What is Ripple? You have probably seen the name, and its accompanying token XRP, on various cryptocurrency websites and exchanges. But is it an actual cryptocurrency? Conventional wisdom says yes, but now some experts have claimed that it is not that at all.
The head of Elpis Investments speaks out
One of these experts is Anatoly Castella, who is the CEO of a company called Elpis Investments. In an interview with Express, Castella claimed that the XRP token is not a digital currency, nor does it qualify as a real cryptocurrency. Why is that? Castella says that there is a certain definition of what constitutes a cryptocurrency, and Ripple does not fall under that definition. Rather, Castella explains, the Ripple platform more falls under the category of fintech combined with fiat money and cryptocurrency. In other words, Ripple is a separate company, as opposed to a pure cryptocurrency like Bitcoin. Why is this important? Castella says that when government regulations are put in place, it would be wise to separate the pure cryptocurrency tokens from the fintech platforms like Ripple. Failing to make that distinction would lead to misregulation.
What is Ripple exactly?
Ripple was launched in 2012 as a combination of a real-time gross settlement system, a cryptocurrency exchange, and a remittance network. What does that mean? According to Ripple’s website, the platform is meant to be the ultimate exchange platform. Ripple is not limited to cryptocurrency and fiat money. Rather, it is a place where users can exchange any form of currency imaginable. Gold? Airline miles? No problem. You can exchange these for each other on Ripple’s platform. In addition to this flexibility, Ripple prides itself on the reduced transaction times and costs associated with money transfers. In this sense, it is not unlike any other blockchain platform or cryptocurrency exchange.
How does it work?
One of the main differences between Ripple and other cryptocurrencies like Bitcoin, is that Ripple does not rely on proof-of-work. Rather, Ripple is built around a ledger that is upheld by a wide network of computers and servers that validate each transaction. These validating servers together form a consensus, which is referred to when assessing the validity of a transaction. Should there be a 90% consensus, one can safely discard the remaining 10%. This is supposed to make each transaction more secure.
Who uses Ripple?
The Ripple platform is originally designed to work as a platform to be used between businesses. However, private persons are able to use it as well. However, another group of users is set to join the Ripple family. The platform has partnered up with over a hundred different banks worldwide. And these are not just any banks. The list includes big names such as Santander and American Express.
What is the main difference?
The reason why Ripple is such an attractive platform is the sheer transaction volume. Bitcoin transactions can be made at three per second. Ripple can handle 1,500 transactions per second. Another big difference is that Ripple is centralized. This may sound weird, given that the whole premise of the blockchain is to keep everything decentralized. Whereas Bitcoin and Ethereum are not controlled by any one organization, but rather a global community of miners, Ripple is controlled by Ripple Labs and their associated partners in the financial sector.