Coin Spotlight: Ripple & XRP - Open Payment Network and Digital Currency [#4]
In this week's issue of Coin Spotlight, we'll be taking a closer look at Ripple. There is a lot of controversy surrounding this coin, so I will try to cover Ripple as neutral as possible. It can't be denied that Ripple clearly has a lot of investments behind it, as they've received backing from major financial institutions.
Basic Overview
There's a clear difference between Ripple as a payment protocol and XRP. The Ripple network (Ripplenet) uses XRP as it's own native cryptocurrency, but also offers other services. It is possible to make use of the Ripple network, without directly making use of XRP. There's only one exception to that rule, you do need 20 XRP to create an account that gives you access to the Ripple network.
Ripple aims to make international transactions cheaper, faster and more reliable opposed to the traditional banking system. They work with a token system, where tokens can represent fiat currency, cryptocurrency, commodities or any other units of value. At its core, Ripple uses a distributed ledger which is validated by different entities such as: companies, ISP's and universities. This allows for payments, currency exchanges and settlements to take place in a secure environment.
As I've mentioned before, while XRP is the native currency of the Ripple network, it is not used for all of Ripple's services. XRP was designed to be an asset with a decreasing supply, at it's creation there were 100 billion XRP created. Ripple's creators have retained 20 billion XRP and gave the other 80 billion XRP to Ripple labs. Part of Ripple Labs XRP reserves have been placed into an escrow account, to clear any suspicions surrounding the huge XRP supply under their control. It also has to be noted that Ripple's founders have donated nearly half of their XRP holdings to non-profits and charities.
Ripplenet Services
xCurrent
This service offers banks the ability to process transactions securely and instantly. It's designed to work with the bank's existing infrastructure, while also adhering to various compliance requirements (such as KYC). Note that this service is for bank-to-bank transactions.
xRapid (early access)
Gives customers access to on-demand liquidity at low cost. xRapid provides banks and payment processors with liquidity through a pool of digital assets (XRP).
xVia (early access)
xVia is Ripple's standard payment interface, which can be used for sending payments through various different networks, all through one standard interface. Prominent features include: payment tracking, adding rich data to transactions and efficient capital management.
Ripple's Customers
It is pretty clear that Ripple is primarily targeted to win over banks and other financial institutions as customers. They currently have over 100 members, among which banks are a majority. This doesn't mean that Ripple wouldn't be used by other sectors as well. Companies might opt to use Ripple to manage their capital more efficiently and currency exchanges might benefit from the fast settlement times on the Ripple network.
Investing in XRP
XRP is not used throughout all of Ripple's services, but the price of XRP has reacted to further developments regarding the Ripple network. Recently the prices went up, after it was announced that Ripple Labs had secured a number of customers for their xCurrent service. The thing is that xCurrent does not have anything to do with XRP, so in theory this shouldn't affect the price.
It seems as though most investors directly tie XRP to Ripple, even though the two can operate independently from each other in some cases. The high number of XRP that is still retained by the founders and Ripple labs, is also a possible concern.
My Opinion on Ripple
I'm going to be honest, Ripple has never really been something that I've been interested in. Before I started researching for this article, I only knew a little bit about how it worked. It's clear that Ripple is mostly intended for professional use by financial institutions, while I usually only follow projects that interest me personally.
Ripple has a little bit of a bad reputation in the crypto-community, with claims of it being too centralized and accusations of Ripple being pre-mined. Some of these claims might be a bit exaggerated, while some originate due to a difference in philosophy.
I'm not against Ripple, but I also probably won't invest in it either.
CoinMarketCap Statistics on 26/05/2018
| Price (USD) | MarketCap | Volume (24h) | Circulating Supply | Max Supply |
|---|---|---|---|---|
| $0.620229 | $24,306,754,811 | $217,598,000 | 39,189,968,239 XRP | 100,000,000,000 XRP |
Source: XRP on CoinMarketCap
Research Sources
Official Ripple Website
xCurrent Product Overview
Ripple Wikipedia Entry
Coindesk Article on Ripple
Let me know what you think in the comments and consider upvoting or resteeming if you like this type of content!
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@daan, I do not have much of crypto knowledge, so when I see such posts made with simple and lay man terms, I gorge on it. At least now I know something about Ripple.
I am yet to start buying other coins or trading but it is good to have this information. Thanks man
This one was difficult to write, I have to admit. Ripple is just quite complicated, because of the difference between Ripple as a company and XRP. Glad that I explained it in an easy-to-understand way, that was my goal.
I was reading about the Ripple but I had no idea there are so many services ( or finance) involved in it. I am mostly into the privacy coins and STEEM.
I think it's really not all that interesting, unless you're employed in the financial industry or something.
Just had to get this coin over with, because someone had made the suggestion on my last Coin Spotlight article :)
I've never really delved into ripple but thanks for explaining it here in a simple way. Learning something everyday
It does have a bad reputation amongst us 'real' crypto people and for that reason I have none in my portfolio.
Is there any reason I shouldn't invest in the future? Not really, but there's so many other more exciting coins to have, such as EOS and Steller Lumens, both of which I have added recently.
I've not invested in Ripple either. I like to follow Warren Buffet's advice, never invest in something that you don't know anything about.
EOS will get interesting once they start their own chain, I'm guessing that the price will go up further.
If we followed WB's advice we wouldn't be here at all! No intrinsic value and all that! I have read a lot about the man.
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Thanks for the post. I hold a bit of XRP as I had bought in when it was about 10c, but I don't advise people to do it now and I'm really reconsidering if it is worth holding on to...
One thing that does have me a little spooked about XRP is (as far as I understand), that XRP the token isn't really required for the services Ripple provides for the banks. Is this true?
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