Crypto Academy week 9 - Homework post for @yohan2on
INTRODUCTION
Since the dawn of Altcoins in 2011, the term has become very popular even among non-crypto folks. A lot of people get interested in the concept of Altcoins by the day thanks to their increasing popularity. As professor @yohan2on stated, there are over 5000 existing Altcoins with more on the way. Today, I would like to attempt the homework task from the season 2 week 1 lecture.
Among the coins, I’ve decided to talk about a controversial one that’s been making the headlines for a while now. You guessed it. It’s Ripple.
Ripple(XRP)
What a catchy name. Ripple’s XRP has been making the headlines lately. I can’t go a day on Twitter and there won’t be something about this “great” XRP somewhere either on a trend on a random post. XRP peaked my interest last year when I was still starting my crypto journey after a friend of mine introduced me to the coin. Personally, I didn’t like the coin because of what I was told but still, I’ve been interested in it for a long time. I have been doing research on this coin for a while now and seeing this assignment, I knew I wanted to talk about it. Now let’s talk...
A brief history
XRP is one of the oldest cryptocurrencies out there. The history books say that XRP was released in 2012 but its story goes way back.
In 2004, Ryan Fugger brought up the concept of Ripplepay as a secure online payment service. There are even rumors that Satoshi Nakamoto mentioned ripple in their works stating:
"Ripple is interesting in that it's the only other system that does something with trust besides concentrate it into a central server." -Satoshi Nakamoto " xrpchat.com
In 2011, Jed McCaleb, alongside Arthur Britto and David Schwartz started working on a consensus system based on a digital currency. Chris Larsen joined the team in mid 2012 after McCaleb hired him. The team approached Ryan Fugger with one request - to use their currency on his network. Fugger agreed to the request. This led to the formation of the company OpenCoin which developed the Ripple protocol (RTXP) and the digital currency, XRP. OpenCoin was renamed to Ripple Labs in 2013 and to just Ripple in 2015. The company was the fourth company to obtain a BitLicense.
Overview
The Ripple protocol is a system that facilitates cross-border transfers between banks. It is a Real Time Settlement System that is based on a technology called the XRP Ledger and powered by its native currency, XRP. Acting as a bridge between currencies, fiat and digital, Ripple makes transactions faster and cheaper by connecting banks to each other and eliminating middlemen. Ripple achieves this through a special consensus protocol called the Ripple Protocol Consensus Algorithm (RPCA) that operates on a distributed ledger technology. The Consensus system adopts the Federated Byzantine Agreement algorithm. It has to show proof of correctness, establish an agreement and confirm utility before any transaction can be approved. Transactions on the Ripple network normally have a wait time of 3-5 seconds with 1500 transactions performed every second.
How XRP works
The XRP ledger allows for payments in XRP. XRP is the currency of the ripple network. It is a mediator cryptocurrency that bridges transfers in different currencies, fiat or crypto.
For example, if Bank A has USD and Bank B has need for Pounds, the conversion and transfer would normally take some time(days) and cost a lot. XRP mediates this without discrimination. USD from Bank A can be converted to XRP and transferred to Bank B which will be converted to Pounds at the best possible rate. Easy as it sounds, the whole process is actually much more complicated. Unlike the traditional SWIFT system, this transaction takes seconds. The diagram below illustrates the process:
" Source
Pros of XRP
1: Very low transaction fees
XRP is best known for its negligible transaction fees. It costs just 0.00001 XRP for every transaction. These type of figures show that XRP is basically free.
2: Fraud proof
Ripple claims that the system is fraud proof thanks to the adoption of the Federated Byzantine Agreement algorithm in its consensus protocol. The show of proof of correctness helps to prevent double spending in the system.
3: Speed
Oh yeah and to the main pro of XRP. Ripple is famous for its “unreal” transaction speed especially between cross-borders. Going at 1500 transactions per second and a 2-5 minutes waiting period isn’t as easy as it sounds. The system easily beats competitors like SWIFT that take days to process a transaction.
Cons of XRP
1: Too much supply
XRP has a total supply of 100 billion units with over 45 billion already in circulation. More of it gets released into circulation periodically. This excess supply reduces its scarcity and ultimately the value.
