Ripple : to move money around the world
Back in the year 2004, computer programmer Ryan Fugger had the vision to have banks to decentralized monetary system where companies would create their own money. This gave birth to Ripple which was successful but had a small network and centralized software. In 2012 Ripple pay merged with Open Coin. Jed McCaleb and Chris Larsen were now the founders of what became Ripple net.
Ripple net is a financial enterprise that allows users to send, receive, hold, and move currencies across border swiftly and genuinely. It uses RTXP (Ripple Transaction Protocol) to move value around the world. This solves slow and disintegration problems associated with banks. It allows at least 1500 transactions per second which make it faster than Bitcoin and Ethereum. Ripple is still aiming to allow transactions as many as the credit card.
Ripple net uses the open-source ledger blockchain to attract and process all transactions. It does not allow mining. The company had initial mining of 100 billion coins and it destroys coins that have been used, these are the transaction fees attached to each successful XRP transaction. This reduces the number of available coins hence increasing the value of the coin. Ripple net also has a plan of realizing 1 billion coins into the market every month until the whole lot is released.
The network and the cryptocurrency XRP
Transactions on Ripple are handled independently by a community of validating nodes who maintain the network and the transaction protocol. Users on Ripple net can select trusted validators from a Unique Node List (UNL). The UNL ensures that no entity on the blockchain is large enough to control the network. It also ensures participants are kept from colluding to attack the network.
XRP is the digital currency for the Ripple net. XRP can be divided into 6 decimal points (0.000006) the smallest unit is known as a Drop. It provides liquidity for service providers on the Ripple network. Furthermore it acts as the bridge for across-the- border transactions removing the need for refunding. And it takes the role of the fiat currency in a cross-border transaction. It achieves this role by using IOUs. IOUs are tokens that can be stored on the Ripple Wallet to represent debt, when the required amount is paid they are released. This depends on trust which is key in the system.
The Technology behind XRP
XRP does not use proof-of-work technology but the open-source ledger system as mentioned earlier. Since there is no mining concept, the power consumption of the system is highly reduced. This adds to reducing the price of transaction fees on the platform. A minimum of 20 XRP is the required deposit for XRP Wallets to avoid having people spamming the Ripple network with a large number of accounts.
The controversial question with Ripple is whether it is decentralized or not. Transactions are handled by independent validating nodes which are not controlled by the company but maintained by it. Further, the RTXP is an open source meaning it can be run even without the existence of Ripple labs. Unfortunately his products are not open source but are run entirely by the company. The trust system restrains the functionality of the platform.
The centralization that is around the Ripple network makes it safer compared to other platforms. The enterprise is in control of almost all the happenings on the system. It has proven stability and good governance. If anyone is thinking of acquiring XRP coins they should remember that like any other cryptocurrency, it is volatile, therefore only stake what you can comfortably lose.
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