Steemit Crypto Academy | Season 2, Homework Post for [@yohan2on]: Altcoins – Part1 "Looking beyond the Bitcoin

Greetings again @yohan2on, I am really happy to be back to our classes and keep learning week after week.

The altcoin I selected for this week's assignment is Ripple.

_{Ripple Logo, Source: https://ripple.com/}

The first thing to know is that Ripple is both a platform and a currency. The Ripple platform is an open-source protocol that is designed to enable fast and cheap transactions.

The platform has its own currency (XRP) but also allows everyone to use the platform to create their own through RippleNet.

What is RippleNet?

RippleNet is a network of institutional payment providers such as banks and money service businesses that use solutions developed by Ripple to provide a seamless experience for sending money globally.

The platform allows you to make payments in any currency including Bitcoin, and enjoy low fees.

Unlike Bitcoin or Ethereum, Ripple does not have a Blockchain network. But... if you don't have a Blockchain, how do you verify transactions and make sure everything is okay? For this, Ripple has its own proprietary technology called: Ripple Protocol Consensus Algorithm (RPCA).

The word consensus means that if every node agrees with every other node, there is no problem.

Creation

The protocol as a working prototype was created in 2004. But the real story begins in 2013, when Jed McCaleb, the creator of the EDonkey network, invited a group of world-class investors to invest in Ripple Labs.

So… What is XRP?

XRP is a token used to represent the transfer of value across the Ripple Network. The main purpose of XRP is to be a mediator in currencies exchange, both for cryptocurrencies and fiat.

_{XRP altcoin, Source: https://currency.com/xrp-price-analysis-for-july-20-27-2020}

Its operation and features are far away from other notorious examples, such as Bitcoin and Ethereum. For a long time, it has been considered a currency for banks, so a false image of this digital asset has been created from the cryptocurrency community. However, in terms of market capitalization, it has always remained at the top, and its progress, in both marketing and development has been remarkable.

_{Ripple price chart, Image from my Tradingview account}

XRP was initially created without the intention of solving an existing problem. After the project was completed, it was decided to orient it towards international payments and to make up for the current problems.

In what situations is it XRP useful?

Ripple's approach on how to improve the system of international transfers is simple: Use XRP as the currency of exchange from the starting point to the end of the transaction. Thus, banks or entities sending money would not have to have several currencies in their bank accounts to be able to make the currency exchange for the client (this generates a risk if the currency you keep depreciates).

For example, to send Currency A to Currency B through XRP: First, Currency A would be converted to XRP and then exchanged for Currency B. All this in a matter of seconds. There would be no need for the sending or receiving bank to have both currencies.

_{Ripple transfer example, Source: https://www.coingecko.com/buzz/what-is-ripple-how-to-buy}

In a few words we can summarize the usefulness of XPR: For currency exchange with low commission.

There are many currencies that cannot be converted directly into each other. Banks need to use the US dollar as a mediator. Therefore, there is a double commission: converting "currency A" to USD and USD to "currency B". Ripple acts as a mediator, but its fees are much cheaper.

Advantages:

1. Ripple is originally designed as a daily payment system, so it is much more useful than Bitcoin in these cases. As a result, transactions are much faster and cheaper.

2. Fast international transactions: The average transaction time is 4 seconds, compared to an hour or more for Bitcoin and a few days for normal banking systems.

3. Ripple has started as an official organization, as its main purpose is to be used by banks. Therefore, it's not subject to multiple regulatory controls like many other cryptocurrencies.

4. Ripple has the ability to be exchanged to any currency or value (such as gold) with a unified minimum fee.

Disadvantages:

1. It is highly centralized, although the idea of cryptocurrencies is to avoid centralized control. Since each XRP coin is already mined, Ripple developers can decide when and how much to release, or not to release. So, it's basically like investing in a bank.

2. In addition to centralization, today it’s almost like a monopoly as Ripple Labs owns the majority of the coins.

3. It's open source. Once the code is accessible to everyone there’s a good chance that many people will try to hack it. Some of them might even succeed.

XRP Variants

In addition to its use as a solution for international payments, the community has wanted to give it some others. For example, XRP Tip Bot is a bot where you can tip on Twitter, Reddit, and Discord. The other person receives the XRP instantly. In case you don't have an account (wallet) to store your XRP, you can print the tip and the person can redeem it.

Conclusion

Although there is a long list of very respectable banks that are planning to use Ripple, most of them are still in the testing stage. The few that do real-money transactions use the platform, but not the token.

Companies using Ripple's platform include Santander, Bank of America, and UBS.

On the other hand, since it's not held in a central location, its registration system is known as a decentralized master registry. This decentralized system allows for greater transparency that banks leverage to send XRP to other registered financial institutions around the world. Now, banks can enjoy the benefit of a wider financial network.

Unlike other ALTCOINS, Ripple's core services focus on fast international currency transfers. This means that while its networks rely on a larger decentralized registry and active validators, Ripple maintains control over how the network is used to ensure trust in its platform.