What Is Ripple Cryptocurrency Is and How Does It Work?

What Is Ripple Cryptocurrency

Ripple is a technology that works both as a digital payment network and a cryptocurrency for financial transactions. Ripple was first launched in 2012; it was co-founded by Jed McCaleb and Chris Larsen. This network is popularly known for its digital payment protocol. Ripple operates as a peer-to-peer, decentralized, and open-source platform that allows seamless transfer of money in any form, whether it is Bitcoin, Litecoin, or USD.

The XRP Cryptocurrency

Ripple is a peer-to-peer technology known for its digital payment network and protocol; it has its own cryptocurrency XRP. XRP has been created for use on the Ripple blockchain. Using a common unit of currency helps in easier recording of transactions; the sender who wants to transfer money converts their currency to XRP and transfers it to the recipient. In turn, the recipient converts XRP to their native currency; here, XRP functions as an accounting entry. Using Ripple’s global network, financial establishments process their user payment reliably, instantly, and cost-effectively around the world.

How Does Ripple Work?

  • Ripple’s main work is to process the payment settlements, asset exchange, and also the remittance system which is identical to the SWIFT system. This system is used for international security and also for transferring money used by financial institutions and banks.
  • The Ripple network does not use a proof-of-work system which is used by Bitcoin or proof-of-stake systems;  rather, they validate the account balances, and also the transactions are done on the system. Ripple’s consensus works to improve the integrity of the system, which helps in preventing double-spending.
  • Ripples confirmations are instant, and it does not take more than five seconds, as it is decentralized; there are no Central authorities to decide who can set up a node and confirm the transactions on the ripple platform.

How Is Ripple Fundamentally Different From Bitcoin?

Bitcoin, as the most well-known cryptocurrency with easily the largest market cap, is an easy comparison to make when discussing other cryptocurrencies. However, Ripple is quite different from bitcoin in a number of ways.

  • For starters, Ripple isn’t powered by a blockchain but a server network. Secondly, instead of replacing conventional banking and payment systems, it’s attempting to work with the status quo to improve the underlying infrastructure, which will ultimately benefit the end-user.
  • Bitcoin is entirely decentralized, as it was made with the purpose of allowing for financial transactions without the need of a third party like a bank. Ripple, on the other hand, literally sells its services to banks and financial institutions. With most of the XRP being owned by the company, the network is far more centralized.
  • Bitcoin was made in the hopes of creating a brand new financial system entirely. Ripple, creating its digital token to help with asset transfers, seeks to assist existing financial systems and upgrade their capabilities for worldwide transactions.
  • Ripple primarily offers fast and cheap transactions, allowing for low-cost, high-speed currency exchanges, payment settlements, and remittances. XRP transactions are confirmed within seconds. On the other hand, Bitcoin transaction confirmations take around 10 minutes on average.

What Is XRP, and What’s It Used for?

  • XRP, the digital currency of Ripple, is capable of transferring your payment within 4 seconds, and it handles 1500 transactions per second using less energy compared to Bitcoin transactions.
  • Even though Ripple has its advantages over other cryptocurrencies, it has a limited supply of XRP. There are 100 billion XRP in existence, with Ripple owning  60% of them.
  • Several financial institutions use xRapid to convert one currency to another when making cross-border payments. Here XRP is used for mid-transaction for liquidity; this makes Ripple and XRP unusual in the cryptocurrency domain since it doesn’t exactly operate as a currency.
  • There is no counterparty risk with the settlement with the XRP token. Ripple is focused on long-term goals and, therefore, more beneficial to invest in it. Check here for a year by year Ripple forecast before investing in XRP.

What Is Ripple’s Value Proposition?

Ripple issues the third-largest cryptocurrency (based on market capitalization) in the world. But its value proposition doesn’t stem from being a Bitcoin copycat. It actually stems from being one of the unique cryptocurrencies on the market. In Ripple, you can transact purely in IOUs all day, every day, without touching XRPs for anything other than the fees. This ties to the central value proposition of XRPs – being the universal medium of exchange.


Ripple is a technology mostly known for its digital payment network and protocol. However, it also has its native cryptocurrency, XRP. Ripple’s primary process is a payment settlement asset exchange and remittance system similar to the SWIFT system for international money and security transfers that banks and financial intermediaries use. Rather than use blockchain mining, Ripple uses a consensus mechanism through a group of servers to confirm transactions. Ripple is one of those cryptocurrencies which has a highly focused approach and future vision. With several banks and financial institutions already getting on board, it appears to be on the path of success. Apart from that, according to the recent news on Ripple, the crypto might see tremendous growth.

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