What is Ripple? You may recognize the name as the third most popular cryptocurrency after Bitcoin and Ethereum. If you’re not clued up on these two cryptocurrencies, then you can read our guides on Bitcoin and Ethereum. But like Ethereum, Ripple is much more than just a cryptocurrency token. It’s a platform using an open source protocol. The team behind Ripple has successfully forged a series of high-profile partnerships. Their partners include a range of prestigious banks across the world. The main selling point of Ripple is a near-unparalleled ability to facilitate fast and cheap transactions. Bitcoin, to put it in context, wasn’t necessarily built to be a method of transferring money — although many use it that way. Ripple, on the other hand, was purpose-built for financial transactions.
XRP is the cryptocurrency associated with Ripple, which is the name of the actual platform. Much like Ether is the fuel of the Ethereum platform, XRP is the driving force of Ripple. The best way to visualize the utility of XRP is to see it as a placeholder token for whatever is being traded. The amount of XRP will represent the value of the fiat money or cryptocurrency being transferred. The benefit of using XRP as a placeholder token is that it is incredibly cheap to make a transaction. Each transaction only costs $0.00001 (in XRP) to make. That transaction fee is subtracted from the total number of XRP tokens available and is not repacked. This system helps create a deflationary economy, similar to that of Ethereum.
What is RippleNet?
RippleNet is a platform that allows users to create their own cryptocurrency. If you are familiar with Ethereum, then you will also know about ERC-20 compliant tokens. RippleNet allows for a similar process of creation. The platform is being used by Ripples many partners. Banks, payment providers, and other financial institutions use RippleNet to send money across the globe.
How does Ripple work?
The Ripple network is very efficient when it comes to making financial transactions. Imagine that you have an item you want to sell, and another item you want to buy. You could go on eBay, but the process would not only be slow but also expensive. With Ripple’s system, you can simply list the item you want to sell and search for the item you want to buy. Ripple then does the searching for you and calculates the fastest and cheapest way to make the transfer for both items. Another benefit of Ripple is that it doesn’t matter what currency you want to trade use.
Who created Ripple?
Although the official launch of Ripple happened in 2013, the history of the protocol stretches all the way back to 2004. That’s four years before Bitcoin was conceived! The founder of Ripple is Jed McCaleb. His previous ventures include EDonkey. McCaleb’s track record as an entrepreneur made it possible for him to source investors for the Ripple Labs.