With a 35,000% increase in value in 2017 and a market capitalization of over $118 billion, Ripple has become a hotly debated topic among analysts and investors. But what is Ripple? Is it like other cryptocurrencies? Why has it been under fire lately? Read on for answers to these questions.
1. What is Ripple?
Ripple is a payment solutions company founded by Chris Larsen and Jed McCaleb. Their Ripple Transaction Protocol (RTXP) contains the XRP cryptocurrency. Ripple claims to provide faster, reliable and affordable transaction solutions for financial institutions. The company has created one hundred billion XRP and currently holds 61% of the coins. The current plan is to release a billion coins every month.
2. Differences between Ripple and Bitcoin
Both Bitcoin and Ripple are cryptocurrencies that use blockchain technology. But, there is a key difference between the two: unlike Bitcoin, Ripple cannot be mined. The currency is not configured as a fiat currency, and its use is fixed on the Ripple network.
Both Bitcoin and Ripple use validator nodes to validate ledgers. Bitcoin has about 10,000 trusted nodes, while Ripple has only five. However, the company plans to add 11 more in the next 18 months. All five validation nodes are controlled by Ripple. XRP has been criticized for not having an independently trusted validator. XRP Ledger is available to everyone, so anyone can download it and become a validator. Many companies run their own nodes on the Ripple network.
3. Reasons for Ripple’s recent price increase
XRP’s recent price rise has a lot to do with the currency’s expected use by financial institutions and investment by gullible investors. Ripple has been successful in winning over banks as customers for its other products. Financial institutions have preferred Ripple’s xCurrent because it offers real-time communication and fast corrections, thereby reducing delays in banking transactions. The company plans to introduce a new product, xRapid, which includes XRP. The new product is seen by banks as an opportunity to use XRP. Investors see the currency’s potential as a means of finance used by banks around the world.
Ripple, or more precisely, XRP, is an up-and-coming cryptocurrency. Bitcoin differs from mainstream digital currency in that its supply is controlled by the founding company. Ripple is talking about what banks will take over in the future. It can be speculated that Ripple’s recent rise in value will fuel further debate about its viability as a cryptocurrency asset.