If you’re familiar with cryptocurrencies, you’ve undoubtedly heard of Bitcoin and Ethereum. However, many other currencies exist that offer different features than their more popular counterparts.
One such coin, Ripple, has the potential to change the way we handle cross-border transactions by streamlining the process through cryptocurrency.
Let’s take a look at what Ripple has to offer and its pros and cons compared to Bitcoin and Ethereum.
What is Ripple?
Ripple is a cryptocurrency designed for banks, payment providers, and digital asset exchanges. Ripple’s goal is to enable secure payments anywhere in the world.
It does that by providing two key services: The first is a real-time gross settlement system (RTGS), which allows financial institutions to transact directly and instantly; the second is a currency exchange, where currencies are traded and exchanged on-demand between parties.
In Ripple’s world, fiat currencies are represented digitally using a common unit of account-the XRP-and at its core, Ripple works as a distributed open-source protocol for exchanges to occur without intermediaries or third-party service providers.
What makes Ripple unique?
To understand what makes Ripple unique, you need to look at what it was built for. While other cryptocurrencies may have been created to revolutionize money or enable anonymous transactions, these aren’t necessarily things that everyone needs.
Rather than focusing on disruption or anonymity, Ripple was created with one primary goal: enabling fast and free global transactions of any size with no chargebacks.
This means it can be used by anyone from individuals looking to send remittances abroad to large corporations looking to move funds across borders quickly and securely. What sets it apart from other cryptocurrencies is its ability to promptly handle high transaction volumes while maintaining security and decentralization-no small feat.
How does Ripple work? How do I buy XRP? Where to buy XRP? These are all questions we’ll answer below.
How Does it Work?
Ripple’s distributed ledger is built upon a consensus algorithm that allows for payments, exchanges, and remittances in a distributed process.
Because XRP (the token) can be transferred between different ledgers in seconds with the minimal computing power required to facilitate these transactions, Ripple has been labeled as secure, instantly, and nearly free for global transactions of any size with no chargebacks.
This allows companies to leverage Ripple when settling international trades. An example of such an implementation would be Bitstamp sending fiat payments to South American bank Bexar.
How does it compare to Bitcoin?
Bitcoin uses blockchain technology as well while facilitating decentralized transaction confirmation through miners, whereas Ripple employs a centralized voting system whereby each node will vote on transactions before they are confirmed.
How to Buy/Sell/Trade XRP (XRP)
Ripple is a unique cryptocurrency in that there are no exchange platforms to purchase/sell XRP (the token used by Ripple). Instead, you must buy/sell it directly from another party using a process called an over-the-counter (OTC) transaction.
There are various online forums where users can find OTC buyers and sellers. Alternatively, you can use a service such as Gatehub, which allows users to easily make transactions without having to find their own buyer or seller.
The Ripple Ledger uses a consensus process that allows for payments, exchanges, and remittances in a distributed process. While there is still the risk of fraud or illicit activity (as with any form of currency), using Ripple can dramatically reduce costs while increasing speed.
While payment providers like PayPal charge 2-3% per transaction, Ripple charges nothing at all for transactions. But these savings pale in comparison to what businesses can save with Ripple’s foreign exchange service (FX).
Companies involved in global trade may not be aware that their payment provider can charge 3-5% per transaction; these companies should definitely look into how they can lower those costs by moving to Ripple technology.