Ripple is a technology used as a cryptocurrency as well as a digital payment network for monetary operations. Ripple’s founders are Chris Larsen and Jed McCaleb. Ripple was initially made available in 2012 with 1 Billion Ripple coins pre-mined at launch. Today Ripple’s total supply is 100 Billion XRP.
Ripple’s currency exchange network and payments settlements system can process multiple transactions from all around the world. It acts as an agent between two parties involved in a transaction, with the network confirming the exchange has happened properly.
Ripple crypto can be used to facilitate transactions for many fiat currencies, commodities like gold, and even other cryptocurrencies like Bitcoin. Ripple’s crypto is abbreviated as [XRP] in crypto exchanges.
Why is it Called Ripple? How Does it Work?
Ripple’s open-source, decentralised network allows easier transfer of money in any form – yen, dollars, and even cryptocurrencies. It is a global payments network with many major financial banks and services as its customers who use XRP to facilitate transfers.
To properly understand how Ripple works, consider it a structure that requires the transfer of money between two parties. Ripple acts as the middleman in the transaction (something like a digital hawala service) that informally transfers money across borders without any physical money-making moves.
Ripple works on a system known as Gateway that acts as the link between the two parties that want to make the transaction. It acts as a form of intermediary that sends and receives currencies to many public addresses on the Ripple network.
Bitcoin Vs. Ripple
While Bitcoin is a digital currency intended as a means of payment for goods and services, Ripple is a payment settling, currency exchange, and remittance system intended for banks and payment networks. The idea is to provide a system for the direct transfer of assets like money, gold, etc., that settles in almost real-time. In addition, it is a cheaper, more transparent, and secure alternative to transfer systems used by banks.
Bitcoin is based on blockchain technology. Ripple doesn’t use blockchain but uses a distributed consensus ledger using a network of validating servers and crypto tokens called XRP.
Ripple’s future right now is dependent on the judgement of the court battle between Ripple and the SEC. Experts suggest that if the case goes XRP’s way, XRP price may shoot up to $20 before coming back to a realistic $3-$4. However, this isn’t confirmed and must be taken with a pinch of salt.
Is Ripple a Good Investment?
Ripple enhances the drawbacks that are generally connected to traditional banks. The transactions are settled in a matter of seconds on the Ripple network, making it considerably faster than banks that take days or even weeks to complete wire transfers. Also, Ripple charges a minimal fee, with the standard cost just 0.00001 XRP, which is substantially lower than the fees banks charge for cross-border payments.
Here is a brief Ripple price history. The price of one XRP coin in 2017 was just $0.006396. In early 2018, the XRP coin reached significant price peaks of approximately $3 (~Rs. 210) per coin, representing a considerable increase from its lows of less than $0.05 (~Rs. 3) in early 2017.
Today, it costs $1.12 (~Rs. 82). So, your $100 back in 2017 would be worth approx. $18,760 (~Rs. 13 Lakh) today. That’s still a great ROI! If you had sold it at its highest value ($3) in 2018, you would have made close to $47,000! (~Rs. 34 Lakh)
Ripple’s regulatory status became dubious in December 2020, according to reports. Ripple offered XRP to investors in the United States and the general public around the world as part of an unregistered stock sale that brought in more than $1.3 billion, according to a complaint filed with the Securities and Exchange Commission (SEC).
Because the cryptocurrency business is relatively new in comparison to traditional finance, the regulatory position of crypto assets has emerged as a topic of discussion over the course of the past few years. The Commodity Futures Trading Commission (CFTC) has stated that Bitcoin (BTC) and Ethereum (ETH) are commodities. However, the classification of other digital currencies has been more difficult to determine.
Advantages of Ripple as a Digital Payments
Ideally, Ripple would displace SWIFT as the preferred means of international money transfers and eventually become the industry standard. Because of SWIFT’s market dominance as the go-to partner for international payments, this is unlikely to happen anytime in the near future. Still, there are a number of advantages that could allow Ripple to chip away at its market share.
The following are the most significant advantages of using Ripple as a digital payments technology solution.
- Transaction costs are exceptionally low in comparison to other markets. Each transaction costs just 0.0001 XRP (one-hundredth of a percent). If you look at the current value of XRP, that is a fraction of a penny!
- Transactions are processed rapidly, with the average sale taking less than five seconds to complete on average.
- Banks can utilise XRP to enable the exchange of one currency for another. Instead of keeping several currencies, they may hold XRP and exchange it for different currencies at a lesser cost.
- Because XRP is Ripple’s cryptocurrency, purchasing XRP is a form of investment in the company.
How to Buy Ripple?
Ripple’s XRP is present across the crypto network and can be purchased the same way other cryptocurrencies are purchased. You could obtain your share of XRP coins with the help of crypto exchanges such as CoinSwitch Kuber. You can opt for the best rates using these exchanges to buy or sell it.
What is Ripple, and how does it work?
Ripple is a payments processing system and currency/money exchange network that can handle transactions all across the world. Ripple operates on a mechanism called a Gateway, which acts as a link between the two parties that wish to conduct a transaction on the network.
What is Ripple used for?
Ripple Labs’ native cryptocurrency, XRP, is used to develop its products. They are used for payment settlement, assets exchange and remittance systems that operate more like SWIFT, a system for international money and security transfers that is utilised by a group of banks and ﬁnancial institutions to transmit money and securities internationally.
How to buy Ripple?
The quickest and most convenient method is to purchase XRP using an exchange, such as CoinSwitch Kuber.
What is the Ripple future?
Ripple’s future is currently reliant on the legal battle between the company and the Securities and Exchange Commission. Experts predict that if the case goes in XRP’s favour, the price of the cryptocurrency may rise to $20 before settling back down to a more realistic $3-$4 range.
Want to buy XRP directly in India? Do it easily on CoinSwitch.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
Table of content
Subscribe to Our Newsletter with exclusive content.