“Payment systems today are where email was in the early ‘80s. Every provider built their own system for their customers and if people used different systems they couldn’t easily interact with each other. Ripple is designed to connect different payment systems together.”
Released in 2012, Ripple aims to enable “secure, instant and nearly free global financial transactions of any size with no chargebacks” through their real-time gross settlement system (RTGS) and currency exchange and remittance network. Ripples distributed open-source internet protocol consensus ledger was created as basic technology for interbank and regulated financial institutions to integrate Ripple into their own systems. This differs from the Bitcoin full node and other crowdsourced altcoin consensus networks in several ways:
- Ripples common shared ledger is a network of independent validating servers which compare their transaction records, rather than the full network of nodes coming to consensus prior to each transaction, enabling faster transaction speeds.
- Although their protocol is open source, it was not created as a plug & play solution, like bitcoins full-node software, nor does it rely on crowd-sourced support.
- Unlike Bitcoin, Litecoin, Ethereum, and other Alt-coins, Ripple is recognized as legal tender by several governments, which gives it instant liquidity via financial institution, as well as purchasing power over material goods. Because of this, it cannot be evaluated in the same ways as other coins, which are largely evaluated based on assumptions & speculation.
In terms of value, it’s more like cash than a commodity. Because of this, it is evaluated in a much different way than Ethereum(ETH) and other alt-coins with intrinsic value, but is accepted much more rapidly because it’s easy for the mass-market to understand.
Just 4 short years after its release, Ripple announced that a consortium of 47 banks have successfully completed a pilot implementation of Ripple in Japan, making it the first country in the world to enable domestic and international real time money transfers via the cryptocurrency. This event lead the XRP value to sky-rocket from $0.051580 USD to an all-time high of $0.430085 in just 16 days
“It’s not a real cryptocurrency!”
Ripple Its a centralized and regulated crypto-currency which does not need global consensus for transfers, and it is built specifically for (and potentially by) financial institutions.
The benefits are the same as normal cryptocurrency .. but also give more control to Istitutions .
- Regulated – Bitcoin’s lack of regulation was likely he reason (or at least, that’s what they told us) that the proposed ETF failed to pass the SEC’s evaluation several months ago. If adhering to some sort of trusted regulatory standards, this could drive federal confidence, which in turn drive bank and lending institution faith…trickling all the way down to the consumers. This insures rapid mass market acceptance.
- Consensus – As mentioned before this is much different process than Bitcoin’s global consensus, which means that transaction times are nearly instant regardless of volume transferred. Additionally, all transfers adhere to distributive ledgers DLT standards, which is a requirement for many financial institutions to be insurable.
- Institutional Management – You’ve probably guessed this one already. Although the demand and speculative value is driven at some capacity by ‘the people’, this currency is about as close to the World bank and SWIFT as you can get.
- Deliberate – It feels like a big bank, because it is. Ripple was built specifically for the financial markets, which is why they specifically targeted regulatory compliance.
The Real Value:
Once the ripple system is adopted the first benefit is near free transfers of funds.
Real Example : Japan has already started accepting Ripple(XRP) as legal tender. If Ripple raises to just 25% of the overall transaction volume of P2P, P2B & B2B within Japan itself (represented in the chart by Other Services, Real Estate, Retail, Transport, Communications, Finance & Utilities) which is equal to about 20% of their overall economy, Ripple would be handling roughly $1.27 trillion USD in Japan – alone – every year. To put that in perspective, the current (at the time of writing) market capitalization of Bitcoin(BTC) is $30.7 billion USD (or >0.4%). Unlike Bitcoin, Ripple is legal tender which means that it can be exchanged for material goods and services, which means that it’s likely to have explosive acceptance in the local area.
Although Ripple does not ‘feel like a normal crypto’ (and there are reason about this feeling) , I personally think that due to its rapid market acceptance, liquidity and position as legal tender in 3 large economies, Ripple(XRP) is both primed for explosive growth and likely to be one interesting investment now and for future.