Everyone has questions about their “crypto”, but few seem to know how it works. That’s where Ripple comes in. But what is ripple? What are the benefits of using ripple? Why should you use it over another currency such as Bitcoin or Ethereum, and why should you invest your money into this particular digital currency instead of a different one?
Ripple provides more than just an alternative way for banks to transfer funds on its blockchain network. It also provides a convenient way for the average person to participate in the crypto world. If you are thinking of buying XRP to begin your investment in Ripple, here is an overview of what Ripple is and how it works.
What is Ripple?
Ripple is a network that serves as a trusted agent between two parties in transactions. It can process transactions for fiat currencies, cryptocurrencies like Bitcoin, and commodities like gold.
Ripple (XRP) was created by a company called Ripple Labs Incorporated on 2012-09-30 as an open-source payment network designed for people to send any amount of money with no chargebacks. The company wanted a system that would offer fast and cost-effective cross-border payments, which is why the network was created using blockchain technology.
What about XRP?
XRP is a cryptocurrency that was created in 2012 and runs on the XRP Ledger. It is unique in that it does not use a blockchain like most other cryptocurrencies, but instead uses a protocol called Ripple Transaction Protocol (RTXP). This makes it more centralized than other cryptos. XRP is often used as a form of currency to exchange for other cryptocurrencies or to finance transactions on the Ripple network.
So, to bring it home, we can simply say that XRP is the native currency used on the Ripple network to facilitate transactions on the network. It is what users pay the network to conduct different transactions on it, including sending and receiving money across the world.
How Does The XRP Ledger Work?
Ripple is a payment network that uses XRP, the digital asset, to settle transactions. The goal of Ripple is to provide a global financial settlement system that is faster, more efficient, and more secure than traditional systems.
The XRP Ledger does not employ PoW or PoS algorithms like Bitcoin or Ethereum. Instead, it uses the XRP Ledger Consensus Protocol. This protocol is more efficient than other protocols and allows for confirmation times of 3 to 5 seconds. That’s an amazing speed compared to other cryptocurrencies like Bitcoin takes minutes to hours to confirm transactions. And because of that, XRP transactions attract lesser fees.
Pros of Ripple (XRP) Over Other Cryptocurrencies
- Focused appeal: Ripple has just one focus, and it has been able to put all its concentrations on that. The product is targeted at banks and financial institutions and has put all efforts into concentrating on that. That way, the product has always been in high demand by major financial institutions.
- Versatile exchange network: XRP is not the only acceptable token for making transactions on the Ripple network. It also allows other forms of cryptocurrencies like Bitcoin and Ethereum, fiat currencies, and even commodities like gold.
- Largely adopted by institutions: Ripple doesn’t struggle for adoption. Many big enterprises already use Ripple as their transaction platform. Some institutions like Yes Bank, Axis Bank, and Santander are all using Ripple.
- Fast transaction: Needless to say, there are only a few cryptocurrencies in the crypto space that is as fast as XRP in making transactions. XRP transactions happen between 3 to 5 seconds. That is a huge advantage over wire transfers and Bitcoin transactions that can take hours to complete.
- Low fees on transactions: because of the high speed of transactions, you literarily pay less for transactions on the Ripple network. Transaction costs on the Ripple network can be as low as 0.0001XRP.
What Factors Affect Ripple’s Price?
The price of Ripple as of the time of writing this post is $0.6086. The price has suffered many highs and lows in the past. However, the year 2021 was a great one for Ripple as the price surged incredibly. So what usually determines the price of Ripple?
Ripple’s price is determined by a variety of factors, including, but not limited to regulation, technology, and sentiment. Ripple is different from other cryptocurrencies because it has an underlying technology that allows for international transactions. This makes it a desirable option for businesses and banks. Positive media coverage is likely to have a positive effect on ripple’s price too.
What Are The Uses of Ripple (XRP)?
If you are considering investing in Ripple and adding XRP to your portfolio, then you will be interested in knowing what Ripple can be used for. Below are some use cases of Ripple and its token, XRP:
To help send and receive money across the world
Where in the world would you like to send money to? You can do that quickly and easily with Ripple (XRP) with much lower transaction costs. Banks and other financial institutions now use Ripple to transfer tokens in real-time to anywhere across the globe. That way, bank transfers can be completed at a much faster speed without incurring any exorbitant fee.
Used as a payment system
Ripple now has its own payment system and uses XRP as the currency to facilitate payments on the system. With the payment system, users can now make transactions with XRP while they head to a local store that supports XRP to cash out.
Can be used as a means of investment
Looking to add another token to your investment portfolio, Ripple might just be a good option to go for. You can invest in XRP and then used it to process all forms of transactions – and in any currency.
Can be used to pay content creators
Coil recently started this. The platform was created to help users donate to their favorite content creators in XRP. That way, content creators on platforms like YouTube and Twitch can be encouraged to keep putting their best into what they do.