As Ripple CEO Brad Garlinghouse is fond of saying in interviews, the fastest way of sending, say $10,000 to California right now, is to drive to the airport and fly your money there yourself. He finds it baffling and ironic that in this modern age of the Internet and advanced technology, the current method of transferring money remains stuck in an archaic era, especially now where information can be accessed in a matter of seconds.
This is the problem that Ripple solves. Ripple aims to make local and international money transfers happen in a snap of your fingers while costing you a fraction of a dollar. Right now, sending money from one bank to another would take several business days because of the hurdles each bank has to go through to connect with the other. Not only does the process consume a lot of time, but it also takes a large cut of money for countless transaction fees.
With Ripple’s own network called RippleNet, you won’t have to wait even a minute for your money to travel across borders. That’s because banks, payment providers, and digital asset exchanges are connected in this private network where all kinds of barriers that slow down the process of transferring money are removed.
What makes this ambitious dream of revolutionizing the global banking system possible and within reach is Ripple’s own ecosystem or problem-solving products. Within this network runs Ripple’s programs, providing solutions that are carried out through their own cryptocurrency called XRP. This network of banks and institutions breaks down barriers and ensures smooth and seamless processing of transactions.
Ripple created RippleNet as a means of bridging international boundaries and eradicating miles of red tape. Within this network runs three different products called xCurrent, xRapid, and xVia. These solutions cater to Ripple’s customers and are used mostly by banks, financial institutions, and payment providers. Transactions that happen within this network are made possible by Ripple’s native digital coin, XRP.
XRP is Ripple’s own cryptocurrency that runs within its network, sent and received by banks and other institutions utilizing RippleNet. Right now, XRP is one of the fastest and most scalable digital assets among all the other coins in the world. Compared to the speed of other coins such as Ethereum’s 2 minutes and Bitcoin’s 66 minutes, XRP breaks the record with its lightning-fast 3-second transaction time.
In addition to that, Ripple boasts its high scalability that can handle an enormous volume of transactions. This factor is especially critical for payment systems that sustain transactions on a global scale.
Currently, the XRP ledger is capable of accommodating 1,500 transactions per second. This is an astounding number compared to other protocols such as Bitcoin that can only process 16 transactions per second and Litecoin with its record of 56 transactions per second.
This is why banks adapting the Ripple protocol translates to faster processing of thousands of transactions throughout the globe. This time-saving solution saves banks from spending trillions of dollars and also results in a more efficient method of transfer that would instantly satisfy customers.
XRP acts as the bridge asset between fiat currencies, erasing the need to convert one currency to a more accessible currency such as the US dollar just to convert it into another currency later on. Ripple’s native currency settles liquidity between banks, providing a smoother process of transferring money without the need for multiple conversions.
RippleNet is the network that connects banks, financial institutions, and payment providers to each other, enabling a frictionless experience when transferring and validating transactions. What makes this possible are Ripple’s 3 main products, xCurrent xRapid, and xVia. Staying true to its blockchain-based protocol, all transactions done within this ecosystem is confirmed and approved by a group of validating nodes which later uploads transaction data into XRP’s open-source distributed ledger.
xCurrent focuses on processing payments for banks and payment providers. This service provides a solution to enterprises and it doesn’t require the use of XRP. It’s a platform where Ripple network members facilitate their settlements and transactions that cross borders. It’s built around the Interledger Protocol which connects different ledgers and payment networks, presenting another solution to erasing barriers that slow down the transactions.
xRapid provides on-demand liquidity by sourcing XRP from digital asset exchanges. xRapid connects banks to digital asset exchanges which convert fiat currency to XRP.
Once a bank is connected to both xCurrent and xRapid, it can now work with xVia, a platform where businesses interact with the xCurrent network. It’s the superhighway that bridges banks and transactions, providing a road for all traffic and transactions to pass through.
How exactly does Ripple solve the problem of painstakingly time-consuming and expensive money transfers? It does just that by converting fiat currencies into XRP through xRapid, sending the XRP through xVia, which is then received by the bank or a digital asset exchange where the receiver can get the money as XRP or any fiat currency. All of this happens under 4 seconds, limiting the window for XRP’s price to drop by the time the transaction is done.
Before considering investing in XRP, know first how it has been performing in the past years. XRP has once shaken the crypto world in 2017 when its value rose to more than a thousand percent with people suspecting whether XRP will be the death of Bitcoin’s reigning success. Some even coined the term ‘Bitcoin killer’ because of XRP’s promising abilities in terms of speed and scalability.
Throughout the course of 2017, the value of XRP skyrocketed to over 35,000%, earning the title as the best-performing digital asset of that year. It reached an all-time high in January 2018 with $3.84 and has been on a roller-coaster ride since then. At the time of writing, XRP’s price sits at $0.22, fluctuating every few minutes. It has been a challenging year for XRP with its price dropping to 51% since the start of 2019.
