Ripple (XRP) Analysis, Technology, Usage, and Reasons to Invest

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Ripple is a real-time gross settlement system for currency exchange and remittance. The network is created by the Ripple company and it is also called as the Ripple Transaction Protocol(RTXP).  The project was initially released in 2012 and is built upon a distributed open source internet protocol and native cryptocurrency technology.

What is Ripple?

The Ripple cryptocurrency, also abbreviated as XRP enables secure and almost instant transfer of currency on an international level. The global transactions are nearly free and there is also no risk of chargebacks. The tokens here represent a fiat currency, cryptocurrency or a commodity based on where and how it is used. The Ripple technology is based on a shared ledger that is publicly accessible and uses a consensus process allowing for payments, exchanges, and remittance in a distributed format.

The Ripple technology is already used by several banks and other companies such as UniCredit, Santander and is also said to be under testing by banks including Axis Bank and HDFC Bank. The early development started in 2004 by Ryan Fugger as he conceived an idea post working for the local exchange trading system in Vancouver. His idea was to create a decentralized monetary system that could effectively allow users to create their own money. RipplePay.com thus set its mark in the internet history in 2005 as a financial service that provides secure payment options to the members of an online community on a global network.

This project then went through several steps of evolution and finally starting 2013, financial institutions started adopting the technology as an alternative remittance option.

Technology behind XRP

Ripple XRP

According to the founders, Ripple is an open-source protocol which serves as a basic infrastructure for interbank transactions by being a neutral utility for financial institutions and systems. This allows for the banks and other financial institutions to incorporate the Ripple protocol in their systems. The Ripple protocol works with two parties, the first one is a regulated financial institution that holds the funds and issues the balances to its customers and the second is the market makers that provide liquidity in the currency that they trade in. In terms of technology, Ripple is based on a public ledger or database the contents of which are decided by consensus. It also holds information about buying or selling of assets and currencies.

The transactions or payments between each other are done using cryptographically signed transactions denominated either in fiat currencies or Ripple Current(XRP). For the transactions that are done in XRP, the internal ledger is used. In other cases, the payments are denominated as amounts owed and the assets are represented as debt obligations. Ripple also now has a user verification protocol allowing users to specify which other users they trust and up to how much amount, this way when the transaction is initiated between two users, the credit line is adjusted confirming to the limits set by the users. The protocol uses a mechanism called as ‘rippling’ to process payments through a network of trusted associates that helps it find a path between two users in a way that each link of the path is between two users who do not have a trust relationship.

Why should you invest in XRP?

XRP can be traded in small amounts up to 6 decimal places and the smallest unit of a ripple is called a drop, 1 million drops equal 1XRP currency. At inception, 100 billion XRP was created and the number cannot be increased according to the protocol rules. This results in XRP being an asset that has a reducing available supply and it is not dependent on any third party for redemption. Out of the 100 billion XRP, 20 billion XRP was retained by the creators and the rest were given to Ripple Labs. About 200 million XRP were given away to various destinations including a few charities that started offering Ripple currency as an incentive to contributors. Now the distribution is handled by an escrow that is cryptographically secured, the escrow allows for a maximum of 1 billion XRP to be released each month to avoid a sudden change in the availability and the leftover currency is returned back to the escrow.

The biggest use of XRP is as a bridge currency and can be very helpful in converting once currency to the other.

Things to know about Ripple XRP

  • 100 Billion total XRP.
  • 200 million given away to charity and other destinations.
  • Current release to market capped at 1 Billion per month.
  • Leftover XRP returns back to the escrow at the end of the month.
  • Maximum time of 4 seconds for a transaction.
  • No need for mining.
  • Fast, Cheap and efficient protocol for international fund transfer.
  • Public Ledger.
  • Partnerships with Accenture, Axis and several other major banks.

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