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.
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 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.
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.
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 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.
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.
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.