What is Ripple?

What is Ripple?

Ripple Transaction Protocol is a real-time settlement system designed for the purpose of currency exchange, remittance and gross settlement as a solution for the banking system. The Ripple platform is an open-source protocol, designed to enable fast and cheap transactions between two parties.

Ripple network was released in 2012 by Ripple Labs Inc., a US-based technology company, with a throughout goal of providing a smooth way to send money globally using the power of blockchain technology.

Ripple is different from Bitcoin or Ethereum. While Bitcoin is just a digital currency, Ethereum is a platform for deploying smart contracts. Ripple, however, is a new payment system targeted towards global currency transactions.

The whole idea of Ripple is to allow banks to transfer any sort of asset, be it currency, USD, Euro, gold, or any other asset such as air miles. People can transfer that assets between different institutions instantaneously.

What is XRP?

XRP is the digital cryptocurrency that is exchanged on the Ripple platform to facilitate transactions. The Ripple token – XRP is usually confused with the Ripple Protocol – which is also named Ripple. The XRP is an issued token that uses the Ripple network – which can be transferred extremely quickly and with low fees.

The XRP itself can also be used on the platform, as well as any other currency or digital asset. The thing is, the use of XRP is independent of the ripple network. A party doesn’t actually need XRP to transfer currencies. The value of ripple is not in the XRP token, but in the network itself and its ability to transfer assets quickly through the network.

The use of Ripple

Banks and financial organizations are able to use ripple software to exchange assets, replaced for the current Swift platform used in banks.

Ripple offers an alternative with some benefits. For example, it could offer a low fee of currency exchange. Currently, there are many currencies that can’t be directly converted to another, so banks need to use US dollars as a mediator for payment, causing double fees. Ripple could also be used as a mediator currency, while it is much cheaper than USD. It also offers quicker international transactions than other similar alternatives. The average transaction time on the ripple platform is 4 seconds, comparing to 10 minutes for bitcoin, or days for traditional banking systems.

One existing service for Ripple transaction is XCurrent, a replacement to the Swift system. XCurrent offers a quicker and more efficient solution to international payments, especially banks and financial institutions.

Another recent platform that enables payment providers and banks to connect different digital currencies using XRP as a bridge asset is Xrapid. This technology speeds up the cross-border transactions significantly and is being used more and more widely today.

Ripple XRP network is being used and tested by financial institutions and banks to send and settle international payments in a more efficient manner. To this day, it is already backed by over 100 financial institutions from all over the world which includes names like American Express, Santander, Standard Chartered and others.

The differences between Ripple and Bitcoin

There are some fundamental differences between them:

  • Technology: bitcoin using blockchain technology, where the transactions are recorded and validated by miners, then added to the existing blockchain. Ripple does not use blockchain technology. It uses its own patented technology instead, called the Ripple Protocol Consensus Algorithm (RPCA). The word ‘consensus’ in the name refers to the fact that if every node is in agreement with the rest, it will be validated.
  • Mining: Bitcoin transactions are verified by miners, who also issue new bitcoins into the network. Ripple tokens are not mined by miners in the community. It uses a unique distributed consensus mechanism through a network of servers to validate transactions, and all of its XRP tokens are pre-mined.
  • Transaction times: ripple is able to process 1,500 transactions per second, and scale up to 50,000 transactions in a second. In comparison, bitcoin can only process 3 to 6 transactions per second.
  • Amount: Bitcoin has a total supply of 21 million coins and needs decades to be fully mined, whereas ripple has 100 billion pre-mined tokens.

Pros and Cons


  • Transaction fees: A transaction on the Ripple protocol is charged about 0.00001 XRP. The cost of 1 XRP is currently around $0.69. That means the transaction fee is so cheap that can be considered free. In this unique mechanism, the XRP that is used for paying fees is destroyed. This is a factor that can avoid flooded attacks by hackers and become secured. It also means that the number of XRPs are reducing day by day. As a consequence, the value of the XRPs will continue to increase.
  • Transaction speed: Ripple transactions are not only faster as compared to traditional payment methods but also as compared to other cryptocurrencies. The performance of Ripple in terms of transaction speed is undeniable.
  • Partnerships: While other cryptocurrencies are hard to find acceptance in the industry, Ripple is already being used and tested by hundreds of financial institutions and banks.
  • Excellent Team: Ripple is being developed by a very powerful team in both experience and expertise. In this young industry like cryptocurrency, a good team can really make outstanding.


  • Not a Decentralization basic: Ripple Labs owns a majority of XRP, as well as approve the validators for the network by using its own RPCA mechanism. This is not the philosophy of cryptocurrencies, which is decentralization infrastructure. The founders also keep themselves around 20 billion XRPs at the first debut.
  • Focused on large organizations: Large financial institutions are already using Ripple to reduce their costs and provide a better service. It seems not to designed for tiny individuals but concentrates on large corporations and banks instead.
  • Competition: Ripple is now the third-largest cryptocurrency in the market, regarding the coin volume and popularity. International payments transfer is an attractive industry for cryptocurrencies. So far, Ripple is facing competition from coins like Stellar (XLM), which are targeting the same space.
  • Distribution: XRP is currently only issued out at less than 40% of its total. The remaining amount (minus the 20% retained by the creators of Ripple) is held by Ripple Labs to distribute whenever and however they so wish. Unlike other decentralized currencies, Ripple Labs plays a huge part in distributing XRP. Ripple Labs is actually a company and this is very different from Bitcoin, where Bitcoin is fully decentralized and doesn’t have a central controlling authority.


There’s a lot to like about Ripple, and it has gained mainstream adoption in the financial sector where no other cryptocurrency has. It deserves its place as one of the top cryptocurrencies and crypto technologies to keep an eye on over the coming years. It could very well transform the global payment industry.

Read more:

Follow us on Telegram

Follow us on Twitter

Follow us on Facebook

You might also like