In English, the word Ripple means light wave, which barely disturbs the surface of still water. The designers of the XRP could not have chosen a better name for their invention that everyone is talking about to the point of creating confusion. Indeed, it is not always easy to clearly define what the word Ripple actually refers to. Sometimes you get the impression that the term designates a cryptocurrency, even though the rest of the time many of those who talk about Ripple refer rather to a payment system. What is it really like? We have prepared a dossier that sheds light on the Ripple, what it is, what it is not, what makes it special … Want to know everything about the Ripple? Follow the guide.
What is the Ripple?
Word Ripple refers to both a company, a securities exchange protocol and a cryptocurrency. Let’s start with the business.
Ripple, the start-up
Ripple was established in 2012. Its headquarters are in San Francisco, California. When it was founded, the company was called OpenCoin before being renamed Ripple Labs. From 2015, she will simply take the name of Ripple. This company has set up the Ripple protocol (RTXP) as well as cryptocurrency Ripple (XRP).
The Ripple Transaction Protocol (RTXP)
The start-up has set up a so-called system RTBR (Real Time Gross Settlement), in other words, a system where the instructions for transferring securities (securities and funds) are carried out individually. This system can be used for both currencies trustees (or fiat) only for cryptocurrencies. To succeed in this challenge of rationalizing interbank transactions, the firm has set up three platforms: xCurrent, xRapid and xVia.
The Ripple is already used by many financial institutions around the world. Among the most prominent are: UniCredit, UBS, National Bank of Abu Dhabi (NBAD), Santander, American Express.
In France, Agricultural credit is the first financial institution to consider adopting the Ripple protocol. For its test phase, which should last 6 months, the bank plans to transfer the salaries of its customers living in France, but working in Switzerland and therefore receiving their salary in Swiss currency (Swiss francs).
The firm has also developed a service facilitating international money transfer, the service On-Demand Liquidity (ODL). MoneyGram and several companies that transfer money have already taken an interest in this service and are considering adopting it.
The Ripple as a cryptocurrency
The XRP cryptocurrency was created to ensure the operationality of the real-time payment system. The ambition behind the creation of the Ripple tokens is to streamline the flow of money internationally, without having to go through traditional financial institutions that charge commissions. That’s why Ripple do not charge child care. It is content to retain an infinitesimal portion of Ripple (approximately 1 / 1000th of a token) during each transaction. This portion is destroyed after the transaction.
On June 13, 2016, the New York State Department of Financial Services issued a virtual currency license to Ripple. The Ripple thus becomes the fourth company holding the coveted “ BitLicense “
The Ripple cryptocurrency has the symbol XRP; it can be divided up to 6 decimal places. Its smallest unit is called “drop”, so that 1 XRP = 1 million drops.
The functioning of the Ripple cryptocurrency is intimately linked to the initial objective of the Ripple company, namely, streamline international money transfers. How does the Ripple system facilitate international transfers? Let’s take an example to facilitate the illustration.
suppose that Bob being in France please send money to Alice living in Canada. Bob’s money is first transferred to a intermediate in France and this one the converts in its XRP equivalent. This Ripple amount will be forwarded to another intermediary in Canada. In turn, the latter converts the XRP sum into a fiduciary amount. This amount is then recovered by Alice, final recipient who only has to pay the local cost of transfers, since the international transfer is made in the form of Ripple, thus escaping the inherent international costs.
The specifics of the Ripple
As a cryptocurrency, it is tempting to measure the specificity of XRP by comparing it with Bitcoin, the first cryptocurrency (in all respects, from its age, to its volume in the market). And it must be said right away that the Ripple is coming out more and more from the shadow of bitcoin, especially since 2017 when the astounding 36,000% increase in its price earned it the highest performing cryptocurrency of the year (Bitcoin settling for “little” 1318% …
The Ripple, a basic objective different from that of other cryptocurrencies
The Ripple suffers the consequences of a certain misunderstanding of its operation, even on the occasion of a frank hostility! Indeed, considered by many to not constitute a “real” cryptocurrency, despite its solid 3rd place in the crypto market, he is often qualified – with a disdainful pout – of “Bank money”.
Now, for a large part of the crypto community, banks are the most tangible form of a “system” to knock down. As such, Ripple is said to embody a form of treachery to “cause.” Furthermore, his centralization and the control of huge amounts of assets by the parent company, also contravene the definition of what an “ideal cryptocurrency” should be.
