Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network. Using a common ledger that is managed by a network of independently validating servers that constantly compare transaction records, Ripple doesn’t rely on the energy and computing intensive proof-of-work used by Bitcoin.

The Ripple protocol (token represented as XRP) is meant to enable the near instant and direct transfer of money between two parties. Any type of currency can be exchanged, from fiat currency to gold to even airline miles.


Our Take

Isn’t it a hassle to send money from one country to another? Converting one currency into another is a tedious and expensive affair.Run to Western Union or SWIFT, get the paperwork done, wait until the time it gets processed, and wait with baited breaththen finally at the end of the fuss, the money reaches the destination. Wouldn’t it be much easier if there was a platform that could prevent all this middlemanship, thus, payments could become faster? Here we have something for you!

Ripple is a technology that acts as a digital payment network for your financial transactions, as well as it is a cryptocurrency. It is known more for its digital payment protocol which operates as an open source, peer-to-peer and a decentralised platform. Guess what? Transactions over this platform can be done in any form, be it Bitcoin, USD, Yen, ether, etc.

(Caption : Ripple coin) (Source :

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Ripple uses XRP as its native currency. It is not necessary for any user to buy XRP for being a member of the network. But it is necessary for every member to hold at least 20 XRP as an anti spam measure. For every transaction in the non-native currency, Ripple charges a fees. Hence, a hacker would have to spend around $20 for membership and pay extra transactions fees for every new transaction, making it expensive for them who try to flood the network with fake transactions. At the beginning of the Ripple network, there were 100 billion XRP created with no more allowed to be created as per the protocol rules, so that the system could be designed with XRP as an asset that has a decreasing supply.

How did Ripple come into Being?

The journey of Ripple’s payment protocol started with the development of its predecessor Ripplepay by Ryan Fugger in 2004. Fugger’s intention was to create a decentralised local monetary system that could help people transact and create their own money. The first iteration to this system was launched in 2005 with the name which provided secure and global payment options of an online community via a global community. Later on, a new system by Jed McCaleb of eDonkey was designed and built. In may 2011, they began developing a new digital currency system which verified transactions upon the consensus of the members in the network. This was the new version of the Ripple system which was designed to eliminate reliance on centralised exchanges, used less electricity than existing systems like bitcoin, and perform transactions much more quickly. The founder of E-Loan and Prosper, Chris Larsen joined the team in 2012, and together McCaleb and Larsen approached Ryan Fugger with the proposal of a digital currency. Upon discussions among between the long standing members of the Ripple community, in September 2012, the team co-founded the corporation OpenCoin Inc.

OpenCoin started off with developing a new payment protocol that was based on Ryan Fugger’s concepts. This was named as the Ripple Transaction Protocol (RTXP). This enabled the instant and direct transfer of money between two parties. The protocol could go around and avoid the fees of traditional banking system and any type of currency could be exchanged on the network including US dollars, Euros, Indian Rupees, Yen, and so on. To maintain the security of this platform, Ripple relied on a common ledger that is managed by independent validating servers which are used to maintain and compare the transaction records. The company also created its own cryptocurrency, abbreviated XRP. This currency allows financial institutions to transfer money with minimal fees and wait.

(Ripple : Looking back in time) (Source : )

By 2014, Ripple was deep into projects involving the protocol, for example releasing an app for the iOS platform that enables users to send and receive any currency through their phones. The protocol is now being used by various financial institutions as an alternative remittance option for the consumers. Ripple allows cross-border transactions for all kinds of institutions from customers to corporations and banks.

Larsen once quoted “ Ripple simplifies the process by creating point to point and transparent transfers in which banks do not have to pay corresponding bank fees.” The first bank to use the Ripple protocol was Fidor Bank in Munich, introducing the partnership in early 2014. Later, New Jersey-based Cross River Bank and Kansas-based CBW Bank began working with the global payments service by combining Ripple’s software with Earthport’s payment service system. Earthport provides its services in over 65 countries through clients like the Bank of America. This partnership marked the first official network usage of the Ripple protocol and marked an explosion in the Ripple’s market capitalisation. By December 2014, the XRP price rose over 200% helping Ripple surpass litecoin to become the second largest cryptocurrency in the world. On December 29, 2017 XRP became the second largest cryptocurrency, though for a short time, with a market cap of $73 Billion.

Many companies have subsequently experimented integrations with Ripple. The Ripple company expanded in Sydney, Australia and opened offices in London, UK as well in Luxembourg. Ripple also obtained a virtual currency license from the NY State Department of Financial Services. They also expanded in Asia with Japanese consortium of Banks in a new network that uses Ripple’s technology for payments. As of July 2017, 61 Japanese banks representing 80% of total banking assets in Japan, were a part of this deal.

How does Ripple Work?

Ripple is described as an open source protocol and an infrastructure for interbank transactions with a neutrality towards financial institutions and currencies. This means that Ripple is basically a platform that used its own protocol that allows users to make transactions that are unbiased of financial institutions and currencies. Banks and non-bank financial companies, including cryptocurrency institutions, can include Ripple’s technology into their own systems.

Suppose A needs to pay D $100 who lives a little far from A’s place hence, it is practically difficult for A to reach D in a required time. Hence, A asks his agent B to transfer the $100 to D as she lives somewhere close to D’s place. However, B is engaged in some urgent work hence asks C (D’s agent) to pay D on her behalf. This money would be deducted from C’s account which could be recovered by B making a reimbursement or counter transactions which would balance the debt. C can record a journal of all of B’s debt which B would pay on an agreed day. Now A trusts B, D trusts C and B must trust C for completing the whole transaction. This is model based on trust.

