Known Tickers: XRP
Release Date: 2012
Known Websites: https://ripple.com
Coin Market Cap Link: https://coinmarketcap.com/currencies/ripple
Ripple’s technology is designed for use by large financial institutions and the nodes powering the Ripple network are hosted by large organizations such as Microsoft, MIT, and Bahnof. The existing network of entities hosting Ripple nodes decides whether to enable other, new entities to participate in the hosting of RippleNet.
RippleNet facilitates the transfer of fiat, cryptocurrency, and commodities between Ripple Gateways. A Ripple Gateway is typically a large financial instutition such as a bank, exchange, or commodities broker. Two Ripple Gateways that trust each other can use Ripple to update a shared ledger used to keep track of the amount of, e.g., USD, EUR, gold, and XRP they owe to each other. If two Gateways wish to transact that either do not trust each other or cannot transact directly for regulatory purposes they can transact through an intermediate Gateway that they both trust. If there is no single intermediate Gateway they both trust, they can transact through a chain of Gateways. In such a case, the value transfer associated with the transaction “ripples” through the Gateways until it ends up at its final destintation, hence the name of the platform.
Note that Ripple is particularly well suited to facilitate the exchange of one asset for another, e.g. USD for EUR, gold bullion for XRP, or BTC for JPY. Also note that for all such exchanges, Ripple essentially updates a balance sheet shared between two large financial institutions which describes how much of a given asset each owes the other. It is up to the financial insitutions to actually pay each other what they are owed in USD, BTC, gold bullion, etc. XRP is the one exception to this. RippleNet can transfer XRP instantly. RippleNet also provides an opt-in product called xRapid which institutions can use to make near-instant payments to each other based on the state of the XRP ledger.
Ripple’s value proposition is that, compared to contemporary systems used by large banks to transfer money, Ripple is more efficient. Ripple estimates that it can save banks ~50% on the payment processing fees they incur, saving banks anywhere from 100s of thousands to 100s of millions of dollars per year depending on their size.
The actual currency, XRP, is used by RippleNet in two ways. The first is to deter transaction spam. In order to create a transaction on RippleNet, users must destroy a small amount of XRP. During periods of high congestion, this amount increases. The second is as a bridge currency. For example, a Ripple transaction swapping USD for EUR might actually convert USD to XRP and XRP to EUR for liquidity purposes. Known Limitations
To the extent Ripple is used to exchange different assets (e.g. gold for euros), it relies on parties settling transaction outside of RippleNet. This makes this application of Ripple difficult to apply outside a network of trusted and sophisticated actors (viz. outside of the banking world).
Because admission into the network that secures and powers Ripple is gated by the large organizations that currently run Ripple nodes, Ripple also faces resistance from actors within the cryptocurrency world who favor more open and more decentralized models. Technical Contributors
The technology behind Ripple is developed and maintained by Ripple, a venture backed startup with over 200 employees. Ripple is open source.
The Japan Bank Consortium—a collection of 61 Japan-based banks— announced it will release a new XRP-powered smartphone application called “MoneyTap.”
It’s the first app of its kind. And it will allow customers to settle transactions instantly during any day of the week. (Right now, domestic payments in Japan can only be settled during banking hours.) The app will also reduce banking fees and transaction times.
Ripple also announced that it will integrate into Uphold, a digital wallet that allows you to hold fiat currencies, commodities, and cryptocurrencies. With Uphold, you can exchange XRP for 23 fiat currencies, four commodities, and seven cryptocurrencies.
In yet another partnership, Ripple announced a pilot program with Cambridge Global Payments, a subsidiary of FleetCor Technologies. Cambridge is a leading provider of commercial payment solutions.
The pilot program will use XRP for cross-border payments using Ripple’s xRapid. Cambridge joins five other major financial institutions, Cuallix, MoneyGram, IDT Corporation, Mercury FX, and Western Union, in piloting xRapid for cross-border payments.
Today, over 100 financial institutions are using Ripple’s blockchain technology to provide global payments.
Consequently, transaction usage continues to rise. Ripple is processing an average of 800,000 transactions per day (including as much as 1.6 million transactions in a single day). That’s quadruple its average from 2013.
Looking forward, Ripple will be the global leader in enterprise solutions for global payments.
It’s the only digital asset specifically designed for financial institutions and payment providers. It can scale to handle the same throughput as Visa. And it acts as a bridge between fiat currencies.
Ripple announced some partnerships that strengthen its access to emerging markets. New partners include Itaú Unibanco, Brazil’s largest private sector bank; IndusInd, a leading private sector bank in India; and InstaReM, a major remittance provider based in Singapore.
All three will be using Ripple’s xCurrent for faster, transparent cross-border payments.
Further, remittance providers BeeTech in Brazil and Zip Remit in Canada will use Ripple’s xVia for payments to customers around the world.
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