In its essence Ripple is not just a cryptocurrency (XRP), but also an open payment network within which it is transferred. Ripple can be described as a real-time gross settlement system (RTGS), meaning that the transfer of funds between parties happens in real-time basis and on a one-to-one basis without netting or bundling with any other transactions. Having said that, the way it works is similar to other cryptocurrencies. It is built on the idea of a distributed ledger network that is managed by a network of independently validating servers that are constantly comparing transaction records. When compared with the transaction of other cryptocurrencies, Ripple transfers are considered to be faster and cheaper.

So, when mentioning Ripple, one has to differentiate between the Ripple network and the Ripple Protocol or XRP. Contrary to say Bitcoin and Etherium, where one’s pool of currency is constantly growing with an eventual maximum and the other is theoretically unlimited, Ripple was designed and created with 100 billion XRP tokens straight from the outset. Additionally, this number is maintained without mining and Ripple labs, the company that backs up its development, holds the majority of the tokens.

What also differentiates Ripple from the rest of the cryptocurrencies, is the fact that it is backed by some of the largest banks worldwide, such as Santander, UBS and American Express. Initially the Ripple network was built with banks in mind, and allows them to offer real-time cross border payment services to their customers, it enables banks to communicate between each other within seconds without the need of third parties, and provides the banks end-to-end visibility throughout the whole process.

What Ripple brings to the table to the Blockchain and banking world is phenomenal and disrupts the market completely. It has been argued that its centralised control contradicts the whole concept of decentralised blockchains, however on the other hand it maintains a trusted Unique Node List (UNL) that protects against malicious or insecure validating servers. What the future will hold for Ripple and banking is ultimately unknown, however, we will surely be on the lookout for what’s in store.

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Sacha Borg

Finance & Legal Recruitment Specialist