5 Things to know about XRP and Ripple
Almost instantly after entrepreneurs and techonology buffs discovered the genious behind blockchain technology, they started trying to recreate and improve upon it. Hundreds of new cryptocurrencies are now on the market, but out of the crowd only a few stand out. XRP and the network it is exchanged upon, Ripple, are among those few. XRP is poised to change the world of digital exchanges.
Here are five things you need to know about XRP and Ripple:
- XRP and Ripple are two different things
People often confuse Ripple and XRP as being one in the same. In fact, they are two different things. Ripple is an open payment network which connects banks, payment providers, digital asset exchanges and corporations via RippleNet. The network uses blockchain technology, like Bitcoin and other altcoins, but it has modified and improved blockchain to make it scalable and capable of facilitating massive transfers of assets across borders, all over the world.
XRP is a digital currency created by Ripple and transferred on the Ripple Network. It’s a cryptocurrency with a clear purpose – it is designed for financial institutions and payment providers. In short, it’s built for large scale use rather than the peer-to-peer single transfers made on a slow-moving, Bitcoin blockchain.
- XRP isn’t trying to replace fiat currency
The aim of Bitcoin and most altcoins is to provide an alternative and eventually overtake traditional fiat currency. In contrast, XRP works with fiat currencies on more than 10 digital exchanges to transfer value across borders. The goal is to provide a faster transfer of funds with real-time traceability and lower operational and liquidity costs.
Today, it takes about 3-5 days to send money from one country to another through a bank, which usually involves high fees the risk of the payment being delayed. XRP can accomplish the same task in an average time of 4 seconds.
- XRP isn’t mined like Bitcoin
Bitcoins are created through a process called “mining,” in which massive hubs of computers work to solve complex math problems and are rewarded with a Bitcoin for every solution provided. XRP is not a mined digital asset. Every unit of currency that exists has already been created by Ripple. Most of XRP is owned by Ripple itself with the rest held by companies and individuals.
- XRP operates at a much greater scale and speed than Bitcoin
Bitcoin blockchain technology can only process 7 transactions/second. A single transaction may require a processing time of 10 minutes (even up to two hours). A traditional payment service, like a credit card, averages 2,000 transactions per second. Bitcoin’s scalability has long been a subject of debate and is what lead to the hardfork on August 1, 2017, which created Bitcoin Cash. The slow transaction time is one of the largest hurdles preventing Bitcoin from replacing traditional fiat currency.
The XRP blockchain ledger can process more than 1,000 transactions per second. It can scale to the same throughput as Visa and process in real-time.
- XRP is the future of global asset exchanges
The speed, scalability, security and low costs of the Ripple Network and XRP all but guarantee that banks and financial institutions will eventually make the switch. It is the goal or Ripple to someday be the platform for day-to-day operations for these institutions. Ripple is solving the issues involved with cross-border payments and changing the way we make exchanges of assets. Its solution involves creating a common standard for payments and using XRP as the digital asset that will bring together currently disconnected ledgers and blockchains. Check out the current XRP prices.