what is Ripple
Ripple – a cryptocurrency and a fully functional exchange service
Innovation is the main success factor when it comes to cryptocurrencies. Dozens of electronic currencies appear every month, but only few of them manage to survive for longer than a year.
Ripple was launched in 2013, however it was available much earlier under a different name – OpenCoin. But after reconsidering the concept of this new cryptocurrency its authors decided to give it a new name. Ripple is a very symbolic name, by the way. The word “ripple” means “choppy water” making us think about a decentralized e-payment system which is being spread around the world just as rings (or ripples) in the water.
How does it work?
Stefan Thomas, one of leading developers of Ripple, claims that their purpose was to grant freedom to everyone. They mean freedom from banks and global financial institutions like PayPal and others which control people’s financial activity and impose high commissions of adding, withdrawing and sending funds.
There should be no confusion between Bitcoin and Ripple since the latter operates on the basis of totally different principle – the “trust principle”. This trust principle can be explained with the following example:
Let’s imagine there are two friends – John and Peter. John wants to give $50 to Peter and the easiest way to do it is to meet personally. But John lives in New York while Peter has recently moved to Barcelona. So what does John do?
John finds a trader we knows well and trusts who works on the Spanish market and asks him to give $50 to Peter. The trader agrees and finds his partner in Barcelona – Mike. Now Mike is supposed to meet Peter and to give him the money.
John doesn’t know Mike but he trusts the trader. In his turn the trader knows Mike well and trusts him. So that is how $50 is finally given to Peter. Peter gets the money and feels happy!
But what about John, the trader and Mike? Oh, they will settle that later when it’s convenient to them – the trader can wait until John pays him and Mike trusts the trader and agrees to get his money later. By the way, a similar system had been used in the Middle East and Asia in general long before a first bank was opened.
This scheme is very simple – on practice it can be much more complicated. But now you at least see the basis of Ripple system.
Is Ripple fully decentralized?
The answer is both positive and negative. The thing is that Ripple system consists of endless number of trusted nodes. Each trusted node is a server which was approved by the administration and added into the system.
In other words, Ripple contains a lot of small centralized systems based on a verified server each. That’s hard to say if it is good or bad, but we have to admit that it’s quite an interesting solution you will never find in any other cryptocurrency.
People who have good understanding of how a typical bank system operates can see many similarities with Ripple. That is why some experienced traders often say that Ripple is the next step in banking evolution.
Are there any similarities between Ripple and Bitcoin?
Both cryptocurrencies – XRP and BTC – are replaceable. Any BTC can be replaced with any other BTC – all coins are equal in the system. Moreover, they’re all similar to each other in order to avoid confusion.
XRP and BTC are both transferred online (electronically) and have incredibly well developed cryptographic protection.
Finally, both cryptocurrencies can be divided with a lot of number after the comma left. Well, that’s all about similarities.
What Ripple does better?
Without a doubt Ripple has certain advantages over Bitcoin. Firstly transactions in the Ripple system are processed much faster. Without doing too deep into explanation of the technical side we just explain it by a totally different structure of Ripple. In general a transaction between two users is performed within a couple of seconds.
There are no commissions for all internal transactions. No hidden fees are applied either. Unfortunately, it is rather hard to find such information on Ripple website, but according to users’ experience you do not have to pay anything for sending or receiving funds.
Another great plus of XRP is very low risk of inflation. Being honest, such a risk almost does not exist and deflation is much more probable. The thing is that after each transaction a certain amount of XRP is removed forever. Therefore the number of coins is reducing every day. Isn’t that a brilliant insurance against devaluation?
But Bitcoin has unbeatable reputation of the first cryptocurrency which grew popular globally. Everybody knows about it and trusts it much more than any other cryptocurrency including Ripple.
From the point of an investor who likes risky assets Ripple is definitely a perfect solution. Now is the high time to invest in XRP – soon there will be no such a good opportunity for quick earnings.
Is Ripple popular enough?
Firstly we wanted to note that Ripple is already available on Poloniex and other big exchange services. Without a doubt it is evidence of the right way of Ripple development.
According to the information from Poloniex daily volume of exchange operations between XRP and BTC has recently exceeded 300 BTC. Try to calculate it in USD and you will see that the result is really decent. In addition, Ripple can be sold or bought for US dollars as well.
More than 15 banks of the global top 50 from 9 countries already work with Ripple – they have a solution for banks helping in providing low-cost remittance service. Companies are also interested in the corporate offer from Ripple. So from the point of reputation Ripple is a worthy service to deal with.
It is not fully decentralized, however it isn’t a big disadvantage unless you are looking for a service or cryptocurrency for illegal purposes. Ripple has great prospects and so do its investors do.
If you are interested in new and innovative cryptocurrency solutions – invest in Ripple. We are absolutely sure that the XRP you buy today will help you earn tomorrow.