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Crypto 101: An Introduction to Ripple

Crypto 101: An Introduction to Ripple


Cryptocurrencies and blockchain have become an important part in the everyday life of people. In today’s era where payment transactions or money transfers can be done in a jiffy, people have included cryptocurrency on their list of options.

There’s a sea of cryptocurrencies competing in the market right now but only a few are making a name for themselves in the crypto industry. One of the most prominent in the trade is Ripple, which is known as one of the most important cryptocurrencies in the industry. With a market cap of $31.36 billion, it trails behind Bitcoin and Ethereum in the market.

While Ripple is introduced to the market as a cryptocurrency, its function is different from Bitcoin and Ethereum. Bitcoin is labeled as a digital currency while Ethereum aims to create smart contracts. On the other hand, Ripple targets to create a payment infrastructure to reach out to international financial transactions. The main goal of RippleLabs was to devise a network where assets can be directly transferred in real-time using three solutions they created. In this way, the cost would be cheaper and swift compared to the other payment methods.

Another characteristic that sets Ripple apart from most cryptocurrencies is the process of its acquisition. Mining is the common term used to gain most cryptocurrencies, but the case with Ripple is different. Upon the creation of Ripple, the 100 billion XRP (currency used in Ripple) has already been created.

The Great Minds Behind Ripple

Ripple was introduced in 2012 by RippleLabs Inc. Ripple was the brainchild of Jed McCaleb and Chris Larsen. The prototype of Ripple was formed way back in 2004. Chris Larsen is a well-known investor and one of the richest people in the crypto industry. He is mostly recognized by his start-ups and online financial services.

Jeb McCaleb, on the other hand, is a programmer and entrepreneur. He was most famous in the field of crypto start-ups. The CEO who currently manages Ripple is Brad Garlinghouse. Brad Garlinghouse is famous for funding start-up companies like Diffbot and Pure Storage.

What Is RippleNet?

RippleNet is a group of payment providers that use the algorithm developed by Ripple. The aim of RippleNet is to create hassle-free transactions on a global scale with less fees. RippleNet is a group of international payment transactions in a single place and to use one platform. Any bank or institution that utilizes any solution or product by Ripple is considered a member of RippleNet.

At present, RippleLabs features three software solutions, namely: XCurrent, XRapid, and XVia. Each solution has its own line of expertise to aid with the hindrances faced by banks in terms of global payment transactions. These solutions use XRP to perform their functions.

What is XRP?

Like Bitcoin’s BTC, Ripple also has a token that represents its value. XRP is the ‘coin’ used in for Ripple transactions. The function of XRP is to play as the mediator between the payment provider and payout bank.

Simply put, the transacted money will be exchanged into XRP and then transferred over to the network before the transaction. Once it’s received by the recipient, it will be exchanged back into fiat currency. At present, XRP is the only known coin used by RippleNet.

The important bit about XRP is that it’s not dependent on RippleLabs. Should the company experience any turmoil in their operation, XRP will remain unaffected and will continue to function in the industry without any problems. Just like any other cryptocurrency, however, XRP is susceptible to changes in the exchange rate table.

Three Solutions Offered by Ripple

As mentioned above, RippleLabs runs the RippleNetwork. Ripple has featured a few products that aim to ease financial transactions in banks and financial institutions.


XCurrent is one of Ripple’s endorsed products that can aid banks with their financial procedures. XCurrent is created to allow payments over different networks and functions under a set of guidelines. The intention of this is to create less fees and hassle in banking on a global scale.


XRapid is designed to aid payment providers and banks to meet all the demands of their customers. This solution is aimed at lessening the flow out of liquid money not being invested or used to create profits.

When a financial establishment doesn’t have enough money to provide services, XRapid will pave a way to let that entity have access to liquid funds with fewer fees. For this to happen, XRapid uses the XRP currency that will stand as the ‘mediator’ currency so that these financial institutions can send and receive money from across borders without having to use liquid funds.


