Introducing Ripple digital currency
Introducing Ripple digital currency: Ripple is an open payment network for digital currency as well as a holding company.
And Ripple is privately held cash flow positive company that aims to create and enable global network of financial institutions and banks to use ripple software to lower cost of international payments.
With this in mind, ripple calls this global network using Ripple software the internet of value.
The XRP ledger is an open source product created by Ripple.
To point out, it was created to sell major point of friction in international payments.
XPR can be used by banks to control liquidity on demand in the real time.
And by paying providers to expand into new markets provide faster payment settlement and lower foreign exchange cost.
When you think about it the state of Global payment industry is widely behind.
You can easily download entire article or a video game on your phone in the middle of forest.
Yet, send a few digital currencies to your grandma in Ukraine over a visa is requires fees and processing time.
The technology for easy global payment already exists.
Why is the global payment industry being so far behind?
Well, it will be stretched to assume that the financial institutions collectively make trillions of dollars from payment fees are not racing to innovate the traditional system that boots a lot of money in their pockets.
The financial industry rather innovates and promote the something that is totally irrelevant for an average person.
Financial products such as collateralized debt obligation (in short CDO).
Which you might be familiar with from 2008-2009 housing bubble crash or quantitative easing (in short QE).
A housing bubble, or real estate bubble, is a run-up in housing prices fueled by demand, speculation,
and exuberant spending to the point of collapse.
Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively extended period to replenish and increase.
That’s what is happening currently QE allows government to buy back depth and release tons of money into circulation stimulate economic growth.
But in the same time it generates a huge national depth.
Consequences for an average person might be devastating.
However unlike Bitcoin, Ripple aims to work with current financial world.
The equivalent of roughly 155 trillions of dollars move across the board every year.
For the sake of example let’s assume that everyone used PayPal which charges 3% fees for each transaction.
This would be way too much for paying fees but, we are all probably familiar with PayPal taking cut of our payment at some point or another.
This means that about 5 trillion of those Global payment fees would go straight to PayPal to add muscle to injuries, those payments would likely even take days to process.
What does Ripple do?
Have you ever had occasion where you needed to wire money to someone?
Only to be told it might take several days for that money to appear in their account?
That’s because most major banks are still using systems that were built 40 years ago for this task.
SWIFT, MoneyGram and Western Union are just some examples of slow,
expensive and relatively limited systems that financial services use to transfer money.
On top of that, not all of the banks are connected via the same network.
So in many cases, you don’t even have a direct line between two banks, when they need to transfer money from one account to the other.
in order for bank A to send money to bank B that it doesn’t have any direct relationship with, more often than not.
It will have to go through several intermediary banks, searching for common network connections between each other in order to clear a path for the money.
That’s why international wire transfers are so slow and costly.
Each bank along the way takes time to process the transaction and a fee for servicing the process.
In some cases, bank transfers must involve currency conversions, which make things even more problematic and expensive.
For example, directly transferring currency from Japan to Nicaragua, means turning Yens into Cordobas, which is generally not feasible.
The reason is that Japanese banks don’t usually hold accounts denominated in Cordobas, because there’s not a lot of demand for them.
However, both Japanese and Nicaraguan banks hold accounts in dollars.
So instead, an individual or bank will usually trade Yens for Dollars and then Dollars to Cordobas.
As you can imagine, this process can be costly due to the multiple conversions.
In short, the banking system today doesn’t have a main connecting network with a uniform set of rules.
Each time you want to exchange or send money through the banking system, you need to find a path to transfer that money, depending on the circumstances.
That’s exactly what Ripple is here to change.
Internet of Value
Just like the internet has its own rules, or protocol, to transfer information known as http.
RippleNet uses a protocol, known as RTXP, for moving value around the world.
Ripple Labs, the creators of RippleNet, aim to create the “Internet of Value”.
This is a way for money to move as quickly as information does.
There is no reason to pay fortune and wait days when transferring money globally.
Who are the founders of Ripple?
The idea for Ripple was actually first conceived way back in 2004 by Ryan Fugger and was called RipplePay.
But in 2012 was passed to Jed McCaleb and Chris Larsen who founded OpenCoin later to be called Ripple Labs.
Unlike most cryptocurrencies who focus on the individual, Ripple Labs aims to serve banks and payment providers,
allowing them to lower transaction costs and expedite settlements.
How does RippleNet work?
RippleNet is a network based on a set of rules known as the Ripple Transaction Protocol or RTXP for short.
The network consists of computers, known as validators, that are spread around the world and maintain a shared ledger of who owns what.
Validators make sure every transaction sent through the network follows the RTXP rules.
Anyone can run a validator and help maintain the Ripple network, just like anyone can run a Bitcoin node to maintain the Bitcoin network.
Companies who want to access the Ripple network can use gateways.
Gateways, which are usually run by banks, act as entry point to Ripple for people outside the network.
It’s the same idea as going to a bank or a credit company to gain access to the banking system.
So Ripple basically offers businesses an alternative to the banking system in the form of an internet of value called RippleNet.