The native cryptocurrency of the Ripple network is called XRP. Based on its market capitalization, XRP consistently places within the top ten. Ripple is a money transfer network that was developed specifically to cater to the requirements of the financial services industry. How does all of that work? Is it worth investing in?
What Is Ripple?
The company that created XRP is called Ripple, and it operates a global currency exchange network and payment settlement system.
“Ripple was designed from the very beginning to essentially be a replacement for SWIFT (a leading money transfer network) or to otherwise replace the settlement layer between major financial institutions,” says Pat White, CEO of Bitwave.
It acts as a trusted intermediary between two parties in a transaction because the network can quickly verify that the transaction was successful. Ripple can help with exchanges for many different fiat currencies and cryptocurrencies, like, Bitcoin, Ethereum and other.
Every time a user uses the network to conduct a transaction, the network deducts a small sum of the cryptocurrency XRP as a fee.
“The standard fee to conduct transactions on Ripple is set at 0.00001 XRP, which is minimal compared to the large fees charged by banks for conducting cross-border payments,” says El Lee, board member of Onchain Custodian.
What Is XRP?
The XRP Ledger, a blockchain created by Jed McCaleb, Arthur Britto, and David Schwartz, houses the cryptocurrency XRP. Afterwards, McCaleb and Britto founded Ripple, which uses XRP to speed up network transactions.
Notably, XRP’s blockchain works differently than other cryptocurrencies. Almost all cryptocurrencies open their transaction ledgers and verification processes to anyone who can solve complex equations quickly. At the same time, the majority of ledger holders must agree with the verification before it is added. That helps to keep transactions safe and secure.
The Ripple network works on XRP and has some central control with a consensus protocol. Anyone can use its software, but it keeps a list of different nodes that users can select to confirm their transactions based on who they trust the most. This helps to ensure that there is less risk of fraud.
Every three to five seconds, as new transactions are received, the validators update their ledgers and compare them to those of the other validators. When there is a discrepancy, they pause to determine what went wrong. This offers the network an advantage over other cryptocurrencies like Bitcoin by enabling the network to validate transactions securely and effectively.
“Bitcoin transaction confirmations may take many minutes or hours and are typically associated with high transaction costs,” says Lee. “XRP transactions are confirmed around four to five seconds at a much lower cost.”
You can buy XRP as an investment, as a crypto to exchange for other cryptocurrencies or as a way to finance transactions on the Ripple network.
How You Can Use Ripple and XRP
Like any other digital currency, XRP is usable for both transactions and future investment. The Ripple network can also be used to carry out other kinds of transactions, like currency exchanges.
Rather than using a bank or money exchange to exchange your currency, you can exchange your Australian dollars for XRP on the Ripple network, and then use that to buy euros. This can be quicker and cheaper than using traditional methods, as you can avoid the high fees that banks and money transfer companies often charge.
Should You Buy XRP?
XRP can be very risky investment. But, if you think that Ripple will succeed as a payment system, then it might be profitable to purchase XRP.
Our prediction: “Ripple has a great potential. In the near future, the price of XRP may not be stable. But we expect the price to rise in the coming years.”(Does not constitute financial advice)