What is Ripple (XRP)?

XRP is the third largest cryptocurrency by market capitalization after Bitcoin and Ether. This token was created in 2012 by Ripple, which is a platform specializing in virtual payments. Since then, XRP has become very popular among crypto users and has developed partnerships with some large companies, such as Santander Bank and the Moneygram remittance service.

Since 2004, Ripple has been offering its customers virtual transaction services as an alternative to traditional banking transactions since. However, it was only with the creation of its own token that the company became popular, offering services based on XRP.

This altcoin has been created with the intention of offering payment services, and this explains some of its core features. Despite some similarities with its older sister, Bitcoin, XRP brings in a considerable number of unique features for those who want to invest in this token. Let’s see what attracts investors to XRP below.

What is the difference between XRP and other cryptocurrencies?

XRP transactions take place within RippleNet, which is a network with huge processing capacity. The numbers are surprising: while the Bitcoin network is capable of performing between 3 to 4 transactions per second, RippleNet can perform up to 1500 transactions. This is reflected in the speed of individual transactions: if in the Bitcoin network a transaction can take a few hours, for XRP it takes an average of 5 seconds.

Within RippleNet, the XRP functions as a kind of “wild card”. Let’s say you want to send Chilean pesos (CLP) to your friend in Brazil through the Ripple network. Your pesos will be converted into XRP, exchanged in a few seconds and converted back to Brazilian reals (BRL) at the time of withdrawal. All this without going through traditional money transmission networks, such as SWIFT, which are expensive and slow.

Due to the speed and low costs of the process, RippleNet and XRP attracted the attention not only of the users of the crypto world, but also of large financial companies such as Santander and Moneygram. It is an extremely cheap and fast alternative to traditional ways of executing global transactions.

Another interesting point is that XRP is an open source cryptocurrency, which means that anyone can access the token’s code. This is useful for other developers who want to create their own cryptocurrency and use it within RippleNet.

XRP does not use a Blockchain

The differences between XRP and Bitcoin are big. To start with, XRP does not use a blockchain. When it comes to Bitcoin, it is the work of the miners, spread out all over the world, that guarantees the validity of the transactions made within their network. With Ripple, however, there is no mining!

So, how does it work? Through a consensus algorithm, known as RPCA (Ripple Protocol Consensus Algorithm). In simple terms, RippleNet extends across several nodes worldwide. It is possible to create, receive or transmit information about the network from each of the nodes.

There are many types of nodes. Some of them, known as validators, use the RPCA algorithm to verify the validity of transactions made by other network users. Among the validators, there are also those known as UNLs (Unique Node Lists), which are the validators considered to be exceptionally reliable.

Therefore, a transaction in RippleNet is only effective with the endorsement of UNLs and most validators. This guarantees the security of the system, since any alteration in a transaction will be rejected by the other nodes. Unlike bitcoin miners, however, validators are not remunerated with XRP for performing this service.

The validators are not related to the Ripple company. This ensures the company does not control the circulation of crypto within RippleNet.

Is the XRP decentralized?

No. However, it tends to decentralize. Let us explain.

As we said before, there is no mining of this cryptocurrency. When it entered the market in 2012, all XRP have already existed – that is 100 billion units. It explains the relatively low value of this cryptocurrency compared to Bitcoin: since there is a large supply of them available, the unit price tends to be lower.

However, Ripple has not put all 100 billion coins on the market at once – it does so in small batches. Currently, the company has about 60% of the existing XRP, which it releases into the market based on the variation in prices and its own commercial interests.

Due to this fact, today the XRP market is less centralized than in 2012. In addition, the increase of the number of validators also helps with decentralization. After all, the validation of transactions does not depend on Ripple itself, but on its nodes, which have total autonomy in relation to the company. However, most of this cryptocurrency still remains in the hands of the company.

Conclusion: What to expect from Ripple XRP in the coming years?

The purpose of this text is not to give investment advice, because the cryptocurrency market, being quite new, is also quite volatile. New competitors emerge and die every day, and their potential remains largely unexplored.

In any case, the trend of Ripple XRP seems to be consolidation. The token is being used by a growing number of companies and consumers. Recently, it set up a partnership with Banco Santander in Latin America, in addition to opening an office in São Paulo (Brazil). Its relationship with large companies guarantees the longevity and continuous improvement of its service. Everything indicates that this trend will only grow in the coming years.

The more companies there are that use the Ripple network, the greater is the value of XRP, as this leads to a trend of appreciation. With an efficient and low-cost system, it seems that Ripple XRP is here to stay.

If you want to exchange your cryptocurrencies to XRP or vice versa, you can count on Cripto InterCambio. We offer more than 100 types of tokens, available to be exchanged within minutes, with no need for registration and without transaction fees!

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