Ripple (XRP), also known as the Ripple Transaction Protocol, is a cryptocurrency and real-time gross settlement system designed to make financial transactions simpler and easier.
Launched in 2012, Ripple was designed not merely to function as a cryptocurrency, but an all-in-one payment processing and remittance system for banks, businesses, and consumers. (1)
Ripple was created with the express purpose of replacing existing payment infrastructure with a model that is decentralized, open source, and accessible to all. Additionally, Ripple allows users to create various types of custom cryptocurrency, fiat currency, and other types of currency via its token system. (2) (3)
Ripple has been adopted by numerous banks, financial institutions, and other major banking organizations due to its reliability, flexibility, and functionality. (4)
Ripple is an effective and worthwhile investment for anyone looking for an all-in-one cryptocurrency and payment processing system.
Development on Ripple began in 2004, inspired by the RipplePay.com system created by Canadian web developer Ryan Fugger. Fugger designed RipplePay.com with the intent of creating a decentralized monetary system that allowed users to invent their own currencies for any purpose they wanted. (5) (6)
Developers Jed McCaleb(who later found Stellar), Arthur Britto, and David Schwartz saw RipplePay.com and sought to expand it through the use of Bitcoin’s blockchain technology, fulfilling Fugger’s dream. (7)
Ripple was conceived as a solution to several problems Bitcoin possessed: excessive electricity usage, slow transaction speed, and excessive centralization. Unlike Bitcoin, Ripple would verify transactions through a community-wide consensus instead of relying on miners. (8)
After being joined by developer Chris Larsen in 2012, McCaleb, Britto, and Schwartz obtained Fugger’s consent to continue developing RipplePay.com into a full-fledged cryptocurrency and monetary system. Ripple would launch that same year. (9)
Forming the corporation OpenCoin (later renamed Ripple Labs), Ripple’s developers focused their efforts on creating the Ripple Transaction Protocol, a system that allows instant, direct transfers of money between two separate parties. The protocol was compatible with everything from the U.S. dollar and other currencies to airline miles. (10) (11)
To accomplish this, Ripple was programmed to rely on a central ledger that is maintained by a number of servers that continuously compare and verify transaction records. (12)
To facilitate transactions, OpenCoin created XRP, a cryptocurrency that allowed users of the Ripple protocol to transfer money without the wait times and fees of traditional banking networks. Ripple also linked Bitcoin to their system, allowing people to use the Ripple protocol to send a payment in any currency to a Bitcoin wallet. (13) (14)
In 2013, Ripple Labs released Ripple’s reference server and client as open source software, allowing anyone to contribute to Ripple’s future development. (15)
Beginning in 2014, Ripple shifted their focus to the banking market, with hopes that their system could replace the existing, outmoded systems that banks rely upon to make transactions. (16)
In December of 2014, Ripple announced a partnership with Earthport, a global payments service whose clients include Bank of America and HSBC. Since then, more banking clients have joined the Ripple system, including Western Union, the Commonwealth Bank of Australia, and the Royal Bank of Canada. (19) (20) (21) (22)
In 2015, the Financial Crimes Enforcement Network fined Ripple Labs $700,000 due to violations of the Bank Secrecy Act. Ripple Labs responded by adding AML transaction monitoring to the Ripple protocol to bring it into compliance with U.S. law. (23)
In recent years, Ripple Labs has expanded globally, opening offices in Australia, the U.K., and Luxembourg, and more and more banking institutions have begun using Ripple in some fashion. (24) (25) (26)
In Ripple, transactions take place when users make cryptographically signed transactions that can be done using either XRP or a fiat currency of their choice. XRP transactions are monitored through the use of Ripple’s internal ledger. (27)
While Ripple originally lacked real-world enforcement of transactions, its integration with numerous banks and payment systems gives it a credibility and security that many cryptocurrencies lack. (28)
Ripple derives its name from the fact that transactions between parties require trust; if two users have not established a trust relationship, the transaction will “ripple” throughout the network until it finds a path in which each link is between those who do have a trust relationship. (29)
Due to its use by many banks and financial institutions, Ripple brings a level of security, stability and trustworthiness that few cryptocurrencies can match, making it a popular option for investors and traders.
Unlike most cryptocurrencies, Ripple cannot be mined due to its unique design.
In contrast to Bitcoin and other cryptocurrencies, where miners are responsible for processing transactions on the network, Ripple transactions are processed through a system-wide user consensus. Thus, mining is unnecessary to maintain the integrity of the network. (30)
Additionally, Ripple’s designers created 100,000,000,000 XRP when Ripple first came online, and they have steadfastly refused to make more. They have also been criticized for the way in which the currency was originally distributed, with the founders retaining 20 percent of all XRP in circulation. (31) (32)
Because it is impossible to mine Ripple, the currency has had a deeply polarizing response from cryptocurrency enthusiasts, with Bitcoin fans deriding it for being “pre-mined.” (33)
The inability to mine Ripple has limited its use and growth to a certain extent. It is unknown if Ripple’s designers plan to allow mining or to issue new XRP in the future.
Ripple is a cryptocurrency that offers a suite of security and convenience features that few if any other cryptocurrencies possess. Its consensus-based transaction system frees it from reliance on miners and gives it a stability when it comes to sending or receiving money.
Additionally, Ripple’s compatibility with mainstream fiat currencies gives it a flexibility that most cryptocurrencies lack. The sheer number of financial institutions using Ripple for their transactions has further buttressed its reliability.
Because mining Ripple is impossible, the currency may turn off some cryptocurrency users who are looking to make money with minimal effort.
However, those who are looking for a reliable cryptocurrency and transaction system built into a single package will definitely want to check Ripple out.