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What is Ripple Cryptocurrency? How Does it Work?

by jane bryon

Are you aware of cryptocurrencies? Ever heard of ripple? You might have or might not. If you want to know about ripple in detail, then you’re at the right place. If you’re one of those who think bitcoin and ripple come from the same mould, where you’re wrong. Bitcoin and Ripple are different, ripple was first released in 2012 by a US-based technology company.

It is built on a distributed open source protocol, it supports tokens that represent fiat currency, commodities and cryptocurrency. It even supports other units of value such as mobile minutes or frequent flier miles.  Ripple aims at securing and running nearly all global financial transaction instantly irrespective of their size, without any chargebacks.

Origin of Ripple

Ripple was an idea conceived by Jed McCaleb, which was built by David Schwartz and Arthur Britto. This team has then approached Ryan Fugger who provided secure payment options via a global network to members of an online community. Mr Fugger who has debuted back in 2005 has developed a system called OpenCoin, which is transformed into Ripple. However, the initial team has stayed as main contributors of code to the verification system behind ripple.

This protocol has been recognised and adopted by many financial institutions. They are using this as an alternative remittance option for their customers since 2013. Ripple software has been combined with global leader Earthport’s payment services. This partnership has marked the journey of ripple protocol’s usage as a network for payment services. Ripple Labs has even created their own digital currency like bitcoin introduced as XRP.

Are Bitcoin and Ripple the same?

No, Bitcoin and Ripple are not the same. Bitcoin is a digital currency. However, Ripple is a protocol which is a real-time gross settlement system, remittance network and currency exchange. Bitcoin uses blockchain technology. To summarize all of its data into one single value and compare it across validating servers Ripple uses HashTree. There are so many regulations regarding Bitcoin, government and financial institutions are not huge fans of it. But whereas with Ripple, the case is different, since its release financial institutions have taken a liking towards it and more payment providers are coming on board for it.

The main idea behind building Ripple is to move more money without the burden of too many charges. And Ripple has over the years stabilised it in the market by processing around 35 million transactions without any issues. It used to handle 1500  transactions per second, now it is updated to 50,000 transactions per second. Whereas, Bitcoin and Ethereum are only handing 3-16 tps and 15 tps. Ripple is more of a digital payment system rather than a cryptocurrency. Ripple’s token is XRP, it is not produced through mining like other cryptocurrencies.

What is XRP?

XRP is issued by Ripple company at its inception. It is a currency under the Ripple network and it is mostly used by the banks to source liquidity in case of real-time demand. It provides faster payment settlement, lower foreign exchange rates and reaches new markets. XRP has been the second largest currency by 2018. This currency is a tool used by a ripple so that it is fungible with any digital asset or currency. Ripple can settle a transaction in 3.5 seconds using XRP. Banks don’t have to use XRP for the Ripple payment system to work, it is independent of it.

Value of Ripple

Ripple payment system as a whole has more value than its token XRP. Banks are using this payment system to trade different foreign currencies. Currently, this trading of foreign currency is now accomplished using SWIFT. Under SWIFT system banks are supposed to have separate accounts in each country to enable the transactions. Ripple Company says it has signed more than 100 financial institutions.

Ripple’s Popularity

Bitcoin has seen a dramatic rise back in 2017. In that year cryptocurrencies have seen a high of $20,000. And the price has reached even higher. We have also seen an increase in the price of other altcoins such as Litecoin. It has seen a dramatic rise to $400 from $50, ethereum has doubled and so are the other cryptocurrencies, they all have seen price hikes. Rumours have started in that year that coinbase is also planning to list the Ripple, which has caused the prices to soar higher than expected. Causing more investors to have a look towards these currencies and many of them showed interest in purchasing them.


There has been a lot of criticism towards Ripple, same as Bitcoin. The bitcoin enthusiasts complain that Ripple’s centralized control system goes against the whole of idea of a decentralized system of blockchains like cryptocurrencies. Ripple uses trusted UNL (Unique Node List) to protect any malicious or threats attacking the system. But it all looks good in theory, but the reality is different, some sort of government regulation could come into the picture and force a change. And due to FinCEN violations, the ripple has changed its policies and it is recognising and recommend gateways that are complying with financial regulations.

Ripple & banks

Currently, over 18 banks are using Ripple and are officially linked to it. Most of them are still in the testing stage and trying to see how it works in moving real money. And the companies are not using XRP token.


Ripple is not the same as bitcoin. Whereas bitcoin, ethereum are cryptocurrencies, ripple is a payment system which can trade different foreign currencies fast without any charges and many financial institutions are planning on using this payment system to transfer the money fast and secure. Even though its currency XRP is not as popular as other cryptocurrencies, but this system has gained quite some popularity and many banks are in their testing mode on this system to see how it transfers currencies in real-time. Let’s see what the future holds for Ripple. But right now it has tightened its policies and other regulations to provide a secure payment method for banks.

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