Either you are a newbie or a guru in the world of cryptocurrency, the first thing you should know about Ripple is that it is both a platform and a currency. The Ripple platform is an open-source protocol designated to enable fast and less expensive transactions.
The primary reason behind the creation of Ripple is to rule all the international transactions globally, unlike Bitcoin that was never proposed to be a simple payment machine. Sounds ambitious, right? Yes!
The platform has its currency called XRP but enables users to generate their own through RippleNet.
However, Ripple presently has some legal challenges with the Securities and Exchange Commission (SEC) despite its ambitions. But that doesn't still prevent XRP from surging in value with other cryptos.
So, the question now is, what is Ripple as a cryptocurrency? How to mine Ripple, its uses, its advantages, and disadvantages? All of these will be discussed in this article.
What Is Ripple?
Ripple is a form of payment settlement system and a currency exchange network designed to process transactions universally. The fundamental reason Ripple was created is to stand in as a trusted agent or mediator between two parties in a transaction. So, the network is expected to confirm speedily that the exchange is successful. As a result, Ripple enables businesses for different fiat currencies, crypto coins like Bitcoin, and even merchandise like Gold.
According to the CEO of Bitwave, Ripple was designed from inception to replace SWIFT (a leading money transfer network) or to replace the payment system between most financial institutions. In addition, the platform enables users to make payments in any currency of their choice; Bitcoin is inclusive and has a minimal internal transaction commission of $0.00001. Are you wondering if that's the right amount? Yes, that's the right amount of zeros. The primary reason why it can't be free is to prevent spammer attacks.
Ripple and XRP are often used interchangeably. But to be precise, Ripple is the network, and XRP is the coin or token on that network- yet most users still refer to Ripple as XRP.
XRP is the token used across the Ripple network to represent the transfer of money or value. The primary reason for XRP is to be an intermediary for others, i.e. both cryptocurrencies and fiat exchanges.
However, unlike every other cryptocurrency, XRP has been pre-mined. It simplifies that the XRP Ledger generated 100 billion tokens that are then released to the public from time to time. Ripple holds about 6% of that amount as a reward for helping the cryptocurrency grow and succeed over time. Nevertheless, another approximately 48% are stored in reserve for steady release into the market via sales.
Nevertheless, This has raised fears that many XRPs are likely to be released at once. As a result, the value of other XRP in circulation already agrees that part of what gives any currency its value is its proportional scarceness.
Differences between Ripple and Bitcoin (Ripple Vs Bitcoin)
Looking at the differences between Ripple and Bitcoin, the most significant and most prominent difference is their reason for being designed. Bitcoin was designed as a decentralized network and a peer-2-peer alternative to the current payment system. At the same time, Ripple is designed to develop a bank's current payment system instead of replacing it. The idea behind Bitcoin is that a third party or mediator is not needed in the exchange process. Still, it's the other way round in Ripple as there can't be any form of transaction without a Ripple exchange platform being the mediator.
Another significant importance is that Bitcoin can be mined while Ripple is pre-mined. Mining Bitcoin means new transactions and received and validated, put together on a block, and then transferred to an existing Blockchain. However, Ripple has decided to centralize the output of XRP, so all the XRP that will exist have been generated. As a result, there are 100 billion XRP available, of which over 40 billion of it had already been issued.
Bitcoin was assumed to be created by Satoshi Nakamoto, while Ripple labs designed Ripple.
In Bitcoin, only 3-6 transactions can be done per second, while in Ripple, about 1500 transactions are carried out per second.
Also, Bitcoin is a digital currency proposed to be a payment method for goods and services. While Ripple is a currency exchange, payment resolving. A remittance system was proposed for banks and other payment networks. The primary reason for this is to make available a system for direct transfer of assets like money, Gold, etc. that settles instantly and is a less expensive, more secured, and transparent substitute for transfer systems used by banks today,
Advantages of Ripple
Ripple is less expensive because 0.0001 XRP is enough to complete a transaction on the Ripple network.
Transactions are fast to be confirmed. Generally, compared to the time it takes banks to approve a wire transfer, it takes just four to five seconds to verify transactions on the RippleNet.
Large financial institutions can use it as a transaction platform.
The Ripple network uses XRP to process transactions and uses it for other cryptocurrencies, commodities, and fiat currencies.
All the XRP tokens are pre-mined and already exist.
Disadvantages of Ripple
It is highly centralized, just like banks.
Even though it is open-source, once the code is accessed, it can be hacked easily.
Since it's highly centralized, Ripple Labs owns 61 per cent of the coins.
Since Ripple is initially mined, it is not distributed like every other cryptocurrency.
Ripple has limited use in everyday life as it is intended only for use by large financial institutions.
How to buy and sell Ripple
XRP is available on cryptocurrency exchanges such as Tradefada. However, please note that you can't buy them with existing government-issued (fiat) currencies. Instead, you will have to purchase Bitcoin or Ethereum first, then transfer them to an exchange to trade them for XRP.
With that said, below is the steps you need to invest in XRP:
1. Create a Tradefada Account
2. Get your account verified
3. Buy Bitcoin or Ethereum first
4. Once you have your Bitcoin or Ethereum in your Tradefada account, Click on Ripple (XRP) and place a trade. Once you have performed your operation, you will be in your Tradefada account.
Having read through the article above, the question now is--should you buy Ripple? Well, just like every other currency, there is a high possibility of risk involved if you think you want to consider investing in Ripple. However, on the other hand, the low transaction fee does have the opportunity for a high return with a low or no barrier to access.
If you are the type that doesn't like the idea of a digital wallet or the steps involved, it's a good thing to inform you that there are no ETFs tracking Ripple yet.
You never can tell, Ripple could hit the roof as high as Bitcoin today, and you can thank yourself for it many years from now.
However, before you invest in any crypto, you should first research such crypto. And know whether such a coin will become a valuable asset in the future. The value of all cryptocurrencies is not predictable and can go down just as quickly as it goes up. So a good tip is never to invest more than you can afford to lose.
Would you like to invest in Ripple (XRP)? Sign up at www.Tradefada.com now and get started!