So, if we want to compare Ripple and Bitcoin, it is already necessary to make a distinction between their basic ambitions. Bitcoin plans to create an alternative to the traditional payment system. Bitcoin wants to allow the exchange of values according to a peer-to-peer system, without intermediation, posing as a disruptive solution compared to conventional systems.
On the other hand, the Ripple never concealed want to deal with traditional players in the global financial transaction system. Consequently, if the Ripple is also focused on the blockchain and therefore a system which remains relatively decentralized despite everything, it is likely to be adopted massively by institutional banking players …unlike bitcoin.
Furthermore, it must be said that the Ripple is not a project intended to replace fiat currencies in the purchase of goods online, whereas it is one of the aims of bitcoin.
The Ripple, a competitive advantage in terms of cost
The main advantage of Ripple compared to other cryptocurrencies is that it allows international transfers at local costs. As we explained above, when the amount transferred is converted to Ripple at the time of transfer, Ripple does not charge any custodial fees, just a small portion of Ripple, which is taken and then destroyed. It only remains to pay the local transfer fees.
As such, broad advantage to Ripple whose transaction cost is ultra-reduced even though it is potentially significant for Bitcoin, depending on availability or on the contrary of network congestion (we have seen the fees reach $ 40 per transaction during the rush at the end of 2017.
Compared to the ordinary bank transfer system, the Ripple system also offers an advantage linked to the almost immediate transfer. Indeed, an international transfer usually takes a few days. With the Ripple, the transfer is instantaneous.
Ripple and bitcoin from mining at maximum emission, the day and the night
Bitcoin can be obtained by mining, with the process proof of work. Nothing to do with XRP, which is not produced by this type of process. All tokens are already created by the Ripple company, which itself owns around 60% of said tokens.
While the maximum bitcoin emission is 21 million bitcoins, the maximum XRP emission is 100 billion Ripples, all already pre-mined.
Likewise, it should be remembered that these are independent servers, belonging to third parties, which take care of transaction security. Each transaction is subject to validation by consensus.
The emblematic faces of the Ripple
Several figures are today to remember when talking about the Ripple. First, remember the name of Ryan Fugger who designed in 2004 the Rippleplay, precursor of the Ripple protocol. He was then a web developer at Vancouver and was inspired by his work on the local exchange system in Vancouver. The idea came to him that he could create a system similar to the local exchange system, which would allow communities to have their own currency, operating according to a decentralized system.
This idea will be enriched with the reflections of Jed McCaleb. Then it will be the turn of David Schwartz and Arthur Britto which, in May 2011, will begin the development of a cryptocurrency system where transactions are verified consensually by members of the network.
Another important figure of the Ripple then comes into play: it is Chris Larsen. He had practical experience in financial services for having already created E-Loan and Prosper, two loan service companies. He will join the developers. Thus in September 2012, the company OpenCoin see the day. Today, Chris Larsen remains one of the major figures of the Ripple, accompanied by Brad Garlinghouse, the current managing director of Ripple. To note that 350 employees work full time for Ripple, in 6 offices separate.
You will be happy to learn that 91% of Ripple employees say they are “happy to work in the company”…
The Ripple’s potential for disruption
The Ripple will have brought a real revolution in the international transfer system. As a compensating currency, the Ripple could eventually replace the traditional processes which, by comparison, are quite expensive and very slow. In this, the Ripple has deeply marked global finance. Two years after its creation, the Massachusetts Institute of Technology (MIT) classified Ripple Labs among the 50 “smartest” companies of 2014.
Where to buy Ripple?
Purchase is the only method of acquiring XRP, since it is not possible to mine this cryptocurrency. To buy Ripple, we will usefully approach traditional cryptocurrency exchange platforms, such as Binance, BitBay, Bitpanda…
Note that XRP is a cryptocurrency developed by a company called Ripple, which has also implemented an optimized payment system for international financial transactions.
Whatever it is in the evening, whether we hate it or adulate it, the XRP cryptocurrency associated with its Ripple protocol has become the vector of a real revolution in financial flows worldwide. It should not be forgotten, however, that like all cryptocurrencies, the Ripple is subject to significant volatility linked to the game of supply and demand. This is why, even if its value has increased by 36 081% in and its capitalization is close to 10 billion dollars, it is important to invest in this cryptocurrency only what one can afford to lose.
In the crypto-bath since 2017, both much too late but quite early from the point of view of my future grandchildren 🙂
Writer, Amateur Trader, Ethereum and NEO-compatible