Ripple is a fascinating project in the blockchain world. It is one of the few blockchain projects that have concrete, real-world use cases and serve governments and the world’s biggest financial institutions. Most of the time it also sits comfortably in the top 10 cryptocurrencies in the world by market capitalization. However, newcomers in the crypto community often have misconceptions about XRP.
Let’s take a look at what Ripple actually is and what investors and crypto enthusiasts should know before purchasing these coins. Or, on the opposite, before trading their XRP to DGB or any other crypto.
Ripple and XRP: How It All Started
Ripple was created in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto. They wanted to create a payment network that would be used to quickly send money around the globe at an affordable cost. The Ripple protocol emerged from an earlier project named OpenCoin.
When XRP Ledger was launched, 100 billion coins were created. About 6% of them belong to the Ripple Labs company, and 48% are in reserve. Over the years, the Ripple network has grown to become one of the biggest blockchain projects with hundreds of major customers worldwide.
How the Network Works and the Role of XRP in It
The Ripple network is a blockchain-based, decentralized platform that operates independently. Its native cryptocurrency is the XRP coin, which is used as the major settlement currency on the network. Ripple is a centralized blockchain network that uses a unique mining protocol.
XRP Mining Process
XRP coins are not mined like Bitcoin. All of the XRP coins have already been pre-mined. Many of them have already been sold or distributed. The rest are held in a smart contract meaning that a portion of them is released after certain cryptographic conditions are fulfilled. Since most of the coins have already been distributed to founders and large institutions, the level of Ripple decentralization is very low.
Ripple’s consensus algorithm is fairly unique in the blockchain space. It does not use proof-of-work or proof-of-stake like most of the major networks. Instead, it uses a kind of voting system where unique validators vote whether or not to include transactions on the ledger. 80% of approvals are needed to accept a transaction.
The system is built for speed and scalability, rather than decentralization, and there is no reward for being a validator. The throughput is 1,500 transactions per second, and the speed is around four seconds.
XRP Use Cases
The major use case of the Ripple network is interbank settlements and messaging. It facilitates fast and safe cross-border payments, which take seconds and cost a fraction of a cent with XRP.
You can also use XRP as an investment, as an intermediary coin in an exchange, or in day trading.
Positives and Negatives of XRP Crypto
The core advantages of XRP:
- It’s a cryptocurrency with a real-world use case.
- XRP is in demand among financial institutions because it can provide real value for companies, organizations, and governments.
- XRP is a well-established crypto having a solid community that contributes to strengthening its position on the market.
- Ripple Labs is a competent organization driving the network forward.
The main downsides are:
- Ripple is widely seen as a much more centralized blockchain than Bitcoin and Ethereum.
- There is no incentive for mining that results in not running security checks on the blockchain frequently.
Is XRP Worth Investing in? What’s the Best Way to Do This?
It is difficult to make an XRP price forecast, in the same manner as Reddcoin price prediction. But, it’s a project that’s had enough staying power for 10 years now. XRP can be bought on all major crypto exchanges.
XRP is a popular choice amongst experienced crypto enthusiasts. But, unlike Bitcoin, when you invest in XRP you are putting a lot of trust in a private company. So, ensure that you fully understand the Ripple project before purchasing its coins.