to Visa levels of 50,000 transactions per second. In comparison, Bitcoin can handle 3-6 tps (not including scale layers) and Ethereum 15 tps.

The Ripple tab, XRP, is not extracted as Bitcoin, Ethereum, Litecoin and many other cryptocurrencies. Instead, it was issued in its infancy, similar to the way a company issues shares when it incorporates: basically, it only chose one number (100 billion) and issued many XRP currencies.

What is XRP and what is it used for?

As a technology, the Ripple platform can have real value and real history that validates the claims that make its effectiveness. However, the XRP token seems to have negligible use cases. In fact, Ripple had planned to eliminate it, at least, until the interest in cryptocurrencies began to take off in 2016. However, as CNBC noted today, if Ripple reaches $ 6.57, its capitalization of the market will be bigger than Bitcoin.

There are 100 billion XRP tokens issued by the Ripple company. At the moment, the company promises that this is the total number of XRP there will be (although, technically, there is nothing that prevents them from issuing more tokens in the future). The hub-and-spoke design of Ripple positions XRP in the middle as a tool that is fungible with any currency or digital resource, such as frequent flyer miles. Ripple can settle a payment in 3.5 seconds through XRP and have it available and expendable. The use of XRP is totally independent of the Ripple network in general; that is, banks do not really need XRP to transfer dollars, euros, etc., which is what many small investors could lose when they are buying the token.

What is the value proposition of Ripple?

The value here is the Ripple network itself and its ability to move assets around the world quickly, rather than in the XRP token.

Banks can use Ripple software to exchange money between different foreign currencies. Currently, this is usually achieved with SWIFT, a cumbersome system that depends on banks having separate accounts in each country where they work. Ripple says it has registered more than 100 banks (compared to 11,000 SWIFT financial institutions), including American Express. .

So, why all the hype?

While Bitcoin has seen a dramatic increase in price over the course of 2017, at the end of the year saw the cryptocurrency almost breaking $ 20,000. As the price went up, we saw a massive increase in the price of a lot of altcoins, with Litecoin jumping from $ 50 to almost $ 400, Ethereum doubling, NEM and EOS rising by a factor of five, and the list goes on and on follow. . The fear of getting lost has made many investors go crazy and "lower price" currencies are attractive to new investors who mistakenly think that the high price of a full BTC puts the currency out of reach.

Add to all the hype rumors that circulated on social networks until December 2017, that Coinbase was going to list Ripple, which caused the price to increase, which in turn led Coinbase to address the rumors of a more generic way in this blog post [19659003] on January 4, 2018:

"As of the date of this statement, we have not made the decision to add additional assets to GDAX or Coinbase. false and is not authorized by the company. "

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Coinbase's announcement caused a big drop in Ripple, returning to the same levels as before the rumors began. Since then, Ripple has dropped dramatically and has recovered, as have many other volatile cryptocurrencies. Although Coinbase is not compatible with Ripple, there are several ways in which people acquire Ripple, if they still want it.

Caution words

A lot of ink has been used in criticizing Ripple as well. The complaint of Bitcoin and other enthusiasts of the block chain is that the centralized control of Ripple contrasts directly with the ideals and advantages of decentralized blockchains like Bitcoin.

Ripple also maintains a Trusted Unique Node List (UNL) to protect against possible malicious or insecure validation servers. It is the UNL that controls the rules of the network, presenting a conundrum: on the one hand, it protects against problematic validator, but, in theory, a regulatory agency or government could enter and force a change that is not necessarily desirable or is frankly invasive . In addition, due to a FinCEN infringement and fine in 2013, Ripple has updated its policies and will only recognize and recommend portals that comply with financial regulations.

New York Times journalist Nathaniel Popper commented on Twitter that he has yet to find a bank that anticipates the use of the XRP card in a meaningful way. Ripple's CEO, Brad Garlinghouse, has denied Popper's claims saying, "In the last few months I've spoken with banks and ACTUAL payment providers, in fact, they plan to use xRapid (our liquidity product XRP) in a serious way." . However, as Popper points out, even the banks he contacted in Ripple's suggestion were not engaged in their plans to implement Ripple soon. [19659038FinancialServicesTimesof18banksandfinancialservicescompanylinkedprompubliclywithRipplemajorityofthiswhether"therewasnotbeingbeyondtheprotests"whilesomehadbeenautomatedRipple's"realmoneymaking"systems"wereononeofthe16companywhichhadrespondedtokentoXRP

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