Ripple: Decentralized Blockchain Technology

Ripple, compared to Bitcoin, was not created primarily as a digital currency but as a payment system that facilitates the transfer of any currency, including cryptocurrencies and fiat currencies, instantly and without chargebacks.

Ripple Explained:

Known as a decentralized, peer-to-peer network, Ripple (XRP) works as a cryptocurrency. It is a blockchain technology, but it offers a distinct value proposition to the market. The digital currency was introduced in 2012 by Ripple Labs and is traded under the ticker symbol XRP.

Ripple, compared to Bitcoin, was not created primarily as a digital currency but as a payment system that facilitates the transfer of any currency, including cryptocurrencies and fiat currencies, instantly and without chargebacks. The digital currency XRP is a part of the Ripple payment system and can be used to link currency exchanges.

Ripple's ability to settle transactions in real time with low transaction costs and excellent scalability is one of its most appealing features. This makes it a viable alternative to the slow and pricey cross-border payment methods that banks and financial organizations have been using up until now.

There has been some controversy and legal challenges leveled against Ripple over the years, most notably about its relationship with XRP and its possible classification as a security. Despite this, Ripple remains one of the market's most popular cryptocurrencies due to its dedicated user base.

How Does Ripple Work?

Ripple uses the RippleNet, a distributed, peer-to-peer network. The servers that make up the network are located all over the world, and they all have their own independent copy of the Ripple ledger. All network transactions are recorded and added to the ledger instantly as they are validated.

Here's a high-level explanation of how Ripple works:

Consensus: The Ripple network employs a consensus protocol to guarantee the integrity of all transactions. According to this protocol, a transaction cannot be added to the distributed ledger until a majority of servers in the network verify its legitimacy.

In the Ripple system, validators are used. Validators are servers that help reach a consensus. They ensure that all transactions are legitimate and safe for the network.


Gateways are third-party organizations that facilitate transactions between the Ripple network and legacy financial institutions. You can use them to make cross-network money transfers and currency exchanges.


XRP is the cryptocurrency used only on the Ripple network. It can serve as a temporary medium of exchange for international transactions. Besides being a store of value, XRP can be used as a payment method.

The Interledger Protocol (ILP) is a communication standard for distributed ledgers and payment networks. Ripple utilizes ILP to facilitate the transfer of funds across many networks and currencies.

Ripple's payment system has been adopted by numerous banks and processors. The reason is because it facilitates instant, cheap international transfers.

Ripple’s Digital Coin

Ripple's XRP digital currency serves as a "bridge currency" between different money types. It facilitates the instantaneous conversion of any two currencies, whether conventional or cryptocurrency. There are multiple gateways in the ecosystem, one for each of the different currencies. For example, Manuel does not need to have any bitcoins in his possession for Mary to accept them as payment for his services. Mary will receive bitcoins from his gateway, which he can fund with United States dollars or any other currency. Multiple gateways can be utilized to initiate a transaction, creating a trust wave across the network of users.

Gateway users are vulnerable to the risk of the counterparty, which is present in the conventional banking system as well. User funds held at a gateway risk being lost if the gateway fails to live up to its obligations. Users who don't trust a gateway can nevertheless use it to complete transactions because another gateway will handle communications with the "untrusted" gateway on their behalf. This ensures that the contract is processed through a reliable channel, one that has been verified as being free of credit risk.

What is unique about Ripple?

Some of the problems plaguing conventional banking are mitigated by Ripple. Even though the Ripple network often processes millions of transactions, settlement occurs in a matter of seconds. In contrast, a wire transfer at a bank could take many days, if not weeks, to complete. When compared to the hefty fees paid to financial institutions for making international payments, Ripple's transaction expenses are extremely low, with the lowest possible transaction cost necessary for a normal transaction set at 0.00001 XRP.

In late mid to late 2022, one XRP was worth about $33.75 cents, and Ripple's market capitalization was around $16.6 billion, making it the ninth-largest asset.

Ripple Vs. Other Cryptocurrency (Bitcoin)

Although both Ripple and Bitcoin are digital currencies, they operate in distinct ways and serve distinct purposes. As the first and most widely used cryptocurrency, Bitcoin runs on a decentralized system that is independent of any single administrator or regulatory body. Ripple, on the other hand, is a digital payment protocol developed to ensure the swift and safe transfer of funds across many different banks.

Also Read: Bitcoin FintechZoom: Everything there is to know about Bitcoin Fintechzoom and how to get in it.

Ripple's strategy for attaining consensus is one of the fundamental ways in which it differs from Bitcoin. To validate payments and add new blocks to the blockchain technology, Bitcoin users undertake sophisticated computations using the protocol's proof-of-work consensus process. In contrast, Ripple relies on a network of trustworthy validators to confirm transactions via a consensus process known as the Ripple Protocol Consensus Process (RPCA).

The pace and price of financial dealings also vary. Confirmation of exchange for Bitcoin might take many hours and can be costly due to the cryptocurrency's high transaction fees. However, Ripple transactions are frequently processed in seconds and are significantly cheaper, making them an attractive option for financial institutions looking to transfer large sums of money quickly.

Besides the explanation above, whether Ripple, Bitcoin, or another cryptocurrency better suits your demands and use scenario is essentially a matter of personal preference. Do your own due diligence and weigh the potential rewards and losses before putting money into any digital currency.

Joseph Okechukwu

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