What is XRP (Ripple)? This is an important question that ignited in every investor about one of the top cryptocurrencies. To answer it simply, we should first define the XRP concept and fully realize its functions and advantages. Without any further delay, let’s begin by discussing what XRP is.
What Is XRP (Ripple)?
Ripple is a payment network that targets international transactions and money transfers. The network invented an internal currency called XRP, dedicated to facilitating all financial dealings that traders conduct. As to the function, Ripple simplifies global payment transactions (e.g., between banks), mainly since banking payment traffic is inefficient, slow, and very complicated due to the different currency areas.
XRP Network’s Advantages & Benefits
Regular international bank payments are complicated and inflexible. The Ripple platform and the internal cryptocurrency XRP are trying to solve such a problem.
Let’s examine the following scenario: If you want to send an international payment using the traditional way, you cannot avoid applying the bank services. If you send an international transaction, you will always face some trouble converting the currencies because each national currency has a particular relationship with other national currencies.
That results in an exchange rate that also fluctuates steadily. It is complicated to change money from one currency to another. In addition, banks need to have a special account at the bank abroad, which will operate the currency exchange. The bank keeps that special credit balance in the foreign currency. This is called a Nostro credit balance.
To operate the exchange, the bank receives additional administrative fees. Not only do the banks deduct managerial expenses, but they also encounter several risks, including the balance risk, which is always subject to fluctuating exchange rates. All these factors make banking transfers cumbersome.
What is XRP (Ripple)? It is simply the solution, as it is a cryptocurrency that enjoys complete independence. Instead, XRP sees itself as a bridge between currencies. The Ripple platform supports every national currency, regardless of the regional area. That makes the transaction cost significantly drop.
The Advantages & Benefits
One of the best benefits that the Ripple platform allows is fast transactions. Any international transfer conducted by any bank often takes multiple days. XRP is considered much faster. So, many traders began to appreciate and recommend it to others.
The speed of transaction execution sets XRP apart from other cryptocurrencies such as Bitcoin, Ethereum, and Klaytn. Bitcoin, Ether, and Ultra have unique mechanisms that validate all transactions before being permanently attached to the blockchain. That validation process guarantees network security. However, it requires that a user waits several minutes to confirm and carry out a transaction.
In contrast, any financial transfer conducted by XRP is confirmed within few seconds. It is of paramount importance for both banking transactions and microtransactions to be made in no time – that is essential for traders and institutions alike.
Safe Transfer & Rapid Traffic
By now, you got your answer to the question, “what is XRP?” However, Let’s discuss the virtual operation that the Ripple network undertakes. As a general rule, all transactions occurring at the Ripple network are validated so that the system remains trustworthy.
To achieve that purpose, so-called “Trusted Validator Nodes” are determined. These nodes are considered selected servers that examine the transaction data and allow it to transit. Within seconds, the sender and receiver jointly decide whether a transaction is valid or not.
This means that Ripple ignores the mining technique, which is the most approachable way to validate new blocks. As a result, there are no programmers who mine XRP. That could gradually increase the total volume of XRP.
Is Ripple Really Better Than Bitcoin?
The XRP cryptocurrency is ranked third among 6040 digital coins included in the United Nations Economic report for July 2021. At the same time, the price of a single token barely exceeds $0.5, but the invested capital volume is already almost $23 billion (as of 23.08.2021 $59 billion).
Being a professional trader, you should realize that the basic concept of Ripple Protocol had been regulated a long time ago, several years before Bitcoin’s appearance. The first version of the XRP system was launched in 2005 – it was designed to organize secure online transfers. In 2012, Ripple launched a new XRP token, developed to deal with commission-free money transfers.
What is XRP (Ripple) & what are the differences? The Ripple and Bitcoin projects merely combine the decentralized data register technology and the “native” distributed network, which distinguishes the cryptocurrency world. However, there are some similarities between Ripple and Bitcoin digital platforms.
There Are Various Differences:
Ripple is based on a gateway system that integrates hundreds of servers around the world. The Ripple network utilizes distributed data ledger technology, but its architecture is radically different from the typical blockchain.
The Ripple network has the leading role, which seems different from that of Bitcoin. Ripple system enables users to get a free exchange of assets with almost instant transactions.
The target market for Bitcoin is not limited. The network is suitable for everyone who wants to enjoy the benefits of cryptocurrencies. Ripple initially focused on working with banks and payment system providers.
Bitcoin blockchain had a relatively high degree of decentralization, while Ripple had no such property. The Ripple platform servers are involved in validating transactions. Although Ripple network announced that the number of nodes would increase whenever new customers connect to the platform, it turns out that trustworthy banks, payment systems, and market makers are the only entities that may benefit from any probable increase.
There are no fixed transactions fees on the Bitcoin network. However, in order to complete the process, the user has to specify the amount of the fees manually. Otherwise, the miners will simply reject the whole process. On the other hand, in the Ripple network, the commission is set at 0.00001 XRP. The fee is only charged to avoid any unnecessary transactions.
What Is XRP (Ripple)? Final Thoughts
Like Bitcoin, XRP tokens are assigned to specific addresses, which traders and users created online. With these individualized addresses, the network can make all transactions. When you, as a trader, want to store Ripple coins, it is recommended to use the ledger hardware wallet, as it provides vital protection.
To access coins and carry out transactions, you can create a free account on the official Ripple wallet, supporting dollars and euros. So, it is suitable for storing and buying other cryptocurrencies.
Investing in stocks, cryptocurrencies, and other Initial Coin Offerings (“ICOs”) is highly risky and speculative. This article is not a recommendation by iCryptoApe or the writer to invest in stocks, cryptocurrencies, or other ICOs. Because each person or individual’s circumstances are unique, therefore, a qualified professional and/or a financial advisor should always be consulted before making any financial decisions and/or trading or buying stocks, cryptocurrencies, or other ICOs. iCryptoApe makes no representations or guarantees as to the accuracy or timeliness of the information included within.
