Although Ripple is frequently characterized as a cryptocurrency or a blockchain-based platform, Ripple iy neither of these things. Even though it parallels other blockchain systems like Ethereum and digital currencies like Bitcoin, it also stands out because of a few key features. So, if you are planning to trade crypto you may use a reliable trading platform like profit maximizer.
- First off, it doesn’t provide consensus using blockchain. Instead, it uses a HashTree to summarize and compare it across its validating servers.
- Second, XRP cannot be mined, unlike most other cryptocurrencies. At launch, 100 billion XRP coins were created and distributed.
- Many criticize Ripple for going against the fundamental principles of cryptocurrencies and express concern about this deviation from the cryptocurrency standard.
- But something must be working for Ripple because XRP is now the third-largest cryptocurrency by market cap and is widely used by financial institutions worldwide.
The origins of Ripple
Jed McCaleb and Chris Larsen of OpenCoin co-founded Ripple, which was first introduced in 2012. By 2018, the business had grown by 36,000% and had built up a network of several significant international institutions.
But how did this extraordinary achievement evolve? Let’s take a quick glance at the timetable of events:
- 2004–2005: Ryan Fugger is motivated to create a decentralized platform that people and communities may utilize to generate their income. On RipplePay.com, he develops the platform’s initial basic iteration.
- 2011–2012: Jed McCaleb starts working on a digital currency whose value is determined by consensus rather than mining. Fugger transfers control of RipplePay to Chris Larsen and Jed McCaleb, who rename the company OpenCoin.
- 2013: Ripple Labs, formerly OpenCoin, receives $2.5 million from angel investors. They publish an iPhone app that is later pulled and make the Ripple code open source.
- 2014: Ripple Labs aggressively expands to overtake Bitcoin as the second-largest cryptocurrency. For international transfers, the German bank Fidor has used the ripple protocol. Prices keep rising, and the value doubles in a single month.
- 2015: Additional banks, including Santander and the Royal Bank of Canada, started to join. They undergo a third branding change, deleting the word “labs” to become Ripple.
- 2016: New York State grants Ripple permission to conduct business and provides millions in subsidies.
- 2017: Ripple experiences a meteoric rise, increasing by 1,000% in just the final month of the year, and is accepted as a payment system by the biggest banks in the world.
A Graphical Depiction Of How The Price Of Ripple Has Changed Over Time
Many cryptocurrencies lack a clear focus and have numerous use cases. Although this desire to appeal to a wide audience has advantages, it often leads to confusion and a lack of focus. In contrast to these other currencies, Ripple was created with a specific use case in mind.
It was created primarily to make international money transfers affordable
Since international payments are typically exceedingly expensive and slow, it has long been believed that the system needs to be updated. Ripple does this by enabling banks and other financial institutions to safely and affordably transfer tokens in real time.
Ripple have the following three realistic use cases:
Provides a mechanism to acquire liquidity for payments; enables banks and payment providers to enter new markets; enables corporations to increase capital efficiency.
Utilizations in Trade Finance
There have always been extensive paper trails and high transaction costs in trade financing. Numerous arguments have been put up in favor of digitizing trade finance since it is believed that cross-border payments will be processed more quickly, safely, and effectively.
Both positive and negative aspects
Compared to many other cryptocurrencies, Ripple can process many transactions per second. Unlike Bitcoin, which can only process 3 to 6 transactions per second, Ripple can process over 1,500.
The centralization factor in currencies plays the main role in cryptocurrency price movement. Ripple disagrees with this because it holds 60% of the whole XRP market.
To use the Ripple network, you don’t need XRP. Financial institutions are able to use the network with fiat money, but XRP can help cut expenses even further. The three major products offered by Ripple Labs which are used to send payments, source liquidity, and process payments.
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