XVia is another variant solution created by RippleLabs. While the aforementioned solutions were created to help big financial institutions with their problems, XVia is geared to help both financial service providers and regular businesses. It provides aid for small and medium business needs like invoicing, delivery tracking, and payment tracking.

Ripple: How Does it Function?

As mentioned earlier, Ripple doesn’t operate in a blockchain like Bitcoin and Ethereum. Most investors and crypto users find this strange because a cryptocurrency without a blockchain is like a writer without a pen. So what’s the deal with Ripple’s ‘blockchain’?

Ripple operates on a system called DLT or Distributed Ledger Technology. This system performs as ledger instead of a blockchain. The word ‘consensus’ in the protocol name bears a lot of weight because if a transaction will not get an approval from all the validators who will verify the process, it will not be carried out.

The security of this process has been questioned a lot by experts because unlike the other cryptocurrencies that function on the blockchain, Ripple functions on its own technology called DLT. This process is designed so that the validators or nodes, can compare on a regular basis the records of the transaction. This way, they can ensure that the money spent is not used in two or more places.

Transactions in the Ripple Network has a one-of-a-kind ID. This ensures transparency in the status of the transactions at any given time.

  1. Messenger - Messenger acts as the relayer of information between the financial institution and its customers. The immediate communication ensures that no manipulation and absolute transparency will be present in the transactions.
  2. Validator - The validators in the Network will decide whether a transaction will be carried out. They are the people who will confirm the transactions and status of using a cryptographic message.
  3. IPL - The InterLedger Protocol is the technology used in the transactions. It allows the flow of the transactions and monitors them.
  4. FX Ticker - The ticker is the one that allows the transactions to be processed into the account currency exchange rate. This ensures that there is frictionless dealings across various currencies and countries.

The Process Behind Ripple:

Step 1: X makes a transfer with X amount to Y

Step 2: Ripple’s system will check the account details X and Y through the bank they’re both using.

Step 3: The nodes on the Ripple system will check if there are sufficient funds to be processed. If there is enough credits to be sent, Ripple will confirm the process and settles the transaction. The people who will approve the transaction are appointed individuals by Ripple.

Step 4: Once the verification process is completed, the confirmation will be sent to both X and Y.

What Is the Difference Between Blockchain and DLT?

DLT or Distributed Ledger Technologyis formed by a network distributed on various nodes or computer devices which participates in the system by copying and having a copy of the ledger. This system has no main authority and arbitrator.

Each of the nodes that handle the registration and storage of data performs on their own. The DLT functions through the system of voting. To get the approval of a certain transaction, all the nodes must agree until they reach the ‘consensus’.

Blockchainon the other hand, is a variation of DLT that features a chain of blocks to arrive at a consensus on the ledger. A blockchain is governed by peer-to-peer networks that can also exist without being managed by a central authority. New blocks are added continuously to the chain. Data added to the ledger cannot be altered once recorded. Furthermore, the block has a unique cryptographic mark that protects all the data and transactions.

Banks that Support Ripple

Since the advent of Ripple in 2012, many financial and banking institutions have used Ripple products to aid them in their operations. Here the top banks that have incorporated the solutions by RippleLab:

PNC Bank

PNC is known as one of the most popular banks in the United States. In 2016, PNC joined RippleNet to improve their cross-border payments service. In 2018, it started using the XCurrent solution for faster transactions in their payment dealings.

Santander Bank

Santander Bank bank is popular for its 650 retailing branch office and over 2,000 ATMs. They announced their dealings with RippleLabs in 2018 but didn’t give details about the collaboration.


As a financial institution that’s been operating for 25 years, Cuallix is known as one of the most well-known establishments in Mexico and Hong Kong. Cuallix started using Ripple in 2017 for their credit and payment processing enterprise.

Mitsubishi UFJ

Known as the fifth-largest bank operating in the industry, Mistubishi UFJ entered a partnership with Ripple. According to Mitsubishi UFJ, Ripple made a difference in their transactions compared to when they were using SWIFT.

