Everything You Need To Know About Ripple
With the bitcoin price in India attaining new highs, it has taken up most of the mind space of crypto users. But many other alternatives can give equally high dividends when invested. One such popular digital currency is Ripple. Founded in 2012, it is the third-largest cryptocurrency globally based on market capitalization and is a currency exchange and settlement platform. Its USP is not that it is a bitcoin copycat but because it is one of the most unique currencies present in the crypto market. Read below to know all about it.
More About Ripple
Ripple, a product of Ripple Labs, is a cryptocurrency and a for-profit platform that has gained popularity due to its unique way of performing payment settlements and currency exchange. XRP is the cryptocurrency of Ripple and has many organizations and individuals as customers. It has a valuation of upwards of $90 billion and is the third most valuable coin as per market cap. They use the platform for fast and hassle-free transactions and are a token but not a currency. Many financial companies and banks use Ripple for performing transactions across the world.
Working of Ripple
One of the interesting aspects of Ripple is that it is not decentralized; unlike other blockchain networks. However, it does have a strong network that validates and adds transactions to a ledger system. The internal ledger guarantees transactions. The important thing to note about Ripple is that the transactions are not limited to cryptocurrencies; they can be used to exchange any commodity, including gold and FIAT currencies.
The Ripple Blockchain is called RippleNet and uses banks and financial institutions as gateways. The built-in algorithm and mathematical computations find the most suitable path for doing transactions and ensuring smooth processing. RippleNet needs 25 independent nodes managed by Ripple, tech companies, and financial institutions to agree on the state of the public ledger and validate the transactions. This makes it much faster at processing transactions than Bitcoin. Instead of thousands of miners validating the transactions, only 25 nodes are needed to do it. Also, mining of XRP is done by Ripple, so no time or power is spent on mining XRP. You can only buy tokens from a cryptocurrency exchange.
What are XRP Tokens?
XRP is the digital currency of Ripple and is a token that represents the transfer in its network. In a conventional setup, it costs time and money for overseas transactions between two different currencies. On average, it takes 3 days to complete the transactions. When XRP is used as the common currency, the time and the fees charged are reduced. Ripple can perform the currency exchange in seconds, and the transaction fee is only $0.0001. So financial institutions and banks have started to facilitate XRP for their overseas transactions resulting in an increase in ripple price in India.
XRP v/s Bitcoin
There are a few things that differentiate XRP and Bitcoin. XRP is limited to its parent Ripple, while Bitcoin is an independent cryptocurrency. Miners get new coins for performing blockchain validations and those who provide computation power in Bitcoin.
Ripple creates all the XRP coins, releasing them as per supply and demand. So it is akin to a bank that handles the currency. Bitcoin has a limited supply and does not generate new coins. Ripple also has added a new feature called smart contracts to release coins as per demand. These are then used for selling, incentivizing, and funding operations.
Ripple and Bitcoin may both be cryptocurrencies, but their purpose is different. Ripple wants to improve the conventional banking system, while Bitcoin wants to disrupt it!