The Invention of cryptocurrencies was motivated by the need to challenge the conventional banking’s way of operation where privacy is not a priority and costs are way up. Ripple; the distributed ledger that facilitates gross settlements for real-time transactions and provides a remittance framework furthers this ambition. Here is a comprehensive look at the network, its feature and how it works. The narrative also looks at Ripple (XRP), the platform’s native token that enables users to pay for the various services that the network renders.
What is Ripple?
The definition of Ripple is only complete if you dissect the network and look at each of the two components; the remittance network and XRP, the native token used to pay for services in the network.
Authored in 2012 by Arthur Britto, Ryan Fugger, and David Schwartz, Ripple is a decentralized payment protocol. Its design assumes the form of a comprehensively-packaged gross settlement system that facilitates real-time financial transactions. It also is a currency exchange that also serves as a remittance network.
The idea behind this open-source network was to create an infrastructure that allows mainstream banks to complete transactions to all corners of the world in just a fraction of what other service providers charge. Its vision and objectives, as such, are different for other cryptocurrencies whose aim is to provide a better alternative to the traditional banking system.
While Ripple (XRP) is the native coin within the Ripple network, the platform gives users a chance to create their own using RippleNet.
What is RippleNet?
All the institutional payment providers that use the Ripple network do so via an infrastructure called RippleNet. The key purpose of this facility is to allow these services providers to execute frictionless money remittance to all parts of the globe.
The infrastructure works by holding multiple assets with potential value. To allow users to realize the value of the various assets that they have placed on the RippleNet, the platform has an On-Demand Liquidity structure. This solution allows users to create a web of exchange where goods and services can be transferred from one person to another in a manner akin to batter trade.
Say, Sally, a resident of Nashville in Tennessee, has a bottle of vintage wine from the nearby wineries that she does not need. She also wants to watch a football game between Tennessee Titans and Nashville Cats but she does not have a ticket. Now consider Jones, a resident of New Jersey who was recently in Tennessee but whose visit was cut short by a work emergency. Jones bought a ticket for the same game that Sally wants to watch and for which she does not have a ticket. However, Jones is not as he has traveled back to New Jersey. He wishes he would exchange his tickets for the new PS4 console.
Lastly, consider Ronald, a Californian resident who wants a bottle of vintage Tennessee wine and would like to exchange that for the new PS4 console he owns but does not intend to use.
In the current world, these three people with interlinking needs may never meet. In the Ripple world, however, they can key in the items they want to give away and what they want in return and the system would match their needs with the solution in the cheapest and fastest manner possible.
The beauty of Ripple is that you can transact in any currency including Bitcoin. Besides, it has the least internal transaction commission of just $0.00001.
Ripple XRP – A Definition
XRP is the token native to the Ripple platform that facilitates the transfer of value over the network. The coin’s purpose is to mediate for the forms of money, both fiat and cryptocurrency exchanges. To better understand the coin, compare it to a joker in a set of cards. Just like the joker can substitute any card in the pack, so can Ripple step in the place of any currency or crypto during a transaction.
As noted earlier in the text, the cost of transactions on the Ripple platform is $0.00001. What is interesting is that after every transaction, the platform burns the $0.00001, never to replenish it again.
The Ripple Protocol Consensus Algorithm – RPCA
Unlike Bitcoin and many other major cryptocurrencies, the Ripple platform is not a blockchain. You may already be wondering then how transactions are verified on the network, or whether you can use a crypto tumbler while transacting with XRP to hide your tracks.
Well, Ripple has a unique tool called the Ripple Protocol Consensus Algorithm or simply RPCA. The purpose of this tool is to eliminate the challenges facing distributed payment systems, which are agreement, correctness, and utility.
How the Ripple Protocol Consensus Algorithm Works
The RPCA processes transactions in rounds. In the first round, each server collects the transactions it identifies before the commencement of a consensus process. This action only applies to the transactions that have not been verified. Such transactions can either be new deals initiated by server users, or spill-overs from the previous verification session. After collection, these transactions are made public in a list called the Candidate Set.
Each server proceeds to merge the Candidate Sets derived from every server thus beginning the process of verifying the transactions. Every transaction that receives more than the set minimum percentage of votes is conveyed to the succeeding round. The rest are either discarded or become part of the Candidate Sets of the following round.
In the final consensus round, every transaction must garner 80% of the servers’ agreeing threshold.
Application of Ripple
The platform and its native token serve the following purposes:
• Low Commission Exchange of Currency – Many currencies are inconvertible directly to others. In such situations, banks use the dollar to find common ground. Meaning, clients incur double commissions; first to convert currency A into USD, then USD into currency B. Ripple provides a cheaper and direct conversion mechanism.
• Faster Cross-Border Transactions – A normal Ripple transaction is only 4 seconds long. Bitcoin transactions last about an hour to complete, and you may have to wait 4 days if you choose to transact using the traditional banking system.
