Ripple and XRP - revolution of the global payment operations?
Everything you need to know about Ripple and XRP.
Beginnings of Ripple
The story of Ripple began back in 2004 when Ryan Fugger initiated RipplePay. The company didn't create much attention, which is why the development stagnated for several years.
The story gain momentum in 2012, when a new team led by Jed McCaleb took over the project. At the end of 2012, a private company OpenCoin was incorporated. 100 billion XRPs were created, distributed between the members of the company management.
In 2013 the company OpenCoin war renamed into Ripple as we know it today. Ripple has 9 offices around the world with its registered seat in San Francisco. At the moment they employ over 350 people. The managing team at Ripple can be seen on the image below.
Focusing on the banking sector
XRP is a digital currency primarily designed as a superior alternative to traditional payment channels (SWIFT and others). Behind XRP there is a private fintech company - Ripple. It is important to say that by buying the XRP currency you won't acquire a share in the Ripple company.
Also, XRP is a publicly available currency with an open code, while Ripple company products are of a closed, commercial type. Therefore, Ripple doesn’t own XRP ledgers, but surely has the potential to develop and spread XRPs considering the large amounts of XRPs which Ripple possesses.
RippleNet is the main product of Ripple. It is a global network of banks and various financing organisations. RippleNet enables a fast and cheap cross-border transfer and conversion of money. At the moment RippleNet has approx. 300 members, including: MoneyGram, American Express, PNC, Santander, SBI Remit and others. Most Ripple partners doesn’t use XRP for business operations and money transfer due to regulatory discrepancies.
XRP cryptocurrency
The total number of XRP crypto coins that can ever exist is approx. 100 billion. At the moment approx. 44 billion are in circulation.
The company can release one billion XRP into circulation on a monthly basis. Under releasing into circulation, we mean selling to investors or on stock exchanges.
One billion XRPs is currently worth 244 million USD. It is a significant amount of money, for which the market has to absorb each month if Ripple decides to sell the whole amount. You can read the last report on XRP sales here. Ripple is surely not lacking money, and recently, the budget was additionally increased in the C series of collecting funds. They filled the cash register with additional 200 million USD.
Advantages of XRP in relation to Bitcoin
XRP seems to have many advantages in relation to Bitcoin. The first one is certainly a far greater network throughput, reaching 1,500 transactions per second. Just for a reminder, Bitcoin is currently limited to a maximum of 7 transactions per second.
Still, only because Ripple (XRP) is faster, does not mean that it is better than Bitcoin. Considering their totally different purposes, it is not recommendable to compare them directly. But, as they are often compared in practice, let us state certain comparisons in this article.
The costs of XRP transactions depend on network load, but in most cases, they can be considered free, since the fees are negligibly small. At the moment, the transaction fee amounts to 0.00001 XRPs (10 drops).
How does XRP work?
XRP uses a specific consensus mechanism, which significantly differs from Bitcoin. When we say consensus mechanism, we mean a set of rules, which enable transfer of values without a centralised mediator, such as bank.
Bitcoin uses Proof Of Work (POW), which we covered in our previous article. On the other hand, XRP works in a different way. Transactions are processed by a group of validators (special servers), which, roughly speaking, supervise all transactions on the XRP ledger.
The first transaction which validators see is considered correct, if certain rules are met, while every other identical transaction is considered invalid. When most validators agree that the transaction is valid, it becomes final.
It is important to mention that validators are not paid for their work, therefore a question emerges - what is their incentive to comply with the rules of the network? You can read more technical information here.
Is XRP more decentralised than Bitcoin?
XRP has published an interesting article in which they claim that XRP is a more decentralised currency than Bitcoin. They support their claim with the fact that Ripple as a company initiates a small percent of XRP validators, below 10%.
At the same time, they don’t mention the fact that for most users it is almost impossible to own an XRP node and take part in the consensus.
The reason is simple, XRP node requires several tens of terabytes of disc (SSD) space and an almost perfect uptime. In order to meet the mentioned requirements, it is necessary to pay large amounts of money, and only companies that use XRP for business purposes can afford that.
Then there is a number of active nodes, which in XRP's case is only 190 computers A small number compared to other cryptocurrencies. All in all, XRP ledger has a neglectable level of decentralisation.
XRP - ledger utilisation
XRP ledger processes several more transactions than Bitcion, but far less than the theoretical maximum of 1,500 transactions per second.
The average in the last several months is approx. 10 transactions per second. The diagram below displays yearly statistics of occupancy of a specific XRP ledger (equivalent to Bitcoin block), generated averagely every 4 seconds.
XRP Wallets
XRP doesn't have quality specialized wallets, so we recommend using hardware wallets which you can buy in our stores or one of the universal wallets.
Investors who seek simplest and securest way to deposit XRPs can request a free paper wallet in Bitcoin Store exchange offices while buying. Our online users can store Ripple on their Bitcoin Store account. Choose an option which suites you the most and keep the access data safe.
XRP deposit
Every new account on the XRP ledger requests a deposit (Bank Reserve) of 20 XRPs for account activation. After activation, the deposit, i.e. XRP crypto coins remain locked forever and they cannot be reclaimed.
Once the account is activated, it does not have a termination date, and it is possible to use it permanently. At the moment of writing this text, it cost 30 Kuna to open an account.
With this we will end our Ripple article. XRP can be bought through our website or in our stores for cash. Watch out for all sorts of Internet advertisements which offer different packages, vouchers, and similar Ripple services.
They are mostly scams and their goal is to draw out money from uninformed users. Stick to verified crypto exchange platforms, so you yourself don’t become a scam victim.