The above example demonstrates the basics of how a Ripple network works. The above example shows that trust is required to initiate a transaction. In Ripple, the medium of trust is replaced by something known as the Gateway that serves the link between two parties who want to make a transaction. The Gateway is a credit-intermediate that receives and sends currencies to public addresses over the Ripple network. Any business can register into the Ripple network and can open a Gateway, which authorises the registered user to act as a middleman for exchanging currencies, transferring the payments and helping prevail the liquidity on the network.

XRP, the cryptocurrency, acts as a bridge to other currencies within the network. As this does not discriminate between any currency whether fiat/digital, it becomes easy for one currency to be exchanged for another. If someone wants Bitcoin as payment for a service rendered, and the customer does not have bitcoins, they can send Indian Rupees as payment which would help the service receive bitcoin from the Gateway. It just needs one Gateway to initiate a transaction, or multiple Gateways can be used, that could form a chain of trust rippling across the users.

The Ripple network works on the consensus protocol in order to validate account balances and transactions in the system, unlike Bitcoin’s proof-of-work system. Ripple also works on preventing double spending in the system which is a common problem with digital currencies. This is a problem where digital information can be reproduced relatively easily. Individual distributed nodes decide by consensus which transaction should proceed by taking a poll to determine the majority. The confirmations roughly take 5 seconds.

Ripple has also helped improve some of the drawbacks of the traditional banks. The platform settles transactions within seconds which enables it to perform millions of transactions frequently, unlike banks that take days to complete a wire transfer. The fee to perform a transaction on Ripple is also minimal with the minimum transaction cost required being set at 0.00001 XRP, compared to large fees charged by banks for cross-border transactions.

Is Ripple a good investment option?

With the cryptocurrency floodgates opening doors, cryptocurrency investors have now become accustomed to a 4 digit return. Yet, many of these currencies have already achieved mainstream investors. But what about the beginners?

For investors looking for investments under $1, Ripple could be a good option. But why?

Ripple isn’t the traditional cryptocurrency which hits highs and falls, and that is all that happens through the course of time. Today, Ripple is revolutionising the ways in which money transfer takes place. Soon it will impact the banks and business to an even greater extent in the world. Again, How? Let us have a look.


The biggest reason that excites investors about Ripple is the The Ripple Transaction Protocol (RTXP). Ofcourse, transferring money to someone living far away from you is a grueling process. And that is where Ripple comes in.

XRP can be used not just as a digital currency but also for money and information. The Gateway system that Ripple uses has attracted a lot of financial institutions and without doubt it is supposed to revolutionise the financial system across the world. This secure channel boxes out any potential threat which makes Ripple effective, secure and empowering.

#2 Ripple and Banks : The new Story to tell

The banking system is not going anywhere, hence, it is foolish to believe that some cryptocurrency has the power to recreate the financial system. But, there is no doubt that digital currency is here to persevere. We are more like to see it incorporated in the financial system through these banks.

The reason behind this is the huge investments of the banks in Ripple world over. The largest banks in the world including the Bank of America have shown interest in Ripple technology. This makes Ripple the first cryptocurrency to be adopted by mainstream financial institutions. And the number of institutions adopting Ripple is gonna go high,.

On an average a bank saves around $3.76 per transaction using the Ripple Technology. Imagine how much they could save in an year — $564,000!

This does simplify our banking system a lot and hence, there is great interest in adopting the Ripple Technology which would certainly help Ripple grow.

(Caption : What does Ripple have to offer?) (Source : Pixabay)

#3 The team behind

It is affirmative that for any technology to advance there must be value for both investors and clients. Many digital currencies have failed due to the lack of leadership that could get the right people or derive the correct methods.

But Ripple has well-connected founders who have used their networks which quickly attracted capital for Ripple from major investors. In 2015, Ripple got $55 million in just one funding round. And this money is continuously pouring in through their major investors.

Plus the biggest positive point with Ripple is that a tech giant that hasn’t shown much interest in digital currencies, is an early backer of Ripple. Who? GOOGLE!

Google saw opportunities to simplify and secure payments in Ripple. Well, Google does know where to invest!

Where does Ripple face Competition?

Today, Ripple faces competition from the other cryptos. It had become the second largest cryptocurrency after climbing 55.9 percent coming out of nowhere at the end of 2017.

Bitcoin (BTC)

The largest cryptocurrency in the world, which draws the most number of investors in the cryptocurrency world is a real competitor to Ripple. XRP started appearing a competitor after its recent experience of surge in prices at the end of 2017.

(Caption : Ripple vs Competition) (Source: Pixabay)

Ethereum (ETH)

Ethereum and Ripple have been playing a war for the second largest crypto since quite some time now. Ripple has gone past ETH two times in history, and this makes ETH a gettable competitor. However, going by the Ripple’s management, XRP offers much faster and reliable alternative to all other tokens. It has already achieved half the market cap of Ethereum.

Litecoin (LTC)

Litecoin brings in a new trait with its peer-to-peer cryptocurrency mechanism. It is being referred to as Bitcoin’s little brother. Yet the most notable differences are the lightning speeds that LTC has to offer and a 84 million token limit. Today LTC’s market cap is just over $10 Billion having been launched at around the same time as Ripple in 2011. Hence it does serve as a big competitor to XRP.

Yet, with Ripple’s outstanding technology and the increasing demand, plus the interest in investors, it does hold a safe spot in the cryptocurrency world. It is evident from the collaborations with banks and the increased liquidity of transactions that Ripple might be the new payment system which could rule the future.