Ripple, a prominent name in the cryptocurrency space, is a payment protocol that facilitates fast, frictionless cross-border payments with minimal fees. The technology is based on a series of servers communicating constantly, maintaining a distributed ledger with the latest state of balances and transactions. The protocol hosts its native asset, XRP, which acts as the chief medium for transferring value over the network. RippleNet, the latest iteration of Ripple’s payment protocols, unites all its products into one network, allowing various ways to transfer value. RippleNet enables the usage and transfers of XRP, as well as the option to generate value and liquidity without using the XRP asset.
RippleNet collaborates with over 200 banks and hosts an On-Demand Liquidity mechanism that enables transfers and exchanges across the world. The network allows payments in any fiat asset and crypto assets, including Bitcoin. Ripple’s protocols promise to displace the older, less technically advanced Bitcoin network by doing away with mining and using a lighter form of encryption to avoid DDOS attacks. Ripple is tailored to process up to 1,500 transactions per second, compared to Bitcoin’s 7-15 transactions per second.
XRP, the native token of the Ripple network, serves multiple use cases within the network, including representing any type of asset and paying network fees. Ripple has challenged Bitcoin’s leading position, aiming to displace it in terms of market capitalization and usage. However, Ripple’s success is tied to the performance of Bitcoin, as the crypto market relies heavily on Bitcoin’s presence.
Ethereum, another major player in the cryptocurrency space, offers second-layer solutions and tokenization. Ripple’s protocol has the potential to take over multiple use cases currently belonging to Ethereum, presenting a unified solution to various use cases. Ethereum’s network has higher transaction fees, variable gas fees, and requires significant investments in hardware to secure the network.
Ripple rebranded its asset in late 2018 to distinguish it from the company and avoid ties to securities regulations. Jed McCaleb, a significant figure in the crypto space, played a crucial role in Ripple’s development and later created Stellar, another cryptocurrency project. Ripple’s success lies in its mix of a traditional business model and rootedness among crypto assets, making it a speculative investment with significant upside potential.
Ripple has accrued a crowd of believers and skeptics, with the company looking to move onto a new form of fundraising through an initial public offering. Investing in XRP remains risky, as Bitcoin continues to lead the market. Ripple’s position is seen alongside other altcoins, with confidence in the asset still relatively low.
