What is Ripple?
Ripple cryptocurrency, a catchall name, was co-founded by Chris Larsen and Jed McCaleb in 2012. The coin for cryptocurrency is labeled as XRP. It is a technology that can be used as both cryptocurrency and digital payment network for your financial trades. It is an open source and peer-to-peer distributed platform which lets you transfer money in USD, Yen or Bitcoin. It’s a centralized cryptocurrency in a decentralized space.
How does Ripple work?
Ripple uses a medium known as Gateway which forms a trust chain between the two parties who want to make a transaction. Gateway is similar to credit intermediary which sends and receives currencies to public addresses by using the Ripple network. It is based on shared public database which use consensus procedure between the validating servers to guarantee reliability. Like Bitcoin, Ripple’s network doesn’t have a proof-of-work system. The transactions depend on a consensus protocol to authenticate account balances and transactions which enhances reliability of the system.
Ripple and XRP?
XRP, its digital currency, is like a bridge currency which connects other currencies. It is easy to exchange different currencies by using Ripple network as it doesn’t favor any cryptocurrency. It makes some drawbacks of traditional banks better. Although Ripple’s network receives millions of transactions recurrently, the transactions are resolved within seconds whereas the banks take days or weeks to complete a transaction. The fee for transactions is 0.00001 XRP in contrast to the huge fees charged by banks for cross-border transactions. In recent times, Ripple added a new feature (escrows) through which every month the company releases 1 billion of its XRP tokens for financing business operations and incentivizing customers and investors, any idle token is put back in the escrow.
Ripple vs Bitcoin
As Bitcoin is a digital currency used for payments of goods and services. Ripple is a currency exchange, real-time payment setting and remittance network for payment networks and banks. It offers a system to transfer assets such as money, oil, gold, airline miles, etc. directly which is inexpensive, transparent and secure substitute for payments. It was not designed to be a mode of payment or currency. Also, Bitcoin is grounded on the blockchain technology whereas Ripple uses consensus protocol and crypto tokens known as XRP. It uses Hash-Tree to sum up the data into a distinct value which can be matched at its validating servers for consensus. Ripple is a stable currency which has handled 35 million transactions without any problem. It can handle 1500 transactions per second whereas the Bitcoin handles three to six transactions per second.
How to buy Ripple?
XRP tokens are traded on cryptocurrency exchanges like Poloniex and Binance. You can’t buy XRP directly from government issued currencies. First you will have to buy Bitcoin or Ethereum and transfer them to an exchange to trade them for XRP.
Should you buy Ripple?
Should you buy Ripple? Well, the rise in foremost financial institutes for accepting Ripple is an indication to its future value. But don’t forget that the value of cryptocurrencies is extremely unpredictable which can go down as quickly as it comes up. So, never invest more than you can easily afford to lose.