Over the years, blockchain has garnered a huge hype, especially due to the culmination of its benefits in the world of cryptocurrency. With thousands of cryptocurrencies available in the market, every cryptocurrency is defined by distinct characteristics.
In this article, we will be looking at Ripple, which is today one of the leading cryptocurrencies.
What Is Ripple?
The understanding of Ripple as a cryptocurrency should start from its development. It was co-founded by Chris Larsen and Jed McCaleb in 2012. Ripple is a system that is dubbed as a cryptocurrency and digital payment network.
The operation of Ripple is chiefly to exchange payment settlement assets and serve as a remittance system being used by financial institutions to transact in several currencies.
The token for Ripple is XRP, and it’s used to perform every crypto-related. The primary objective of XRP is to act as the intermediary of trade between two currencies or blockchain networks.
However, Ripple is a peer-to-peer decentralized worldwide payment network with a large customer base that ensures smooth financial transactions in fiat currency and cryptocurrency.
How Ripple Works
1. Unlike the proof-of-work algorithm used by Bitcoin and the proof-of-stake method of Ethereum 2.0, transactions on Ripple are confirmed by a consensus mechanism called XRP Ledger Consensus Protocol. The consensus is geared at strengthening the integrity of the system with the elimination of double-spending.
2. Trade made by the first consensus is determined by every distributed node. Approvals are fast as it takes five seconds to complete.
3. The IOUs of a particular currency can be easily tracked for every user. The IOU credits and transactions between Ripple wallets are enabled by the Ripple consensus lender that makes the transactions visible to the public.
4. Due to the recording of financial transactions in a public ledger, the data on the public ledger is vulnerable to de-anonymization procedures.
Advantages Of Ripple
1. Ripple is considerably fast and easy to use for speedy cross-border payments without any restriction.
2. Due to the large engagements characterized by RippleNet with a unique financial solution, the more Ripple attracts large firms, the bigger its influence would be in the future.
Disadvantages Of Ripple
1. With many potential competitors in the crypto space, the Ripple system requires a constant upgrade to enable its growth.
2. The major competitor of Ripple to the actualization of its goals is Society for Worldwide Interbank Financial Telecommunications (SWIFT). Therefore, much time, research, and effort are required to perfectly fit in against such a well-established brand.
The growth of Ripple has been significant in recent times, and the token tends to have big prospects even as many companies are adopting its use. It could be recalled that the value of the XRP token had a remarkable increase in the year 2020 than other cryptocurrencies, including Bitcoin.