Ripple blockchain is a financial technology platform that provides a global digital system of payments, settlements, and exchanges for financial transactions. Ripple was developed in 2012 by Ripple Lab Inc. and co-founded by Chris Larsen and Jed McCaleb.
Like every other cryptocurrency platform, Ripple has also been experiencing rapid price increases in the last few years. It’s currently holding the third position on the market cap after Bitcoin and Ethereum. However, as a relatively new digital platform, most people are yet to fully understand what the blockchain is all about. Here are five important things you need to know about the Ripple blockchain:
Ripple Network Is A Payment Protocol
The Ripple network, also known as RippleNet, is a separate component of the ripple blockchain. RippleNet is a payment platform designed for enterprises to transfer assets across borders. It’s a distributed open-source protocol, peer-to-peer, and real-time payment system.
The Ripple blockchain acts as a bridge currency between the exchange of other currencies. This means transactions on Ripple aren’t limited to XRP (its proprietary currency). It works conveniently with more than ten digital tokens.
It supports the exchange of tokens such as fiat currency, cryptocurrency, gold, commodities, airline miles, and any other unit of value. The network is a decentralized platform that allows the effortless transfer of any token while enabling both parties involved to use their preferred middlemen to receive money.
Moreover, the Ripple protocol allows instant confirmation of transactions, making for a smoother workflow in the business setting. This eliminates wasted time and energy. It can do this because all transactions and balances are held on the Ripple ledger, which is secured and maintained by a central administrator known as the Rippler.
XRP Is The Virtual Currency For Ripple Network
XRP is the cryptocurrency used for representing the transfer of value on the Ripple network. It’s more like a Ripple coin. Unlike other cryptocurrencies, the XRP token can’t be mined, making it more sustainable as new coins aren’t constantly created. Every existing XRP token was produced and distributed at its inception, and Ripple Labs control the dispersion.
Instead of the regular nodes used by other cryptocurrencies, XRP relies on nodes known as validators. These validators are approved and selected by Ripple Labs. The validation process can be done by any individual or one of the many global financial institutions. XRP, as a digital asset, is used to bring together the presently separated ledgers and blockchains.
Ripple Blockchain Was Developed For Financial Institutions
Unlike other cryptocurrencies that were developed to eliminate the need for banks as intermediaries for financial transactions, this decentralized blockchain focuses on integrating the financial institution into the digital world.
It provides options for the swift processing of remittances and money transfers. Ripple is described as a real-time gross settlement system because it can perform transactions in real-time across borders.
Banks and other financial institutions are beginning to use Ripple as an alternative to the status quo of SWIFT (Society for Worldwide Interbank Financial Telecommunication), which is typically used for cross-border transactions.
Ripple works like SWIFT, but it’s generally considered to be more efficient in facilitating cross-border payments securely. It’s used by financial intermediaries as a secured asset exchange and remittance system when transactions involve international payments.
Ripple Blockchain Offers Fast Transaction Services
Ripple blockchain offers a near-instant and direct transfer between two partners. The blockchain has improved some of the major setbacks of the traditional banking system and other cryptocurrencies with its fast delivery of transactions.
Ripple uses less energy to perform transactions within an average period of five seconds, making it the fastest digital asset for payments. This is a huge competitive advantage for Ripple, especially when wiring money internationally.
The traditional system takes three days or more for wire transfer, while Bitcoin may take about two hours to deliver. Ripple can also handle significantly higher transaction volumes than other leading cryptocurrencies. It’s a reliable source of liquidity for cross-border transactions.
Cheaper Transaction Costs
This leverage of cutting-edge blockchain technology is used to streamline payment services and reduce costs. The transaction costs for sending XRP are exceptionally cheap at a rate of 0.00001 XRP for a standard transaction across borders.
This is considered almost free by users as the difference is obvious when compared with the transaction cost of traditional financial institutions. Even leading mined cryptocurrencies such as Bitcoin and Ethereum charge an average of USD$1.15 and USD$0.30 respectively. With Ripple, banks and other financial institutions can transfer money and assets across countries at a lower cost for transaction fees.
For now, Ripple is the only blockchain focused on working with financial institutions to create a reliable system for securing a seamless means of making payments between countries. It’s a secured ledger with an open-source code base backed by a community of professional validators. Ripple’s XRP is here to stay for the foreseeable future because its purpose of enabling financial institutions to perform payments globally is relevant to businesses and consumers worldwide.