Built on a distributed open-source protocol, Ripple is a blockchain database and a digital asset or cryptocurrency (XRP). However, unlike the previous cryptographic distributed ledger system and currencies that focused on bypassing the traditional banking system, Ripple has been introduced to improve inter and intra-banking transaction speed and security and facilitate the peer-to-peer transfer of fiat or cryptocurrencies and currency exchange.
Commercial Use of Ripple
Its global payments network, RippleNet, has 300 financial institutions across 40 countries and six continents. Ripple works with regulators, governments and central banks—not against them—to improve the way the world moves money.
XRP was created in 2012. The distributed ledger behind XRP is referred as XRP Ledger, which is an open-source, permission-less and decentralized blockchain technology. What’s the role of the ledger? It’s a comprehensive accounting system for tracking and trading obligations denominated in any way users want, and an exchange built into the protocol. The settlement of long cross-currency payment paths and exchanges of multiple currencies happens in atomic transactions, which enhances security and reliability.
Ripple offers an open-source developer platform “RippleX” for developers and entrepreneurs to build real-world payment solutions on the XRP Ledger. The developer platform makes application development and integration easier and faster. Developers can easily rope in the capability of the tools, services and programs built on the XRP Ledger to build payment applications that enable users to send and receive payments across any currency, network and geography.
The below table compares Bitcoin and XRP.
Ripple Payment Transfer Instruments
Connecting your computer to the peer-to-peer network that manages the ledger, you can receive, hold, and send XRP to anyone else. The XRP Ledger bridges the world’s many currencies. Like the Internet of Things (IoT), where data moves, the XRP Ledger is the Internet of Value that makes money to move from one point to another based on some protocols. Take a look at the payment transfer instruments facilitated by Ripple.
Direct XRP Payments
Direct XRP payments are the simplest way to send value in the XRP Ledger.
Sending cross-border payment has been made easier with Ripple’s cross-currency payment system. The currency conversion takes place in the paths and order books, and the payment is made to the recipient in the desired currency.
Similar to the conventional checks that issuers can cancel or allow to realize, Ripple provides a facility to defer payment or get credited to the recipient’s account.
Escrows safeguards the interest of both parties involved in a commercial contract. The value is set aside and delivered to the recipient only when certain conditions are met. Escrows can depend on time limits, cryptographic conditions, or both.
Partial payments subtract fees from the amount sent, delivering a flexible amount. Partial payments are useful for returning unwanted payments without incurring additional costs.
Payment Channels enable fast, asynchronous XRP payments that can be divided into very small increments and settled later.
How Does the XRP Ledger Work?
Below is the architecture of an XRP Ledger.
Let’s take a look at the four core components of the ledger.
Peer-To-Peer Network: It serves as the foundation of this ledger ecosystem. This network of always-on servers shares transactions, engages in the consensus process and processes transactions. All other components of the ledger ecosystem rests on this peer-to-peer network, directly or indirectly.
Programming Libraries: These are part of higher-level software. They are imported directly into program code, and house protocols to access the XRP Ledger.
Middleware: It provides indirect access to XRP Ledger data. Applications in this layer often have their own data storage and processing.
Apps and Services: They are user-facing applications that provide access to the XRP Ledger, or sometimes provide a basis for even higher-level apps and services.
Growing Wealth with Ripple XRP
You can build a healthy financial portfolio by trading in XRP under the spot or futures market. All major crypto exchanges, including PCEX Member, Binance, Coinbase Pro, Kraken, and Bitfinex have markets pairing XRP with INR, USD, and other fiat currencies. Select the right crypto trading exchanges by evaluating their performance by liquidity scores, volume, web traffic factor, and confidence scores to trade. You should also look at the transaction fee, along with deposit and withdrawal fees.