What is Ripple and how does it work?

Ripple is an open source blockchain-like platform that enables fast transactions at a low cost. Unlike bitcoin, but like other cryptocurrencies, it was not created to serve as a means of payment. Rather, his idea is to provide a platform where projects can be developed or used simply to send information or documents using technology similar to blockchain. Although, like all platforms, Ripple has an associated cryptocurrency, called XRP.

The RippleNet network is a network that allows institutional payments to be made to banks and companies by developing financial solutions applying the benefits of blockchain technology, much faster and cheaper than the usual mechanism to make these payments, which is none other than following the channel of an international transfer with the cost and time that this entails. On top of that, it also allows the exchange of valuable items and the connection. For example, a person who has tickets to a concert can exchange them through the Ripple platform with another person who has another object that they want to sell in exchange for those tickets. However, perhaps the most interesting thing about this platform is that through it you can make payments for any virtual currency, such as bitcoin.

What is your token and how does it work?

ripple logo

Its token, which as we have already said is called XRP, is intended to be used as a mediator in sending money. That is, it would be like a kind of joker in the deck that can be exchanged for any other currency. To exchange dollars for euros using XRP, for example. It also highlights that it is not a blockchain network as such, but uses the Ripple Protocol Consensus Algorithm (RPCA).

For all this, we have to know that the main uses that can be given to this alternative platform is to exchange currencies with low commission, which can be fiat money or cryptocurrencies. XRP acts as a mediator so that bitcoins can be exchanged for euros with hardly any commissions. It is also used to make international transfers much faster, which arrive in a time of about four seconds and with hardly any commission. Something very important to note, since international money transfers can take more than 5 days and have commissions of more than 5%. Ripple gives an alternative to end that. Finally, it also allows a user or a company to issue their own currency.

The main objective of Ripple is to be used by banking entities. In other words, it wants to serve as instruments for banks so that they can join the blockchain-like system faster and with hardly any commissions. In fact, it has come to have the support of relevant international entities. However, Ripple’s main handicap is that it is not a blockchain network, even if it looks like it. And its benefits are not what this technology offers.

If you talk about Ripple, you have to talk about its conflict with the United States Securities and Exchange Commission (SEC). The SEC accuses the platform of selling unlicensed securities using its XRP token. However, from Ripple they maintain that it cannot be considered a value. Although this court case has many edges, and still does not have a resolution, the weight of doubt from the SEC about the platform is what has weighed the most on Ripple in recent years, which has gone from being one of the main cryptocurrencies to play a secondary role giving the baton to other platforms.