The fast money transfer network, Ripple, and its associated coin, XRP, have been enjoying steady acceptance and growth over the five years since their inception. Here’s why.
When talking about Ripple (XRP), people often overlook the product that caused it to exist: the Ripple Network. Unfortunately, even though it’s been accepted by several banks as a legitimate money transfer system, the platform is a bit more complex to figure out than your regular cryptocurrency.
So we’re going to go through it and explain every piece along the way.
How to buy Ripple (XRP)
The easiest way to buy XRP is through a two-step process that requires an exchange with another cryptocurrency
1. Buy some bitcoin or Ether.
What is Ripple?
|Icon||Symbol||Initial release date||Algorithm type||Max. supply|
|XRP||2012||SHA-512||100 billion XRP|
The goal of Ripple is to be a global settlement network, a platform to allow anyone to transfer money in any currency to any currency in a matter of seconds. This is an ambitious goal meant to eliminate the use of older systems like Western Union or SWIFT.
The Hard Fork
Consider this scenario: Alice and Bob need to send some money to each other. Alice uses Jamaican dollars (JMD) to conduct her business, while Bob operates in Bangladeshi taka (BDT).
While it might not be evident to end users, the process behind Alice sending Bob money involves converting the JMD to a common currency like USD, then transferring the money between Alice’s bank and Bob’s. Finally, the USD in Bob’s bank is converted back to BDT.
This incurs a lot of fees at every exchange and wastes a lot of time. The Ripple network and currency aim to fix this problem.
The alternative Ripple proposes is the use of XRP as a common currency underlying all money transfers between different currencies (USD is currently the most common currency). Not only are transaction fees much lower to convert from one currency to XRP and back, but transfers take a maximum of 4 seconds to execute and verify.
Quite a few global banks have already started embracing Ripple as it saves them a lot of money in the long run by avoiding exchange fees.
Exchanges that list Ripple (XRP)
Exchanges where you can buy crypto with fiat
How is Ripple different from bitcoin?
The Ripple coin and the Ripple Network have various advantages over bitcoin as they have been built with slightly different purposes in mind.
Fast and cheap
Ripple transaction processing only takes four seconds since it’s significantly less active compared to bitcoin. This has the added bonus of cheaper transaction fees, whereas the price for bitcoin transactions has been on the rise lately as more people adopt the platform.
All the 100 billion XRP that it’s possible to use on the platform already exist. While they’re not all on the market – a few are released into the market every month to avoid flooding – there is no use mining as there is nothing of value to be added, unlike in more traditional cryptocurrencies.
In May 2017, Ripple pledged to lock up 55 billion XRP in 55 different smart contracts, essentially putting billions of dollars in escrow. Each month, a contract then releases 1 billion XRP into the market.
The primary motivator for this move was fear from investors that Ripple would suddenly reduce the price of the coin by releasing the billions of XRP that it’s holding into the market.
The move to lock up XRP will mimic the effect of mining as seen in other currencies like bitcoin and ensure that the currency will keep its price steadily growing
The Ripple platform and coin being accepted by banks gives the process legitimacy and, at least from an investor’s standpoint, can be a little more reassuring. This is not the case with bitcoin and other currencies as they are seen as competition by the banks.
Ripple history price graph
Where can I use Ripple?
XRP is still a long way from being as widely accepted as coins such as bitcoin, Litecoin or Ethereum. It was never the goal to use Ripple as a payment method. Instead the aim has always been to use XRP to grease the wheels, in order to make fiat money transfers easier, faster and more secure.
That said, there are quite a few merchants that accept Ripple, including hosting providers and vaping product merchants. A full list can be found on the XRP forum here
How do I invest in Ripple?
Rarely has a coin been considered so ripe for purchase as Ripple is in September, 2017. Selling at $0.0218 per XRP on 1 April, 2017…
…the coin skyrocketed to $0.3973 per XRP in no more than 47 days!
The price has since settled down a bit as speculators decide whether they want to invest in the coin or not, and banks shuffle funds around and investigate the platform.
With more bank involvement will come greater growth. If you have no problem with the way Ripple has handled the initial XRP influx (see section below: “What to watch out for – Centralization) and if you think more banks will accept Ripple as the de facto money transfer platform, then there may never be a better time to get in on Ripple than 2017.
Using Ripple to transfer money
Transferring money with Ripple works like any other cryptocurrency:
- Have some XRP available in your wallet. XRP wallets are the same as, for example, bitcoin wallets. Buy XRP on an exchange and then transfer them to your wallet.
- Scan or enter the recipient’s address. Whether they provide you with the hashed wallet address or a QR code, just follow the simple instructions on your wallet of choice and you’ll be done in no time.
- Enter the amount and send. The transaction should be verified in a few seconds and you’re done.
Making money with Ripple
Unless you’re a bank willing to invest into the Ripple platform, and because there is no mining allowed on Ripple, there are only two major ways to make money from it.
Get paid in Ripple
Adopting XRP will not only put you in a position where you can see returns on money that’s sitting in your wallet, but you will also be helping the currency gain legitimacy and wider use. Being this early and this young, Ripple will benefit from any merchant accepting the currency. When it grows, everyone enjoys the fruits of their investment.
Invest in Ripple
While the Ripple platform might not be easily accessible for investors, anyone can buy XRP and wait. The currency is growing and it is still in its infant stage. As more and more merchants and banks adopt the platform, the price will probably increase, the currency will grow, and the value of every wallet will grow with it.
What to watch out for
As much as some people love Ripple and see it as the next generation of cryptocurrencies, there are also some who have concerns over privacy and centralization.
Cryptocurrency has always been considered the poster child of privacy and anonymity. Ripple’s decision to market their platform exclusively to banks has been a cause of concern for some users who worry about big brother keeping an eye on their transactions.
Ripple’s platform is extremely centralized whereas most cryptocurrencies aim to be as decentralized as possible. The reason for this is that Ripple owns the vast majority of the coins available on the platform while currencies like bitcoin allow anyone to mine and acquire coins. The move to lock coins inside smart contracts was a step in the right direction to fix this issue, but every time the coins are released they first go to Ripple to do with them as it pleases.
What’s next for Ripple?
The company behind Ripple plans, as a priority, to improve the lack of decentralization from which the platform is currently suffering. By adding more trusted validator nodes, the company plans to shake off the image that it’s just another central bank controlling the Ripple currency.
With that said, the future of Ripple depends entirely on the adoption of the platform by banks and that’s where the focus of the people behind Ripple inevitably needs to be. As more banks join the network, the price of XRP will probably skyrocket, driving more people to the coin and enticing banks to join the platform.
Without banks the platform would likely die, and so will the investors attempting to push it forward. Luckily, that doesn’t seem to be the future of this currency.
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