Hey crypto nation, it’s Layah Heilpern here with Exodus.
I’m going to take you through one of the highest-ranking assets by market cap: XRP,
which is sometimes referred to as Ripple.
You may be surprised to find out that Ripple and XRP are two different things.
Ripple is the San Francisco-based fintech company behind the global payments platform
RippleNet, and a steward of the XRP Ledger blockchain along with its native digital asset,
XRP.
The idea for Ripple first came about as early as 2004 by computer programmer Ryan Fugger.
Ryan envisioned a decentralized monetary system where communities could create their own money.
His goal was to create an Internet of Value, and his vision became RipplePay.
RipplePay saw some initial success, but its network was small and the software, centralized.
So, in 2012, RipplePay merged with another project called Open Coin by founders Jed McCaleb,
now with Stellar, and Chris Larson.
Open Coin and RipplePay merged together to form what is known today as Ripple.
Ripple’s RippleNet is a fintech enterprise solution for financial institutions that lets
users send, receive, hold, and move currencies across borders faster and more reliably.
RippleNet solves the current problem with legacy banking systems and networks, which
are fragmented and slow.
Many of these networks are not unified across banks, and each system has not seen any major
innovations for decades.
This is where RippleNet comes in.
The Ripple network is fast, secure, and can settle transactions in 3 to 5 seconds from
anywhere in the world, much faster than both Bitcoin and Ethereum.
It is highly scalable, handling 1,500 transactions every second, with the potential to scale
to the same speeds as the Visa payment system.
How does RippleNet achieve this?
Let’s get under the hood.
Ripple leverages the open-source XRP Ledger blockchain to track, process and cryptographically
guarantee all transactions.
But unlike Bitcoin, XRP does not use Proof of Work and has no concept of mining.
This means that the blockchain’s power consumption is minimal and is able to keep transaction
fees low.
XRP transactions are handled by an independent community of validating nodes who maintain
the network and the transaction protocol.
To keep the network’s integrity intact, users can select trusted validators from a
Unique Node List or UNL, which is a publicly known and identified list of trusted nodes
such as Microsoft and MIT.
The UNL ensures that no single entity is large enough to control the network and prevents
participants from colluding to attack the network.
More than half of the validators on Ripple’s recommended UNL are operated by nodes external
to the company, with more independent validators continually being added to the list.
Another plus point for Ripple, and what financial institutions want to hear, is that Ripple
is anti-money laundering compliant, with fraud detection, sanction screening, and regulatory
reporting in place.
This makes RippleNet a secure, robust and reliable network with proven stability and
governance over the years.
Click the link above to hop on over to the Exodus blog, where we answer questions about
XRP’s status as a security, and the perceived centralization of the network.
What about the XRP token and how is it used?
XRP –the digital asset on the XRP Ledger –provides On-Demand Liquidity for financial
service providers within the Ripple network.
Taking over the function of Nostro and Vostro accounts and eliminating the need for pre-funding,
XRP acts as a bridge currency to facilitate cross-border payments.
For example, Bank A will convert its fiat to XRP and use XRP as a bridge currency to
exchange with the fiat currency of Bank B. In this case, XRP takes over the US Dollar
function as a base currency, but only much cheaper and without foreign conversion fees.
XRP’s transaction fee is 0.00001 XRP or 10 drops, which at today’s prices is less
than $0.01 per transaction.
With XRP, payment providers can reach other smaller markets, enjoy faster payment settlements,
and reduce foreign exchanges’ overall cost.
Do remember that XRP, the cryptocurrency, is ultimately distinct from Ripple the software
company.
The XRP Ledger is open-sourced and maintained by a global and independent community, of
which Ripple is an active member.
XRP is the option available to RippleNet members to source On-Demand Liquidity and one that
Ripple, the company, continues to actively push adoption for.
So, what are your thoughts on XRP?
Are you holding on?
Let us know in the comments below along with your XRP price prediction.
And if this video helped, give it a like and be sure to subscribe to the channel for more
crypto videos from Exodus.