Despite the drop in value, XRP has proved stable in terms of market capitalization. It still holds fast onto its title as the third top cryptocurrency in the market even with the occasional road bumps. XRP’s 3-second transaction time remains its crowning glory.
Even with the known high volatility of cryptocurrencies, you won’t have to worry about XRP dropping in value by the time it’s received by the person or institution on its receiving end. There’s only a 3-second window for the price of XRP to drop before it’s received. Compared to Bitcoin’s transaction time that can take up to an hour, 3 seconds is definitely a faster and sweeter deal.
Another thing to consider is Ripple’s partnership with both small and large financial institutions. Currently, Ripple has been working with over 200 large-scale banks such as Barclays, JP Morgan and money-transferring giant companies like MoneyGram. Their latest partnership with MoneyGram was a milestone in terms of reaching beyond continents and breaking boundaries.
XRP’s transactions reached an all-time high just this past month when it reached 4 million transactions in a single day. Its previous record was 1.7 million in January, and only 9 months after, it more than doubled in number. This shows how Ripple’s problem-solving network is efficiently working and is continuously revolutionizing the crypto and financial world as we know it.
Ripple is a private, for-profit company that sells its blockchain-based technology that settles liquidity and transactions in real-time and in a cost-effective manner to banks and financial institutions. While it’s not completely governed by the company with its open-source ledger monitored by different validators, Ripple still has control over the network.
Another way it differs from other cryptocurrencies is its manner of production or lack of it. Unlike bitcoin, XRP is not mined. When Ripple started, they already pre-mined a determined amount of XRP that will circulate its network and the market. A hundred billion XRP was created upon its inception and about 99 billion are left in supply. Ripple holds majority of these coins while escrows and other payment institutions hold billions for their transactions.
Unlike most if not all blockchain-based protocols, Ripple’s main target market are banks and not individuals. Some argue that Ripple goes against the very nature of cryptocurrency where the presence of meddling middlemen is removed from the picture. Instead of removing these intermediaries from the process, what Ripple does is provide services for these intermediaries using technology that harnesses the power of blockchains.
Even though Ripple created XRP mainly for use of banks, financial institutions, and payment providers when transacting in RippleNet, XRP is not entirely exclusive to these companies. You can buy XRP for money remittance purposes. With its amazing speed and high scalability, sending money with XRP takes no longer than 4 seconds and now, with Ripple’s incessant partnerships with international institutions all over the world, the places your money can reach only expands further.
Buying XRP is not as easy as buying other digital coins such as Ethereum and Bitcoins on exchange sites. When you want to buy coins like those two mentioned earlier, you just log in on an exchange site like BTCXE, enter how much fiat currency you’d like to exchange for a specific cryptocurrency, choose whether you want to pay using your debit or credit card or through bank transfer, before hitting the Buy button. Then voila, you receive your coins in your wallet in under a minute. If you opt to pay through bank transfer, it will take a few days, which is exactly the problem that Ripple solves.
Unfortunately, this easy process isn’t available for XRP yet. Right now, you can’t buy XRP using fiat currency but you can buy it with Bitcoins. So to get XRP, you’ll have to buy Bitcoins first before converting that to XRP in exchange sites.
So after going through that tedious process and having XRP in your wallet, what are you going to do with it?
There’s the classic trading and investing that crypto enthusiasts often do. Buy some XRP while the price is low and leave it in your wallet while waiting for its price to skyrocket. When it finally does, you can then sell them in exchange sites for fiat currencies or other digital coins.
Some online stores that only accept digital currencies have caught on with Ripple’s coin. Around 240 online shops accept XRP as payment now, according to Cryptwerk. With the crypto industry’s fast-changing and ever-adapting market, shops accommodating XRP will only increase by the day.
With Ripple’s aim in revolutionizing the banking system, XRP’s true purpose can be fully utilized in the money remittance industry. If you need to send a hundred dollars to your relative abroad, for example, you can just send your XRP and it’ll be received in seconds. Despite its ability to be used as payment in online shops, XRP’s unparalleled speed and scalability remains to be best utilized for what it was designed to do.
Ripple envisions a world where money transfer from one country to another only takes a few seconds and not several business days or weeks. They took this dream and turned it into reality with today’s revolutionary blockchain technology. With their expanding partnerships with institutions, it’s becoming easier to see this vision enter the mainstream and become the standard for digital value transfers.
With their own network and self-mined coin, Ripple provides a solution to the painstakingly archaic process of international money transfers. It’s clear what XRP’s purpose is and it rests on the stability of RippleNet. Investing in XRP has its perks that can even increase as the world adapts to it. Remaining as the third best performing digital coin in the market despite drops in value, XRP proves to be a real game-changer that is here to stay.