Ripple

What is Ripple?

Ripple is a digital currency that is somewhat similar to Bitcoin. Bitcoin was the first successful digital currency, and so all other cryptocurrency after it are compared with it. XRP works in much the same way as Bitcoin, and it is the name of both a digital currency as well as a payment network that the currency is transferred through. The currency name abbreviation for Ripple is (XRP).

The goal of XRP is to allow people to take charge of their own finances and tear down the Walls that are currently around them thanks to organizations like PayPal, credit card companies, Banks and other institutions. These companies have massive processing delays, charge fees that range from negligible to quite large and even charge you to exchange currency.

The company behind XRP is called OpenCoin. OpenCoin intends Ripple to address the need to keep currency flowing without restriction. You can check out the OpenCoin blog if you want to find out more about what their goals are and why they created XRP in the first place. But the main thing to understand is that Ripple is intended to build on and improve the decentralized digital currency model that Bitcoin has made so popular.

What is Ripple: Making Currency Work like The Internet

One of the goals of XRP is to make currency work the same way that the internet does. David Schwartz, the head cryptographer of Ripple explains: “Payment systems today are where email was in the early ‘80s. Every provider built their own system for their customers and if people used different systems they couldn’t easily interact with each other. XRP is designed to connect different payment systems together.”

Ripple believes that the large companies out there are going to lose control of centralized currency and everyone’s money, just as they no longer control information, which is freely shared over the internet.

The People behind Ripple

The company behind the currency is called OpenCoin. It was founded by Chris Larson who now serves as the CEO and Jed McCaleb who is the chief technology officer of OpenCoin. Both of these professionals have experience running companies or working in the financial industry. The company has been receiving funding from investors including Lightspeed Venture Partners, the Bitcoin Opportunity Fund and Vast Ventures.

XRP vs. Bitcoin

In many ways, Ripple is like Bitcoin. Both are cryptocurrency, or a currency based on cryptology. In addition, both have a limited number of coins that can be mined, and both can be transferred from one person to another without any central authority. In addition, both of these have digital security that prevents counterfeiting.

Of course, that does not necessarily mean that XRP is a rival of Bitcoin. In fact, you could argue that Ripple is complementary to Bitcoin. Ripple has designed their network to allow transfer of any form of currency including USD, Euros and even Bitcoin. “Ripple will open up many more gateways for Bitcoin users and easier ways to bridge Bitcoin with the mainstream world of finance,” says XRP developer Stephen Thomas.

How Ripple and Bitcoin Work Together

You may be wondering just how these two could possibly work together, since it seems like they do the same job. However, XRP is sort of a support currency for Bitcoin. Ripple offers faster transactions and better stability. Since XRP is not relying on a single company to maintain the transaction ledger, there is no waiting on block confirmations and that means the transactions go through quickly.

The Plan for Ripple

The company will create a grand total of 100 billion XRP coins. They will release half of those Ripples for circulation and will hold onto the other half. While Ripple does not charge transaction fees like PayPal or your bank does, they do take a very small portion of each Ripple. It equates to one thousandth of a cent from each transaction that is processed and rather than going to the company or into some central depository, the amount is destroyed. It is to prevent someone from putting through millions of transactions all at once.

Ripple’s Current Price

Right now, 1 XRP is worth about $0.15 or $0.20 USD, or 5-8 Ripples per dollar. This is a huge step up from where they started, where the price in April of 2013 was 1000 XRP per dollar and even higher than the price a month later which rose quickly to 115 Ripple per $1.

Differences and Similarities between XRP and Bitcoin

Let’s talk about some of the differences between Bitcoin and Ripple and some of the things that are the same, so that you can see how these two currencies fit together.

 

Similarities

  • There are definitely a few similarities between Ripple and Bitcoin. First of all, both of these cryptocurrencies are decentralized. Both are also open-source and no one owns them.

 

  • In addition, both of these currencies use effective algorithms to ensure security. Basically, if someone authorizes a transaction the entire network will be there to verify that transaction.

 

  • Both of these cryptocurrencies also eliminate the central banks or financial services organization as well as government. Your money is yours with no central authority to take it away if they desire.

 

  • However, if you want to turn your Ripple coins into another currency, then you are going to need a company to make that trade for you.

 

  • Finally, both of them are based on anonymous peer-to-peer transactions that happen over the internet.

 

Differences

  • The first difference between Bitcoin and XRP is that the network protocol to reach a consensus is not the same. Bitcoin uses what is called proof-of-work, in other words mining, also known as verifying the transactions. XRP uses what is called an iterative consensus process. This also means that Ripple is a great deal faster than Bitcoin. While it can take up to an hour to verify a Bitcoin transaction, because it has to be verified six times before it is finally allowed to go through, it only takes a few seconds with XRP. It also requires less energy.
Bitcoin is decentralized
  • While Bitcoin is a decentralized actual digital currency, XRP is a transaction network. It is also decentralized and it contains a digital currency within it called Ripple. This may seem confusing to some, but as you learn more about cryptocurrency this will make more sense.
Bitcoin network tracks movement
  • Another difference is the Bitcoin Network just tracks the movement of Bitcoin. But the XRP network can track any information. So for example, Ripple can track balances of any currency at all if needed.
Currency exhcange
  • Bitcoin requires a centralized currency exchange. However the XRP network already has its own currency exchange. If someone wants to sell their Ripple for US dollars, they can do that within the network without ever having to go to another exchange. In addition, those with Bitcoin can trade on the Ripple network as well.
21 million Bitcoins
  • There is a maximum number of 21 million Bitcoin with more than two-thirds of that currently mined. But there are already a fixed number of (XRP), with 100 million Ripple coins out there.
Bitcoin created through mining
  • Another difference is that Bitcoin are created through mining. OpenCoin plans to give away a great deal of (XRP) and distribute them as widely as possible. They’re holding on to XRP as well, in order to make a profit when they go up in value.
Ripple allows automated scripts
  • Ripple also allows for the creation of automated scripts. If you were to use Kickstarter, as an example, you could have a crowd funding script that returns money to everyone that contributes if the amount needed is not raised, just like Kickstarter does, but without the need for that central authority.
Ripple, XRP has a different goal
  • Finally, XRP is more compatible with other currencies. While Bitcoin has created a cryptocurrency that is used around the world now, Ripple has a different goal. XRP can help businesses or persons who aren’t concerned with cryptocurrency itself. For example, a company might use Ripple simply because it is easier to pay a company in another country, especially because of the fees. There are lots of things that a network like XRP could do for the business world. As this network gets larger, the features and advantages will not only become more well known, they will also increase and the end goal of Ripple will someday be realized: the release of the death grip that banks and other financial institutions have on people’s money and true freedom of currency over the internet.