2: Cannot be mined
The whole supply XRP was minted at launch. This means that the coin cannot be mined but bought. Habit miners, therefore, cannot get this cryptocurrency from a reward system.
3: Not completely decentralized
XRP goes against some of the principles of cryptocurrencies. Cryptocurrencies are “supposed” to be decentralized. That is, they shouldn’t be controlled by a single entity. The case is different for XRP as almost 60% of the total supply is owned by Ripple. The company can choose to release any amount to the public as they choose.
Also, the trusted nodes (validators) are selected by Ripple.
The question of decentralization is still an argument however.
Stats
Here are some XRP stats as of writing:
Price | $1.33 |
Rank | #4 |
Market cap | $60,298,345,381.41 |
Trading volume | $20,331,114,911.24 |
Curculating supply | 45,404,028,640 XRP |
Total Supply | 99,990,831,162 XRP |
Maximum supply | 100,000,000,000 XRP |
" stats from CoinMarketCap.com
Lawsuit
In late 2020, the Securities and Exchange commission filed a lawsuit against Ripple and two of its executives, Chris Larsen and Brad Garlinghouse. The SEC alleged that the company, Ripple, had sold XRP as unregistered securities. The SEC argues that XRP is in fact a security that is distributed and sold by Ripple. This argument is backed by the fact that XRP is largely controlled by Ripple unliked bitcoin and ethereum that are fully decentralized. Unlike its decentralized counterparts, XRP was minted and distributed solely by Ripple.
A lot of people have criticized the SEC’s move saying that it was hastily made. The SEC had known about the operations of ripple and XRP for over 7 years so the question of “why now?” Is on everyone’s mind.
The case is a lot more complicated but from recent developments, it seems like Ripple is leading the case. It’s possible that the outcome of the whole thing will affect the future of cryptocurrencies and blockchain technology.
Differences between XRP and Bitcoin
There are a number of features that make XRP very different compared to bitcoin. I’m going to be outlining some of them below:
BITCOIN | XRP |
Can be mined | Cannot be mined (pre-minted) |
Uses blockchain technology | Uses a distributed consensus ledger |
Completely decentralized | Controlled by an entity |
Very high network fees | Negligible network fee. Practically fee |
Used for payment | Used as a remittance system |
Performs 5 transactions per second | Performs 1500 transactions per second |
Transactions average by 10 minutes | Transactions average by 5 seconds |
Where to trade XRP
Some exchanges to get XRP include:
- Binance
- Huobi
- Kucoin
- Bitstamp
- Kraken
- Bitfinex
- Gate.io
My XRP price analysis for 6 days
I have been following the price trend of XRP in my own amateur way. This is how it has faired from Tuesday, 13th April to Sunday, 14th April:
⁃ Tuesday: XRP started at $1.5 and got to a high of over $1.88 in a matter of hours before consolidating to about $1.85.
⁃ Wednesday: I woke up to a price of $1.88 and in minutes it was over $1.9. It Briefly touched $1.96 before going down to $1.57. It wandered between highs and lows before Closing the day a little below $1.8.
⁃ Thursday: By 5am XRP was at $1.77. It Went down below $1.72 in the day and went back up to $1.77. It later got up to over $1.82 before closing the day at $1.78.
⁃ Friday: Started the day at $1.77 and went down to $1.73. It dropped below $1.65 Later and even lower to under $1.45. It Rose to $1.54 and all the way to $1.68 later at night.
⁃ Saturday: Started at $1.57 and went as low as $1.55. Came up to $1.61 and back to $1.57. Ended the day at $1.49.
⁃ Sunday: Started as low as 1.4 and dropped as low as $1.28 in a short while. It struggled between $1.28 and $1.34. Its currently floating at that range as of writing.
The price movement of XRP shows high volatility in the market. Anyone trying to get into the market should be really cautious at this moment.
Chart from binance
CONCLUSION
I have been interested in XRP since the lawsuit in 2020. I can’t say for sure if the currency has a future but it seems that way. I’ll keep following the trends for sure.
Special thanks to @yohan2on
His @awesononso
Thanks for your participation in the Steemit Crypto Academy
Feedback
This is good work. Well done with your research on XRP
Homework task
8
Yes! Thank you prof. Looking forward to your next class😁
Please kindly review @yohan2on
Thanks again