Let’s first understand what Ripple is, also known by its XRP cryptocurrency, it was developed to generate payment protocols within the banking system. Its creators created a system that allows the integration of this new platform with the networks of financial institutions.
How and who created Ripple?
Ripple was created in the city of California, United States, in 2012 by Chris Larsen and Jed McCaleb. By then, their coins were called ripple credits, and in 2018 the cryptocurrency was renamed XRP. This happened by community vote to make a differentiation with respect to the company that created it.
How is Ripple’s infrastructure?
To answer this question, it is necessary to differentiate between the Ripples infrastructure and the cryptocurrency called XRP. In this sense, we can highlight that the first one is not decentralized, this means that it is under the control of an entity, in this case, the company Ripple Labs Inc, whose developers focused on the creation of an online payment model. .
With the evolution of the company and the market, they placed their efforts in maximizing the efficiency of interbank payments. Traditionally, these companies used old payment protocols, such as Western Union and Banks. This is how they managed to develop a block chain system, which made this type of transaction much more robust.
Despite being open source software, not much is known about its inner workings.
Who gives Ripple solutions?
Ripple was born to support financial institutions. The system is basically managing payments within a network with participants with a high level of trust. In this way, the interference of those institutions that exercise the monetary policy of a Region/Country, such as a Central Bank, is reduced.
When considering this new scenario, all the members of the system would have the possibility of participating in decision-making to a greater or lesser extent. With this, a much more democratic and supportive platform is generated that can give effective responses.. Promotes the emergence of alternative payment structures.
When a person sends money, the Swift system is generally used. This method is slow and has high operating costs. On the other hand, Ripple’s infrastructure is cheaper, faster, more reliable and more secure.
By now you may be wondering how, being centralized, this infrastructure is secure. This company has accounting files, or nodes, distributed among several participants who are in charge of continuously validating it.
So far they have 36 nodes where operations are recorded at more than 150 validation points. Six of these nodes are controlled by the company and the rest by banks and private companies. In this way, a sustainable system is generated that allows less expensive payments to be made and in less time.
Ripple’s XRPs
XRP works as a system that stores the user’s accounting information and also provides services for currency exchange. In this sense, Ripple shows us XRP as an open source platform that supports financial transactions in real time, safely and verified by the members of the system thanks to consensus.
Unlike Bitcoin, the Ripple company is the one that manages the offer in the market. In this sense, the amount of XRP is managed according to their policy, and there is no need to mine new coins. This feature sets it apart from other cryptocurrencies because it is Ripple who decides whether or not to bring more coins to the market.
Additionally, there are other differences, such as the fact that there will always be a cost of about 20 XRP that will remain in the user’s wallet, as a minimum balance, and that can never be recovered. In this way, if a user wishes to make a shipment for less than 20 XRP, the operation will not be accepted. That’s because Ripple wants to prevent the file from growing exponentially, preventing malicious transactions on the network.
The XRP is managed by a network of nodes that allow its continuous and independent validation. For this reason, the user can configure and select which node to trust to perform the validator process. Despite this, the Ripple company promotes the use of a list called “List of Unique Nodes” or UNL that it considers fully trustworthy. This validation process occurs when the nodes exchange transaction data agreeing on the state of the ledger.
Conclusion, is it a good investment?
By way of conclusion after all the above, Ripple – XRP does not have good prospects as an Investment.
It has quickly become a major player in cryptocurrencies. XRP’s focus is aimed at generating global payment solutions between various financial institutions. Its features pose many challenges, for example, problems with transparency. It is not yet obvious how they can be overcome.