• Provide a Cheaper Payment Ecosystem – To facilitate even faster transactions, the Ripple platform allows users to issue their currencies. For instance, you can choose to create a currency to buy a product or pay for all manner of services online.
How to Buy, Store or Sell Ripple
You can buy or sell Ripple as easily as you would any other cryptocurrency. All you need is an account in an exchange that accepts your method of payment, an address where there purchased XRP will be remitted to, and the right amount.
According to the official Ripple website, 30 cryptocurrency exchanges currently list XRP. Some of these outlets are Coinbase (the most preferred), Binance (the world’s largest and most elaborate cryptocurrency exchange), Bitstamp, Bittrex, Kraken, and CEX, to name only a few.
The Process of Buying XRP from a Cryptocurrency Exchange
In this narrative, the writer chooses to highlight the process of buying XRP in Coinbase, a leading cryptocurrency exchange. The said exchange accepts the most diverse payment methods, including fiat.
To start, create a user account on Coinbase. Note that you will have to provide some personal information and verify your identity. Once you are done setting up the account, you will need to link your bank card or other preferred payment methods.
Proceed to the “buy” tab and purchase the amount of Ripple you want using dollars. Do note again that you may not use credit cards to buy cryptocurrency on Coinbase. However, you can use debit cards or bank transfers. Whenever possible, use the latter for such a purchase since doing so will afford you the lowest fees.
Binance is great but it is mostly a cryptocurrency-to-cryptocurrency exchange. Meaning, for you to undertake a successful purchase of one cryptocurrency, you need another cryptocurrency. Of late, however, the platform offers fiat to cryptocurrency transactions but such deals attract hefty commissions.
Over and above the payment methods highlighted here above, you can buy Ripple via PayPal. To do so, you may need to purchase Bitcoin using the PayPal balance you have. After that, you can send the Bitcoin to any of the mentioned cryptocurrency exchanges.
If you are not familiar with the process of buying Bitcoin using PayPal, then this guide here may come in handy.
After you have successfully bought XRP from an exchange, you may now want to send them to a secure, independent wallet. To accomplish this task, log into your account in the exchange, click on your profile to reveal the drop-down menu, click on funds and choose Ripple.
The exchange will prompt you to input the destination address. There is a wide range of wallets that include hardware wallets, desktop wallets, web wallets as well as Android and iOS wallets that you can use.
The recommended web wallet for storing XRP is Exarpy.
Selling Ripple XRP
You have two options if you want to sell your XRP. First, you can do so directly for dollars. Second, you can dispose of them via an exchange that approves of both XRP deposits and cash withdrawals.
Alternatively, you can exchange the XRP for another cryptocurrency, say ETH or BTC, and then exchange these for fiat. While the latter process is the most common, it also is tedious considering that you have to undertake considerably more conversions.
The Process entails:
• Registering for a user account in an exchange that offers a convenient selling process.
• Confirming the email address that you use to create the account.
• Verifying your identity by providing identification documents and proof of residence.
• Transferring XRP from your wallet to the exchange. Most exchanges do not charge for this action. However, Gatehub and Bitfinex levy a deposit fee.
• Exchanging the XRP for USD.
• Withdrawing the USD using a convenient payment method.
You should use a crypto mixer when transferring XRP from the exchange to your wallet.
Is it Possible to Use Ripple Anonymously?
Most cryptocurrency enthusiasts know just how important anonymity is when dealing with cryptocurrencies. It is little wonder crypto tumblers are their beloved tools. This lot will be sad to note that XRP transactions are not anonymous. This is so because the architecture of the Ripple platform seeks to provide solutions to the archaic legacy systems that banks hold on to date.
Since the platform’s main customers are banks and other mainstream payment and remittance service providers, it strives to abide by the regulations of the industry. These include AML and KYC best practices.
That notwithstanding, you can use XRP anonymously by exchanging it to Bitcoin, then passing the BTC in a crypto tumbler before making a payment. Alternatively, you can opt for other coins such as Monero, Zcash, and Cardano. Using a coin mixer, however, is the safest of all methods.
Is XRP a Worthy Buy?
The cryptocurrency markets are very volatile. Besides, XRP being one of the world’s major coins, no one can say with certainty where its value will stand tomorrow. That notwithstanding, Ripple has a great chance of becoming the standard interbank payments processor. If that happens, the demand for the coin may balloon, leading to an increase in value per coin. Such a turn of events will have a positive effect on market capitalization.
The Ripple platform and XRP are outstanding innovations. The role that they play is changing the remittance space, making transactions faster and cheaper. There is a possibility more banks and payment service providers will adopt Ripple. If that happens then the value of XRP will increase substantially. This may not mean much to anonymity enthusiasts but the good news is, such individuals can still enjoy holding and speculating with XRP and converting them to other coins that are compatible with crypto tumblers.