Pros and Cons of Ripple

Ripple is considered as the third best crypto in the market and trails behind two of the most-seeded crypto giants, Bitcoin and Ethereum. But just like any other cryptos, Ripple also has its set of pros and cons that people should look into before they dive into the world of Ripple.


Less Transaction Fees

The regular transaction fee for Ripple is 0.00001 XRP. Compared to other cryptos, the fee of Ripple is so small it’s almost free. No one benefits from the transaction fee used in Ripple because it doesn’t have miners. The fees used in Ripple transactions get automatically destroyed after the transaction is completed.


Ripple is popular for its lightning-fast transaction speed. Unlike with other cryptos and financial service aids that can take days for transactions to be processed, a transaction made using Ripple can be as fast as 4-5 seconds.


In a time where cryptocurrencies are criticized in the mainstream economy, Ripple proved that it has succeeded in that area. Ripple is popular for providing financial services and aid to multiple multinational companies in the world.

Handled by a team of experts

While other cryptos are managed by an anonymous blockchain, Ripple is handled by a team of people who are appointed because of their expertise in the field of cryptocurrency. This boosts the confidence and trust of many investors and crypto users because they are assured by a team of people who can provide transparency and a clear set of goals.


It’s Centralized

One of the most criticized areas of Ripple is its centralization. RippleLabs has major control of the XRP production because half of it belongs to the company. Furthermore, the people who handle the transactions in the ledger are appointed by the company. Many people say that Ripple beats the purpose of cryptocurrency which is decentralization.

It caters mostly to big multinational corporations

The target market of Ripple is mostly focused on big companies and financial institutions. The sad thing about Ripple is that it doesn’t offer much aid to consumers. Mostly Ripple wants to build partnerships with banks and financial institutions.

How to Make a Ripple Wallet

Since XRP coins are virtual currencies, they are required to be stored in a virtual wallet While Bitcoin wallets don't require a fee when you open an account, Ripple charges 20 XRP for interested Ripple users. That’s why it's important to think carefully before acquiring this wallet because it’s not cheap.

There are various Ripple wallets available for interested users. Here are some of them:

Software XRP Wallets

The most popular way of keeping XRP coins are through the use of software wallets. This type of wallet can appear in various forms. A variant of XRP wallet is an online wallet. This allows you to access your XRP coins on any device you choose. But online wallets are not really safe because they are prone to different types of internet breaches.

Software wallets can also appear in the form of apps. You can download these on your mobile, PCs, and any other device. For additional protection, keep the device you use in offline mode and store your keys in a private place only you can access.

Desktop / Web-Wallets

Desktop wallets are crypto storage you can keep in your desktop computer. There are companies that will give you the option to have a mobile and desktop version of the wallet they offer so you can sync them. Also called an online wallet, this method is the least secure place to place your coins. People who will opt for this wallet should note that the company’s server can access their private key.

Hardware XRP Wallets

Hardware wallets are deemed as the safest place to store XRP. Since this device is tamper-proof and comes in the form of a USB, it's mostly offline. Therefore it's safer from incidents of hacking, fraud, and breach. Furthermore, some hardware wallets are designed with security grid cards, making it safer for crypto storage. In cases of breakage and theft, there is a recovery phrase users can use to reclaim their crypto funds.


A paper wallet is a less modern and techy version of securing crypto coins. In essence, a paper wallet is a piece of paper that contains the wallet’s public and private keys. This method is also considered as one of the safest because hackers will be oblivious of its existence. The only downside of this wallet is its tendency to get misplaced and damaged. So it's best to keep this type of wallet laminated or in a safe box.

Final Thoughts on Ripple

Every day, new innovations and inventions are introduced to us to make our lives easier. Ripple will surely soar more in the coming years. If what the experts say is right, Ripple might even revolutionize the traditional banking system that we are used to. On our end as consumers who will benefit from this breakthrough, it’s our responsibility to learn and understand how the system of Ripple works and how its effects will impact society as a whole.


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