When talking with the average person, there are two cryptocurrencies they are usually familiar with. The first is, of course, Bitcoin. The second is Ripple, if only due to the meteoric rise from out of left field that brought it to its current status. Ripple is the third largest cryptocurrency by market cap, only beat out by Bitcoin and Ethereum. While the post-Christmas correction was particularly painful for Ripple, they have not slipped from their position, and their brand awareness is astonishing outside of the cryptocurrency space.
Ripple is the brainchild of Jed McCaleb, through a network originally developed by Ryan Fugger. As an actual company, not a foundation or non-profit, Ripple Labs was one of the first in the blockchain sphere. It’s also interesting to note that the original company was founded with the idea of a decentralized exchange that focused on communities empowering their own currency – in 2004. It wasn’t until 2012 that they adopted blockchain technology towards this end.
The original goal of the Ripple payment protocol was to upgrade the world’s payment systems. Bank transfers are still based on archaic technology, and as we’re all aware, transfers can still be measured in days instead of seconds. Technology is advancing at a lightning fast rate, and there’s no reason for this critical component of everyday life to lag so far behind. Ripple uses a consensus based system to allow the often disparate banking systems to work together, resulting in transactions taking an absolute fraction of the time of a conventional system.
There is no shortage of competition in the “digital currency” race. Litecoin, Dash and the more recent NANO ( Formerly RaiBlocks ) are all jockeying for the position of consumer currency of the future. Ripple stands apart from these projects, in that they are seeking to create more of a back end for financial institutions than end consumers. While end users can still use the Ripple network for certain features, the main customer is banking institutions.
The major use for end consumers is through foreign currency exchange. Ripple can be used quite effectively as a bridge currency, helping to transfer funds from one national currency to another, even if they are rarely traded against each other.
Ripple has effectively already proven itself. Major banking institutions quickly adopted the distributed ledger and consensus based decision making of the network, as it greatly simplified their own internal operations. Even if the general public forgets about the Ripple payment protocol, it is likely to live on through operating as a gateway for different banking systems to communicate with one another. While other coins are seeking to become the reserve currency of the average person, Ripple has already cornered the financial institution market.
Just because they’ve cornered the market, doesn’t mean they’ll stay there forever. Many of the first cryptocurrencies are being replaced by faster, more efficient replacements. Ripple is still the new kid on the block for the top blockchain currencies, but they have also suffered fairly severely in the post-Christmas correction. They’ll need to prove that they can recover before the public begins to lose confidence in their system.
This is part of my ongoing series of basic primers for cryptocurrency. If you found it useful, interesting or just like my style - consider following me!
Previous primers;
A Bitcoin Cash Primer
A Litecoin Primer
A NEO Primer
An Ethereum Primer
