An Introduction To Ripple
Cryptocurrencies have become a very big deal over the last few years, and even though Bitcoin has emerged as the most dominant token, there are still others like Ripple (tradename XRP) that have been steadily growing in the background.
Ripple is not like most other cryptocurrencies. As a result, a number of investors have stayed away from it since they do not understand how it actually works. Unlike other cryptocurrencies, Ripple is more of a protocol rather than a currency. It does use a blockchain but does all the transaction verification within the company (in other words - no mining or independent verification of transactions). This protocol is what enables banks and other kinds of financial institutions to make transfers between different states and across continents in just a matter of minutes.
Transferring Money Digitally
In fact, banks are not only able to transfer money from one branch to the other, but also facilitate transactions between different banking firms using the protocol. Such a situation means that the time taken to make a transfer can be near real-time instead of days compared with the traditional approach. The firm that created the Ripple protocol did so with the hope that banks would utilize the XRP cryptocurrency for making international transfers. So far, they seem to have been successful - its currently used by UniCredit, UBS and Santander and many other household names.
The main concept behind having such a setting was the use of a common unit of currency so as to make all transactions a whole lot easier to record. This means that any individual transferring money would have to convert their local currency into XRP and then continue with the process. The person receiving the funds will then convert the XRP into their own currency. As one can clearly see, XRP simply acts as common accounting entry on the blockchain but with no mining to be done.
Advantages of Ripple
For experts in the field, the primary advantages of Ripple are the speed at which transactions can be facilitated, the reduced costs associated with it (banks see up to 30% cost savings), and the increased transparency of the transactions in progress. Ripple has also been seen as an innovative tool that can be quite effective when it comes to reducing the amount of time needed to securely transfer funds. When you think of it, banks are able to generate revenue by lending out money. This means that the capital tied up in any kind of transfer is basically a lost opportunity. Therefore, the certainty offered by the Ripple network can be of great relief to most banks and financial institutions.
Criticisms of Ripple
60% of the Ripple currency is owned by the founders (Ripple Labs). This is very high compared with Bitcoin and the others. This amount means that the founders have a massive influence on the currency price and could destabilise the currency with large selloffs.
What do you think of Ripple? Be awesome and comment below.
Wisecrypto last edited by
As an investor first, and cryptocurrency fan second, I don't trust ripple because of the disadvantages mentioned. The founders hold most of the coin market, which makes me feel like they're expecting it to shoot up in price in the current investing climate and then sell it off. not only will this destabilize the coin, but also theoretically harm the entirety of the crypto market itself. It'll... excuse the pun.... have a rippling effect throughout I feel.
The founders hold most of the coin market, which makes me feel like they're expecting it to shoot up in price in the current investing climate and then sell it off.
For sure they'll want to sell some off at some point - however, if they were smart they'd do it without hurting the overall coin value.