The digital world has been a powerful resource for improving and simplifying people’s lives, as well as offering new innovations on well established institutions. One place where this has been particularly the case is with digital cryptocurrency, which has the potential to rival the paper fiat currencies on which we all rely.
Among the popular forms of digital currency today is XRP, also known as Ripple coin, which is used by the open payment network Ripple to exchange money online and help people not worry about the restrictions and security issues that come with traditional banks. Those who are interested in investing in cryptocurrency should first read this guide to fully understand XRP.
Created by Ripple
Ripple coins, or XRPs, were invented and introduced into the world by Ryan Fugger in 2004. They are a part of the Ripple labs. XRP is similar in many ways to the more well-known Bitcoin, but is different in one specific way, which is that the Ripple network allows all currencies — not just Ripple coins — to exchange for nearly free.
The objectives for Ripple have changed over time, with the original purpose being to serve as a digital monetary system that lets individuals and corporations create their own money. Today, the primary utility of the currency is to allow people to exchange money online in a more secure way than worrying about physical, paper currency.
A connection between fiat currencies
XRP stands out among other cryptocurrencies, such as Bitcoin’s BTC, Ethereum’s ETH and Litecoin’s LTC. In addition to being around longer, as well as the price of XRP being lower, this currency option does not intend to replace paper currency all together. Instead, the goal of XRP is to serve as a bridge between digital and fiat currencies so that people can transfer money faster and at a lower cost.
There are more than 10 digital exchanges where XRP makes this possible, and it works across the globe. For example, it usually takes days for an American company to pay an employee in Japan through traditional methods. However, with XRP, they can get it done in seconds.
Ripple owns XRP
Another unique element of XRP is the ownership of the coins. The common way in which cryptocurrencies like Bitcoin are managed is through mining, a process that uses computers to solve complex math problems and produce a token of currency upon the completion of the problem.
This process requires a great deal of electricity, which can determine how long it will take to make sure that exchanges are correct. However, XRP is not a digital mining asset. Instead, Ripple already owns almost all of the units of currency that will exist. The rest of the units are owned by corporations and individuals.
A faster option
Another aspect of XRP that sets it apart from its competitors is its speed. This is, in part, due to the fact that it works with fiat currencies rather than against them, instead of a focus on replacing traditional currencies and transfer methods now and in the future.
The average settlement time for XRP is four seconds, which costs a fraction of what it would take to transfer money across the country or world between physical banks. The XRP blockchain ledger can process over 1,000 transactions per second, while Bitcoin’s can only do seven transactions per second. One transaction for Bitcoin could take anywhere from 10 minutes to two hours to complete.
A focus on security
XRP is able to make exchanging money online between companies and individuals across the globe a piece of cake thanks to its security methods. The XRP ledger operates as an open-source code that is kept in check by a team of engineers and validators that work around the clock. Transactions happen any time of the day, so it’s important to have an eye on the ledger for potential hackers and for any questions that users might have about past transactions.
Like with most digital currencies, Ripple coin is also a decentralized currency, through through a different set of rules than Bitcoin or Litecoin, as XRP does not rely on miners, but instead relies on a consensus protocol.
Keep this guide in mind so that you can get the most out of your XRP investment.