Ripple Cryprocurrency - How It All Begun?
The Ripple coin has posted tremendous growth over the past year, currently ranked fourth on the list, after Bitcoin, Ethereum and Bitcoin Cash, with a market cap of $ 8.8 billion (as of this writing, according to the Coinmarketcap website ). Ripple's function is radically different from that of Bitcoin and Etherium. While Etherium focuses on smart contracts and Bitcoin on store of value, Ripple focuses on offering solutions for payment systems. In this article, I will explain about Ripple's project, who is behind him and where he is heading.
A little history
Ripple was founded in Vancouver in 2004 by Ryan Fogger, and was initially named RipplePay. The main goal of its establishment was to create a decentralized monetary system that would provide secure payment options among members of an online community. In 2012, Chris Larsen and Jed McClave adopted the idea of Fogger and founding OpenCoin (later renamed Ripple Labs Inc.) that developed the Ripple XRTP protocol and currency we know today. During its years of operation, Ripple has signed impressive and promising collaborations, starting with initial fundraising by venture capitalists. Among the world’s leading companies: Google Ventures, Pantera and Andreessen Horowitz , and to collaborations with over 100 institutions Top Finances Among them: Japan's Largest Bank The Bank of Tokyo-Mitsubishi UFJ (BTMU), Bank of America, UBS and American Express Credit Company, whose announcement of its cooperation on November 16 led to a 20% jump in currency Ripple that day.
So what exactly is Ripple? Know the protocol
Ripple is a decentralized (and not a currency) open source protocol based on P2P technology, which aims to be a neutral infrastructure for banking transactions. The protocol allows the trading of anything of value including commodities, fiat currencies and digital currencies. That is, unlike Bitcoin, for example, Ripple offers infrastructure. Ripple's protocol is based on an algorithm that calculates the cheapest exchange rate for the customer. For example, if we want to convert dollars into euros, instead of converting dollars directly to the euro, it might be cheaper to convert dollars to Canadian dollars, Canadian dollars to gold, and gold to the euro. The Ripple protocol will do these for us in a matter of seconds. The main clients of the protocol are financial companies and banks that will integrate the protocol into their systems, thereby simplifying, accessing and reducing forex trading for their clients. Two transactions are required for a transaction to be made on the protocol: one is a financial institution that will hold the money for the client; Market maker ("Market Maker"), such as hedge or forex funds, to allow liquidity of the same currency (any user, nodes, in the Ripple protocol can be used as a market maker). The use of the protocol involves minor fees for the transactions (the minimum fee required is 0.00001XRP) . fees collected are destroyed and their main purpose is to prevent flood attacks (flooding attacks). For further details on the subject.
The use of Ripple's currency, the XRP
It is important to make clear that the currency that Ripple produces, the XRP, is not called Ripple. However, because it is the only currency the company produces, many call it that. The XRP is a digital currency, which is an intermediate asset for trading between different types of currencies on the Ripple protocol. The XRP offers two major advantages over other digital currencies. The first is transaction time. While the Etherium transaction time on average takes 15-20 seconds, and with Bitcoin over an hour, the XRP transaction time on the Ripple protocol is less than 4 seconds. The second advantage concerns the issue of scalability. While the Bitcoin allows 3-7 transactions per second, and the Etherium 15-20 transactions per second, Ripple allows 1,500 transactions per second. That is, the XRP may be particularly attractive to its target audience - credit companies and financial institutions.
What value does Ripple offer its customers?
It is important to understand that banks can adopt Ripple's protocol without using XRP at all, so I will split this discussion into two parts. First, what value does the Ripple currency add, the XRP. As the CEO explains in a Fortune website interview , banks 'primary use of XRP is to solve the liquidity problem. The banks' existing model for dealing with the liquidity problem, by holding billions of dollars worth of currency in Nostro and Vostro accounts , is not Instead, banks can use the digital asset, the XRP. For example, if A from Germany wants to transfer $ 100 to B from the US - A will transfer a euro worth $ 100 to his bank. His bank will convert the euro into XRP and transfer the amount to B's bank. B's bank will convert the XRP to dollars and transfer the money to B. ( Link to a video explaining the process). That is, the use of XRP eliminates the need for holding foreign currency in Nostro accounts (solves the liquidity problem) and thus lowers the bank's operational costs. Secondly, alongside the use of XRP, the use of real-time gross payment Ripple protocol ( RTGS) is expected to reduce transaction costs for banks by about 60% (according to Ripple's website ). This is done by processing global payments in a more efficient way. The streamlining of payment processing is expected to enable banks and payment providers to offer services to new markets that, without the use of the protocol, have been difficult or too expensive to reach in the past (eg India, Thailand and Mexico). Importantly, Ripple's code is decentralized, but the company is centralized.
