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What Is Ripple: Simply Explained

Ripple is one of the few cryptocurrencies that goes beyond the generally accepted digital form of money. Founded by San Francisco-based Ripple Labs Inc. in 2012, Ripple is more than a cryptocurrency – it also served as an international financial transaction system, similar to the SWIFT system.

So, What Is Ripple?

The first thing you need to know is that Ripple is both a platform and a currency. The platform is an open-source protocol that is designed to allow fast and cheap international transactions around the world. The protocol has its own cryptocurrency with the XRP tag but also allows each company to integrate it to create its own payment system through RippleNet.

RippleNet is a decentralized global network of banks and payment providers using Ripple’s distributed financial technology, which provides real-time messaging, clearing, and settlement of financial transactions. At least 300 financial institutions from more than 45 countries use the platform, including companies like MoneyGram, Bank of America, and Banco Santander.

RippleNet has three main products:

xRapid – a solution for financial institutions and payment providers who want to reduce their liquidity costs and improve the consumer experience.

xCurrent – a banking solution that integrates XRP into global payment processing.

xVia – a solution that allows companies to send XRP payments over the ripple network.

Ripple (XRP), like most cryptocurrencies, relies on a shared database that stores information about all Ripple accounts and the transactions between them. A network of validators accepts and processes each transaction, comparing its records with those of other links in the chain so that transactions can be validated.

Unlike Bitcoin, every transaction is validated through a special consensus mechanism. Ripple’s blockchain uses a unique distributed consensus mechanism to validate transactions, instead of using computer resources to solve complex mathematical cases, as is the case with Bitcoin. That is why the speed of transactions at Ripple surpasses the leaders in the world of cryptocurrencies and is the preferred method of settlement in a number of banking institutions and payment services.

The digital currency, XRP, acts as a bridge currency to other currencies. Its main purpose is to be an intermediary for different currencies – whether crypto or traditional. This is achieved through currency pairs in which XRP participates, such as XRP / EUR (Ripple / Euro), XRP / USD (Ripple / US Dollar), and XRP / BTC (Ripple / Bitcoin).

The platform allows payments to be made in any currency, with a minimum internal transaction fee of $ 0.00001. After a transaction, the amount of $ 0.00001 ‘disappears’ from the platform and cannot be replenished.

Another huge advantage of Ripple over other payment systems is that the system can make transactions of millions of dollars in a matter of seconds – an operation that would take traditional banks several days.

One of the main functions of Ripple is a currency exchange with a low commission. There are many currencies that cannot be converted directly into each other, so banks must use the US dollar as an intermediary. Such intermediation creates a double commission: converting currency “A” into USD and USD into currency “B”. Ripple is also an intermediary, but much cheaper than the USD, as the price per transaction will always be $ 0.00001.

Ripple is also used for fast international transactions, with an average time of 4 seconds. Compare it to an hour or more for bitcoin and a few days for ordinary banking systems.

Ripple also makes it possible to create payment ecosystems. The user can issue their own currency to ensure fast and cheap transactions.


*Ripple transactions do not depend on many participants to secure and maintain the network and database, as is the case with Bitcoin. As a result, transactions are much faster.

*Ripple has the option to be exchanged for any currency with a single minimum commission of $ 0.00001.


*Ripple is attempting to establish itself as a competitor to SWIFT, the industry leader, in a competitive financial technology field. In the conventional world, changing the status quo can be difficult and time-consuming

*Because the crypto business is so young in comparison to traditional finance, regulation has been hazy. Ripple would need a clearer judgment from regulatory authorities on what sort of asset categorization XRP fits under before it could replace existing systems with XRP in any role.

In Conclusion

The first cryptocurrency was Bitcoin, and Ethereum, in general, is the foundation for smart contract technology. Ripple’s network can be viewed as a currency exchange system that offers banks and other financial institutions global payment solutions.

RippleNet can be applied to the existing banking infrastructure as a way to complement and improve the traditional payment system. xCurrent allows cost-effective real-time payments to financial institutions. xRapid uses XRP as a way to conduct global currency transactions, providing pools of liquidity when needed. xVia facilitates the integration and communication of all RippleNet participants.

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What Is Ripple

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What Is Ripple

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