Bitcoin is the largest digital currency in the world, with a limit of 21 million units, and it is well-known among the general public. However, Ripple, which is the third largest digital currency in the world, is not as widely recognized. This leads to the question: what is Ripple? To obtain a comprehensive overview of XRP, 247btc.net has published an informative article for readers.
What is Ripple ( XRP coin )?
Ripple is a company that operates within the real-time payment system, network of currency exchange and transfer. Its aim is to enable individuals to utilize the services of financial institutions, banks, PayPal, and other similar organizations at an extremely low cost but with faster processing speeds.
Established in 2012, Ripple is classified as one of the pioneering companies in the blockchain industry.
What is the history behind the establishment of Ripple?
In the year 2001, Ryan Fugger was credited as the first individual to conceive the idea of crafting Ripple as a decentralized form of digital currency system, also known as RipplePay.
In 2005, this system was launched with the objective of offering secure payment solutions within a global network.
In the year 2012, Fugger collaborated with Jed McCaleb and Chris Larsen to establish OpenCoin, a technology company headquartered in the United States. Ripple was sponsored by major investment funds, including Andressen Horowitz and Google Ventures.
Following that, Ripple started its development as a protocol focused on providing payment solutions for banks and financial institutions. In 2013, OpenCoin was renamed as Ripple Labs and in 2015, the company officially adopted the name Ripple.
In September 2016, Ripple Labs received a $55 million investment from Japan’s largest securities brokerage firm, SBI Holdings, which resulted in SBI Holdings acquiring approximately 10.5% of Ripple Labs’ ownership shares.
In the year 2017, Ripple made significant progress in its growth by engaging with multiple banks that leveraged their flagship product, RippleNet. It is worth mentioning that Ripple also organized its inaugural annual event, SwellbyRipple, in the same year. This event has been a recurrent success, and as of 2019, it has been conducted for the third time.
The Ripple platform boasts a distinct digital currency known as XRP coin
The trend of cross-border payments is showing significant growth. However, the current payment infrastructure faces challenges, such as high transaction fees, slow fund transfer time, and difficulty in surveillance.
Therefore, Ripple created the RippleNet payment network to address those issues.
RippleNet constitutes a network that brings together banks and financial institutions leveraging Ripple’s solutions that include xCurrent, xRapid, and xVia.
xCurrent is a prompt payment solution that enables RippleNet network members to track cross-border transactions. It is built on the Interledger (ITL)* protocol developed by Ripple, not the XRP Ledger, meaning that clients using this Ripple solution will not require XRP tokens.
*Interledger is an open protocol that enables payment transmission across various types of ledgers, including but not limited to Blockchain.
The provision of On-Demand Liquidity (ODL) as a solution to facilitate liquidity on demand for banks is achieved through the use of XRP as an intermediate currency between multiple types of fiat currency.
As the only solution utilizing Ripple’s XRP, xRapid represents the strongest strategic move of Ripple in the current market. To elucidate the operational mechanics of xRapid, I shall provide detailed clarification for your reference.
How xRapid works:
Assume that both Bank A in Mexico and Bank B in India are utilizing Ripple’s xRapid solution and Bank A intends to transfer 10,000 USD into INR (Rupee) equivalent at Bank B in India.
The modus operandi is as follows:
- Step 1: Bank A will send a transfer request and the Ripple system will return to bank A the XRP/USD exchange rate of 0.3 and the XRP/INR exchange rate of 20.
- Step 2: Bank A reviews the returned exchange rate and decides to accept the money transfer.
- Step 3: Ripple will use 10,000 USD from bank A to convert into XRP at the exchange rate of 0.3$ (~33,333 XRP) at their partner exchange.
- Step 4: The newly converted XRP will be transferred to Ripple’s partner in India via XRP Ledger.
- Step 5: The newly transferred XRP will be exchanged into Indian rupees (INR) at the exchange rate of 20 INR (~666,666 INR).
- Step 6: Ripple’s partner in India will send 666,666 INR to bank B’s account.
