Today, Ripple (XRP) has become a firm fixture when it comes to cryptocurrency news.
Other than Bitcoin and perhaps EOS, or Ethereum lately, no other crypto commands the attention Ripple has.
But what is Ripple?
Ripple is a privately owned company that seeks to create and enable an international network of financial banks and institutions. Ripple operates on an open peer to peer decentralized platform that permits a seamless transfer of money in any form, whether litecoin, bitcoin USD or Yen. It uses the RippleNet blockchain software to minimize the cost of international payments.
However, the term Ripple is often used to describe the digital currency “XRP,” the payment network on which the money is transferred, as well as the holding company behind the whole project.
What Is Ripple?
Ripple is a technology that functions as both a digital and a cryptocurrency payment network for financial transactions.
Its primary objective is to create an international settlement network that guarantees more efficient transactions between the world’s financial institutions. Therefore, the platform operates to permit users to transfer money from currency A to currency B in a matter of seconds, anywhere around the world. It is an ambitious goal meant to eradicate the need for older systems like SWIFT or Western Union.
What is XRP?
Despite the coming in of new cryptocurrencies, a lot of teething still hounds our financial system. International payments are still cumbersome and low, and the world, in general, is not warming up to compete with the cryptocurrencies fast enough. Therefore, ripple comes into play as a mediator to solve this problem.
XRP refers to a token used to represent the transfer of value across the Ripple Network. The primary objective of XRP is to mediate between other currencies, i.e., for both fiat and cryptocurrencies exchanges.
How does Ripple work?
Ripple functions with a common ledger managed by a network of independently validating servers that consistently compare transaction records.
It uses a shared public database that employs a consensus process between the above-mentioned validating servers to ensure integrity.
Moreso, ripple cryptocurrency also uses a hash tree to collect the data at hand into a single value. This is then compared across the validating servers to provide consensus.
Which wallets can you use to hold XRP?
You can store your XRP on any exchange which you see convenient to you. However, this is not recommended due to the security risks associated with trading platforms. Instead, it is a brilliant idea to transfer your tokens to a safe, secure, private wallet.
Moreover, ripple cryptocurrency does not offer an official wallet for XRP. However, numerous third-party providers provide wallet support for this popular cryptocurrency. For instance, you may also want to include a mobile/web wallet like cryptonator or Ledger Nano S hardware wallet.
NB, It is generally recommended to use hard wallets. They are usually safer because they are offline and have better security than online and other exchange wallets. However, they are not ideal for someone trading frequently.
What is Ripple used for?
It functions as a low commission currency exchange. Many currencies cannot directly convert to each other. Therefore, banks need to use the US dollar as a mediator. In other words, there is a double commission, i.e., in converting currency A to USD and USD to currency B. However; Ripple is a mediator too which is much cheaper than USD.
It can also function as fast international transactions. Ripple’s average transaction time is 4 seconds. You can compare it to a few days for regular banking systems and an hour or more for Bitcoin.
Ripple creates payment ecosystem. Users can issue their own currency for cheap and fast transaction.
Is Ripple Worth Investing?
Ripple will probably appeal to bigger banks throughout the next coming years, as it offers a fast, scalable global payment network which reduces transaction fees. XRP can earn big returns on their investment that is if ripple keeps making headway throughout the banking sector.
Beside from XRP banks can also choose to venture into RippleNet but use IOUs instead of XRP. Therefore, viewing it from its trend so far, Ripple has seen a definite increase in numbers at most of the times.
However, always recall that where there is a significant reward, there is also huge a risk involved.
Conclusively, whether you choose to invest in Ripple or not, it is worth watching as blockchain adoption increases.
Therefore, Ripple is one of the few legitimate, viable competitors to the old guard financial system, and it can play an essential role in how money moves around the world.