Ripple is a money transfer network designed to serve the needs of the financial services industry.
From the outside, the world of cryptocurrency investment seems to be limited to Bitcoin only. As the most well-known cryptocurrency, Bitcoin is a leader in market cap and overall appeal with crypto investors.
However, there are other options for those interested in diversifying their portfolio and experimenting with coins that offer a different take on the concept of digital currencies. Ripple's XRP is one of them.
As of March 2021, the cryptocurrency is ranked fourth, behind Bitcoin, Etherum, and the Binance coin, in terms of total market cap.
Ripple is a money transfer network designed to serve the needs of the financial services industry.
XRP, a cryptocurrency adapted to work on the Ripple network, is consistently listed among the top five cryptocurrencies by market cap.
Despite its ambitions, Ripple is currently locked in legal trouble with the Securities and Exchange Commission (SEC), although that has hardly prevented XRP from soaring in value to the same extent as other cryptocurrencies.
Ripple, A Modern Payment System
Ripple is a payment settlement system and currency exchange network that can process transactions worldwide.
Ideally, Ripple serves as a trusted agent between the two parties in a transaction because the network can quickly confirm that the exchange is running properly. Ripple can facilitate the exchange of various fiat currencies or cryptocurrencies such as Bitcoin, and even other commodities such as gold.
Unlike Bitcoin or Ethereum, Ripple does not refer to a blockchain network with native cryptocurrency assets. In fact, Ripple has a history of reframing how XRP fits into its business model.
First, Ripple embraced it as the "fuel" that drives cross-border payment technology, then pushed it aside in favor of focusing on xCurrent, xRapid, and xVia which are still other payment networks for cheaper and faster international payments.
In late 2019, xCurrent, xRapid, and xVia were renamed RippleNet, a payment network focused on fast cross-border transfers between financial institutions. In addition to RippleNet, Ripple also oversees the XRP Ledger, a blockchain-like network that facilitates payments in XRP, the digital currency issued by Ripple.
Like other cryptocurrencies, XRP can be sent to and from digital wallets regardless of international borders. When it launched in 2012, Ripple marketed XRP as a faster and cheaper alternative to Bitcoin because these transactions could be completed in seconds.
The XRP network can achieve this speed because its infrastructure is centralized and does not use systems like the consensus algorithm used by Bitcoin to process transactions.
Advantages of Ripple
1. Completion with fast time
Transaction confirmation is very fast. It usually takes only four to five seconds, compared to banks which take days to complete a transfer or hours it takes for Bitcoin transactions to be verified.
2. Very low cost
The fee for completing a transaction on the Ripple network is only 0.0001 XRP and this requires a small amount compared to the current rates of other cryptocurrencies.
3. Versatile exchange network
The Ripple network not only processes transactions using XRP, but can also be used for fiat currencies, cryptocurrencies, and other commodities.
4. Used by large financial institutions
Large companies can also use Ripple as a transaction platform. Santadar, Axis Bank, and Yes Bank are some of the uses of this network, indicating that they already have greater institutional market adoption than most cryptocurrencies.
Can You Use Ripple and XRP?
You can use XRP like any other digital currency, either for transaction purposes or as a potential investment. You can also use the Ripple network to process other types of transactions, such as exchanging currencies.
For example, if you want to exchange USD for Rupiah, you can first exchange your USD for XRP on the Ripple network, then use it to buy Rupiah, instead of handling the currency exchange directly through a bank or through a money exchange service. This can be a much faster and cheaper approach than paying the high fees that banks and remittance organizations may incur.
