Currency name(s): XRP (XRP), or Ripple token
Genesis Block: February 2013
Total Supply: around 99 billion XRP are in total supply today; 100 billion XRP is the maximum supply allowed, and about 42.5 billion XRP are in circulating supply at the moment
Algorithm: RPCA – the Ripple Protocol Consensus Algorithm
Features: open-source, fast transactions across borders, low commission, decentralized
The Ripple network is a unique system that is used to make digital payments fast, easy and secure, regardless of the amount an individual or entity wants to transfer. The company behind Ripple has set a goal to create a global financial network in order to rework how cross-border transactions are made. In order to ease the fees that legacy institutions are currently taking from users (companies as Western Union, TransferWise, PayPal, etc.), Ripple created a ledger in order to keep the fees to a bare minimum, and to accelerate the transaction processing. Granted, there are some fees, but they only amount to a small percentage of the XRP token (about ~$0.00001) and were put in place so that the network is secured from various DDoS as well as spamming attacks.
When discussing the Ripple network, it is important to note that the network uses the blockchain technology, but does not have a blockchain of its own. In order to validate transactions, the team behind Ripple created its own validation and verification technology, and that is their Ripple Protocol Consensus Algorithm – or RPCA. This consensus algorithm functions differently from Bitcoin’s proof-of-work in that in Ripple’s network there are no new blocks that need to be verified and added to the chain (as is the case with Bitcoin), but the majority of nodes that are in the consensus need to agree on an action if it is to be executed.
It's important that we note how the RPCA works in order to get a better understanding of the Ripple network. There are two types of nodes in the Ripple ledger – validators and trackers. While the trackers track the transaction and distribute it, the validators ensure that all criteria are met for transaction validation. Ultimately, one transaction can be completed immediately, under the condition that 80% or more validating nodes give it a green light to proceed.
In our analysis of Ripple and its ecosystem, we have found that the technology behind the Ripple network is actually fairly straightforward. However, as it is divided into levels, it is important to describe these specific levels and identify which level serves which purpose when the network is used.
The three distinctive levels in the network are xCurrent, xRapid, xVia. xCurrent enterprise software is the main testing grounds for banks and financial services. This part of the network is used to settle payments between banks or other financial entities. It is mostly used to send messages and deliver payment and transaction confirmations.
xVia is a software product that has been implemented in the Ripple network. It is used to act as an interface module that connects markets within the financial and global payments world.
And finally, xRapid, which is the level of the network that serves to provide liquidity within the Ripple network’s payment system in the form of the XRP token. Only this part of the network actually uses the tokens that can be traded within the markets. XRP here is used as a form of a ‘medium’ between currencies – one entity can transfer USD by automatically changing it to XRP, and the other entity can receive their payment in GBP in the equivalent value of XRP. It functions as an exchange office while it also transfers the funds and keeps its fees as low as they can be.
When considering getting involved in the Ripple markets it is important to know the backstory of this network before moving on to the details of trading. It is not a fully-fledged blockchain network, but it does operate as one. It is also somewhat centralized as a private company is behind its development, not the community of developers. The Ripple network was designed to offer a solution to banks, financial services, and large enterprises to complete large transactions and money transfers, from one entity to another. It was not created with an individual in mind, but for corporations to use it on a daily basis. That is why the likes of Santander, Credit Agricole, MoneyGram, as well as American Express are testing the network to see if they will be implementing some of Ripple’s solutions in the near future.
The only somewhat direct competitor to the Ripple network is the Stellar network (which we covered in this article), but the focus of these two networks is very different: while the Ripple network focuses on bringing software solutions to enterprises, the Stellar network focuses on bringing banking services to the unbanked.
In our analysis of the Ripple markets, it became clear that this particular token is subject to wild swings in both directions regardless of the prevailing fundamentals or the broader crypto markets in general, making it prime for speculative activity but not great for longer-term investing. This is true of both the BTC and USD pairs. The highest price per token recorded for XRP was $3.84 in January 2018, right before the market correction. The lowest price per token ever recorded was almost a year after launch, in July 2014, when the price was sitting at around $0.002.
Many major cryptocurrency exchanges provide access to XRP trading pairs, and those interested can buy or sell XRP for a myriad of other crypto or fiat currencies. Binance, Coinbase, BitMex, Bitfinex, Kraken, and many others offer trading pairs for XRP, so it should be fairly easy to gain access to this asset for trading purposes.
Below is a sample of some of the past work that BBA has done on the XRP/BTC market in order to illustrate the kind of value that we provide to full members:
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