In 2012, Chris Larsen and Jed McCaleb co- founded Ripple technology which act as both crypto currency and a digital payment network.
It’s main function is a payment settlement asset exchange and remittance system, similar to the SWIFT system for international money and security transfers, which is used by financial institutions and financial middlemen
Ripple and XRP are two different term: Ripple is the name of the company and the network, and XRP is the cryptocurrency token. The purpose of XRP is to serve as an intermediate mechanism of exchange between two currencies or networks. It serve as a temporary settlement layer denomination.
Ripple is a blockchain-based digital payment network and protocol with its own cryptocurrency, XRP. It is worthy of note that Ripple doesn’t use blockchain mining , it uses a consensus mechanism, via a group of bank-owned servers, to confirm transactions.
Ripple transactions use less energy and transactions are confirmed in seconds.
Ripple operates on an open-source and peer-to-peer decentralized platform that allows for a seamless transfer of money in any form, whether it's dollars, Yen, euros, or cryptocurrencies, like litecoin or bitcoin. Ripple is a global payments network and counts major banks and financial services amongst its customers. XRP is used in its products to facilitate quick conversion between different currencies.
Ripple uses a medium, known as Gateway, as the link in the trust chain between two parties wanting to make a transaction. Gateway acts as the credit intermediary that receives and sends currencies to public addresses over the Ripple network. Anyone or any business can register and open a gateway, which authorizes the registrant to act as the intermediary for exchanging currencies, maintaining liquidity, and transferring payments on the network.
XRP, acts as a bridge currency to other currencies. It does not discriminate between any fiat/cryptocurrency, which makes it easy for any currency to be exchanged for another. Each currency on the ecosystem has its own gateway . One gateway is not needed to initiate a complete transaction; multiple gateways can be used, forming a chain of trust rippling across the users.
The Ripple network does not run with a proof-of-work (PoW) system like bitcoin or a proof-of-stake (PoS) system like Nxt. Instead, transactions rely on a consensus protocol in order to validate account balances and transactions on the system. The consensus works to improve the integrity of the system by preventing double-spending.
A Ripple user that initiates a transaction with multiple gateways, but attempts to send the same $100 to the gateway systems, will have all but the first transaction deleted. Individual distributed nodes decide by consensus which transaction was made first. The confirmations are instant and take roughly five seconds. Since there’s no central authority that decides who can set up a node and confirm transactions, the Ripple platform is described as decentralized.
Ripple keeps track of all IOUs in a given currency for any user or gateway. IOU credits and transaction flows that occur between Ripple wallets are publicly available on the Ripple consensus ledger. But even though financial transaction history is publicly recorded and made available on a blockchain, the data is not linked to the ID or account of any individual or business. However, the public record of all dealings (i.e. the blockchain) makes the information susceptible to de-anonymization measures.
Ripple improves on some of the drawbacks attributed to traditional banks. Transactions are settled within seconds on the Ripple network (even though the platform handles millions of transactions frequently). This is unlike banks which could take days or weeks to complete a wire transfer. The fee to conduct transactions on Ripple is also minimal, with the minimum transaction cost required for a standard transaction set at 0.00001 XRP, compared to the large fees charged by banks for conducting cross-border payments.
The Ripple payment system is mainly intended to be used by banks, although individual investors may speculate on the price of XRP.
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