What is Ripple?
Ripple is a digital payment network, and XRP is its native cryptocurrency. Ripple was designed with an idea of a distributed ledger network that requires different parties to participate in validating the transactions.
The ripple payment protocol is an open-source, real-time payment system that can be used to transfer both Ripple (XRP) and fiat currencies. Ripple is also the name of the company that maintains the ripple protocol.
Ripple’s system is described as a ‘real-time gross settlement system,’ which allows for currency exchange and remittance. It is based on the shared public database that uses a consensus process.
The Ripple consensus ledger uses distributed ledger technology to support the transfer of tokens representing fiat currency or cryptocurrency. The protocol is open, which means anyone can access it without the need of getting approval from Ripple. This allows the banks and non-banking institutions to incorporate the protocol into their own system.
How is Ripple different from XRP?
Ripple is a private enterprise software company that founded and created the Ripple protocol, which is an open-source protocol that includes Ripple Consensus ledger and RippleNet, payment solution products that are marketed to the banks and exchanges.
XRP is a native token for the Ripple Consensus Ledger, which is used for facilitating the transfer of money between different available currencies across the Ripple network. There are 100 billion XRP units that are created, which will not increase or decrease according to its protocol. XRP was created before the Ripple labs were founded. The creators of XRP gifted 80% of the XRPs to the company while keeping 20 billion units for themselves.
XRP is a native cryptocurrency of Ripple, which acts as a bridge currency to other currencies. It doesn’t discriminate between fiat or cryptocurrency, which makes it easy for any currency to be exchanged with another. Each currency has its own gateway, and multiple gateways can be used, forming a chain of trust across the users, and holding balances with a gateway results in counterparty risk, which is also seen in the traditional banking system. If the gateway doesn’t honor the liability, the user can lose the value of his money held in the gateway.
Technology Behind Ripple
Ripple offers a payment solution using Blockchain technology. It aims to solve the issues that impact digital payment systems. Ripple facilitates cross-border payments without the delays and extra costs associated with other currency transfers. Ripple is a technology that is backed by some of the leading names in the banking sector, like American Express, Standard Chartered, and Santander, who wish to use Ripple for their cross-border payments.
Ripple allows peer to peer transactions, and it doesn’t act as a transactional protocol for crypto-to-crypto, rather crypto-to-fiat. The technology of Ripple allows cryptographically signed issuances, which allow users to trade with one another in seconds. XRP transaction processes take 4 seconds, and Ripple can handle more than 1500 transactions simultaneously. Ripple protocol consensus algorithm is applied in a few seconds by the nodes so that the correctness and the agreement of the network are maintained. Once the consensus is reached, the ledger is considered closed. The last closed ledger maintained by all the nodes in the network will be identical.