The entirety of this process can be completed within a few minutes, which is significantly faster compared to utilizing the current payment system that takes approximately 3-5 days.
xVia is a standardized interface based on API technology. This interface enables financial institutions and businesses to execute payments among other members within the RippleNet network.
XRP Ledger (XRPL)
The XRP Ledger is a decentralized ledger based on a network of peer-to-peer servers, which was founded in 2011 by Jed McCaleb, Arthur Britto, and David Schwartz. In contrast to Bitcoin, the XRP Ledger employs a consensus algorithm called “Ripple Protocol Consensus Algorithm” (RPCA) to achieve network consensus.
What is XRP coin?
XRP is the primary token utilized within the XRP Ledger, with 100 billion tokens pre-mined in 2011. In 2012, all three founders of the XRP Ledger opted to donate 80% of the allocated XRP to the OpenCoin company.
Basic information about XRP coin
- Ticker: XRP
- Blockchain: XRP Ledger
- Consensus: XRP Ledger Consensus Protocol
- Token Type: Utility Token
- Avg. Block time: 4 giây
- Avg. Transaction Time: 1,500+ TPS
- Smallest Unit: 1 XRP = 10^5 drops
- Max Supply: 100,000,000,000 XRP
- Total Supply: 99,991,316,762 XRP
- Circulating Supply: 43,248,091,671 XRP
Token Allocation XRP
Ripple Labs maintains 80% ownership of XRP, while the remaining 20% is owned by the founders, with a total maximum supply of 100 billion tokens. This allocation of ownership is as follows:
Due to its ownership of 80% of the total XRP tokens, Ripple has complete control over whether to sell or distribute XRP for free with the purpose of promoting and developing the RippleNet product.
According to data released by BitMEX Research, Ripple sold approximately 16.5 billion XRP between January 2013 and July 2015. Out of this, 12.5 billion XRP was sold to partners, and the remaining 4 billion XRP was utilized for meeting operational expenses of the company.
In December 2017, Ripple established an Escrow fund to ensure sustained support for the operations of RippleNet, with a locked-in percentage of 55% (equivalent to 55 billion XRP).
Every month, 1 billion XRP is unlocked to cover operational expenses of RippleNet. Any unused funds are returned to the Escrow account at the end of the month and await the next release for disbursement.
The remaining 20% of XRP ownership belongs to the three founders of XRP Ledger, specifically Chris Larsen, Jed McCaleb, and Arthur Britto. Both Larsen and McCaleb received 9.5 billion XRP, whereas Britto obtained the remaining 1 billion XRP.
In the year 2014, Jed McCaleb departed from Ripple to establish Stellar (XLM), therefore the allocation of Jed’s XRP is subject to negotiated terms.
- Jed can sell up to $10,000 per week in the first year.
- From year 2 to year 4: Maximum sales of $20,000 per week.
- Years 5 to 6: Maximum 750 million XRP sold per year.
- Year 7: Maximum sale of 1 billion XRP per year.
- After 7th year: Maximum sale of 2 billion XRP per year.
However, in the year 2016, this agreement was modified as Ripple had suspected Jed of violating the original terms.
As per the agreement made in 2016, Jed is obligated to donate 2 billion XRP for charitable purposes, and the remaining 5.3 billion XRP held by Ripple is in his possession.
The amount of 7.3 billion XRP shall be released annually by Ripple in the following manner
- 0.5% for the first year.
- 0.75% for 2nd and 3rd years.
- 1.0% in year 4.
- 1.5% after year 4 onwards.
Based on data obtained from Ripple’s official website, it can be observed that the total supply of XRP, as of October 2019, is depicted in the chart presented below.
The intended application of XRP
The XRP token currently serves several practical purposes, namely:
Ripple’s On-Demand Liquidity (ODL) solution utilizes XRP as an intermediary currency for facilitating cross-border transactions.
In order to initiate a transaction, users must hold a minimum of 20 XRP in their wallet, as per the stipulation designed to restrict the occurrence of spam on the Ripple network.