Consensus Ledger
The ripple is based on a common shared ledger. That is, on a distributed database where the transaction information is stored. The Ripple protocol is based on an iterative consensus, enabling it to approve transactions much faster than Bitcoin and Etherium based on proof of work and proof of stake. Ripple is verifying transactions with Unique Node List (UNL), as of today, by default, Ripple provides a recommended list, with "validators" from the company. However, Rifel announced last May that as part of its plan to become more decentralized, it intends to allow parties Thirds serve as "validators." Ripple announced that the "validators" would choose from users (nodes) who appeared multiple times in UNLs, so that by November 2018, Ripple (or any other entity) would not hold the majority of "validators." ". For further discussion .
The Bitcoin Bridge
Ripple in collaboration with BitSamp.net has developed the Bitcoin Bridge. This application allows Ripple protocol users to pay people in Bitcoin without holding Bitcoin. That is, if I want to transfer money to a business that is willing to pay only at Bitcoin, but I do not want to hold Bitcoin, I can transfer dollars to the business through Ripple's protocol, and the business will receive the amount in Bitcoin. The main purposes of this application are to eliminate the need for exchangers and to make the use of the Bitcoin traders protocol available.
What is planned for Ripple's future?
There are 2 major issues that need to be monitored in the near term.
- Issue Issue : Ripple, which holds about 62 billion XRP currencies out of the 100 billion existing currencies, announced that at the end of the year (2017), it would distribute 55 billion XRP currencies in a secure Escrows account . Ripple will do so through 55 contracts, each with a total of XRP billion, and each contract expires on the first day of the month for 55 months. After each contract expires, the XRP will become available for trading. This move is expected to disperse the uncertainty about the company's 62 billion currencies, and according to a reportOn the company's news site, its main purpose is to provide stability and prevent manipulation and speculation. Of course, it cannot be concluded that stability is indeed achieved. So, for those who are thinking about investing in the long-term currency, I would recommend, first, to read the article in full (and not settle for the article), and secondly, to continue to follow updates on the issue, as this move may have an acute effect on the price of the currency in the long run.
- Making the XRP Ledger More Distributed : Ripple announced its intention to make the XRP Ledger more distributed than the Bitcoin and Etherium, and has set it as a goal to fulfill that goal by November 2018.
In conclusion
Unlike many blockchain projects, Ripple does not purport to relinquish the need for Fiat banks and currencies, on the contrary, Ripple offers infrastructure for banks and payment providers that will allow trading in a wide variety of currencies (Fiat currencies alongside digital currencies), with the XRP serving as an intermediate asset. Ripple's vision is to make the payment process as fast as the information transfer process through the "internet of value". That is, money transfer between countries will be done at the same speed as sending an email for example.
Wallets are recommended
It is important to note that in XRP's first transfer to wallets that support it, a fee of XRP 20 will be charged to register the wallet address. Therefore, a thought should be invested in choosing the wallet to avoid paying the commission several times on different wallets.
- Ledger nano S - Cold hardware wallet, offers a relatively high level of security and supports a wide range of currencies including: BTC, ETC, ETH, DASH, Zcash, Stratis. Link to tutorial video .
- Coinpayments - Hot wallet, secured by BitGo . The wallet supports over 80 different currencies, and allows payment to over 454,000 businesses. The fees charged for transfers are relatively low and stand at 0.5%.
- GateHub - Very user-friendly wallet. Sends email notifications about transactions made and money wallet status. In addition, the company provides a convenient graphical display of your currencies. Alongside the XRP, the wallet also supports ETC, ETH, BTC, REP. Guide, tutorial video .