XRP functions as a means of payment for transaction fees within the XRP Ledger network. At present, the minimum fee stands at 0.00001 XRP (roughly equivalent to 10 drops). Unlike other Blockchain technologies, validators operating within the XRP Ledger are not entitled to receive transaction fees. Instead, these fees are burned and subsequently removed from the XRP supply.
However, the aforementioned low fee level will not induce a deflationary effect on XRP.
What is the methodology for mining XRP?
The XRP Ledger employs the RPCA algorithm to achieve consensus within the network, which means that mining or staking XRP is not possible. Additionally, Ripple currently does not conduct any airdrop campaigns for XRP, unlike Stellar’s ongoing efforts in this area.
Hence, if desirous of acquiring XRP, the only viable option for brethren would be to engage in trading activities through reputable platforms for the procurement thereof.
The wallet stores XRP securely
Currently, numerous XRP-capable wallets are available for storage. Users can select from the below list of compatible wallets to store XRP:
- Hardware wallet: Ledger Nano S, Trezor (Model T), CoolWalletS
- Applications: Coinbase Wallet, Trust Wallet, Atomic Wallet, Metamask Wallet …
The Future of XRP Coin
Ripple has entered the payment market with a focus on targeting banks, thus creating competition with the traditional payment system, SWIFT, which has been in operation for over 45 years. Currently, SWIFT handles over 34 million transactions per day with a total value of over 5 trillion USD.
This number is really terrible, right guys?
Now, let us proceed to examine a brief comparison between Ripple and SWIFT.
Initially, let us review the quantity of active wallets on the XRP Ledger network. The number of active XRP wallets experienced a substantial increase to 57.55 thousand wallets during the early period of July 2019, which is equivalent to a remarkable surge of +364.25%. Subsequently, the count decreased and returned to a stable level comparable to the beginning of the year.
The subsequent aspect pertains to the quantity of transactions occurring across the entire network of the XRP Ledger.
It has been observed that the transaction volume of the XRP Ledger has shown a significant surge, reaching a magnanimous figure of 1.74 million transactions per day, which is an increase of 228.4% as compared to the initial figure recorded earlier this year.
The transaction volume has increased by over 139.5% since mid-October, and this effect can confidently be attributed to the commercialization of Ripple’s On-Demand Liquidity solution in October 2019.
At the time of its launch, ODL had only approximately 10 users. However, this figure has since increased to 24.
MoneyGram is considered to be the most active partner with respect to transaction volume, wherein 10% of their transactions are successfully executed via Ripple’s ODL.
As mentioned in the Allocation section, Ripple shall be granted exclusive access to the monthly release of one billion XRP and all associated utilization rights.
Let us now examine in the following section how many XRP Ripple has sold and their respective value in the year 2019.
This significant source of XRP’s high trading volume presents a challenge for price appreciation, so it is important for individuals to take note of this.
It is evident that the quantity of XRP sold by Ripple in Q3 has significantly decreased by approximately 74% compared to Q2/2019, resulting in the value of XRP sold being reduced to $64.2 million.
Despite a significant reduction in the amount of XRP sold, the value of XRP has continued to decline by over 52.2% since the beginning of Q3.
Token Supply Schedule
XRP Coin Development team
The XRP or Ripple Protocol was developed by OpenCoin in 2012 and was subsequently transferred to Jed McCaleb and Chris Larsen for further development.
- Chris Larsen: The co-founder and CEO of E-LOAN, a financial company, has also established several startups in the online financial services sector and is known as an “Angel” investor.
- McCaleb: The co-founder of the Mt. Gox exchange, along with several other cryptocurrency projects like Stellar (XLM), eDonkey, and Overnet, have collaborated in the development of these platforms.
The emergence of Ripple has brought about a novel perspective for financial institutions to facilitate cross-border money transfers. Through the insightful information presented in the article by 247btc.net, it is hoped that readers will obtain a comprehensive understanding of the Ripple platform to make informed investment decisions.
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