Ripple will take over the world? History and prospects of cryptocurrency

Of the top twenty “coins” by capitalization of the Coinmarketcap rating, it is the Ripple (XRP) cryptocurrency that causes, perhaps, the most controversial attitude of the crypto community. Often criticizing Ripple for its shortcomings, many experts and crypto enthusiasts nevertheless note that this cryptocurrency remains the most integrated into the global financial market. Its use causes the least concern among representatives of transnational banking organizations.

What makes it possible to use Ripple in international payments? How did this cryptocurrency appear and develop? Why do many find themselves recognizing XRP as crypto-money? What’s next for Ripple? In this article, we will try to answer these questions.

History and development of Ripple

We list the main “points” in the development of the Ripple cryptocurrency:

• The developers call 2012 the date of birth of the Ripple cryptocurrency. However, the developments that eventually led to its creation date back to 2004. Then Ryan Fugger, a programmer from Canada, decided to develop and launch an international payment system that provided the ability to create their own money to any of its users. He called his system RipplePay, and its working version was ready in a year. True, at that time it did not attract due attention to itself and the project for a long 6 years passed into the finalization stage.
• Rethinking the concept of their offspring and adopting new technologies that have appeared in recent years, the developers added to the system a rule for confirming payment transactions based on the consensus of the participants. After Chris Larsen, a well-known programmer and crypto enthusiast, joined the development team in 2012, it was decided to add their own cryptocurrency settlement unit inside the platform. In that year, but a little later, the Ripple network was launched with XRP as a native cryptocoin project.
• The first partners and investors were such well-known venture funds as Andressen Horowitz and Google Ventures. Some time later, they were joined by the then head of the largest cryptocurrency exchange Mt. Gox Jed McCaleb.
• From 2014 to the present day, the Ripple Labs consortium that controls Ripple has been implementing a successful policy of promoting its project to the international financial market.

The difference between XRP and cryptocurrency

From the very beginning, Ripple is focused – to a greater extent – on working with banks and financial institutions to increase the speed and reduce the cost of money transfers. Unlike bitcoin, XRP did not claim to be a new currency supposedly designed to replace the dollar. Its task is to provide the possibility of almost instantaneous exchange of one asset for another with a minimum commission between users.

We list the main differences that allow some skeptics to argue that Ripple is not a cryptocurrency:

• Ripple is based not on blockchain technology, but on a distributed database, the nodes of which are called gateways. Any user or organization can be a gateway, but certain criteria must be met. After all, the gateway in Ripple is a kind of exchange office that accepts any asset from users and issues XRP in return. Naturally, the gateway also provides exchange in the opposite direction. Thus, it is he who acts as a liquidity provider in Ripple. The safety and security of such a registry is questioned by many experts, although the developers deny that there are any vulnerabilities.
• The emission of XRP was carried out once – in the amount of 100 billion units. Only a third of the XRP “coins” have been released into free circulation, the rest are under the control of the developers and are frozen to level the market glut. Once a month, a special smart contract releases another 1 billion coins to meet demand and artificially support inflation.
• Ripple developers have the ability to freeze the assets of any member of the network. This centralization was an unpleasant surprise for its users.
• Lack of an official wallet for storing cryptocurrency. The developers themselves offer to store XRP in third-party clients, without specifically naming wallets.

However, the presence of undoubted advantages of Ripple stimulated its demand in the international financial market and the systematic joining of the largest banks to the network of this cryptocurrency. What competitive advantages does Ripple offer to its partners:

• High transaction processing speed. The Ripple network is capable of processing up to 15,000 transactions per second. If the standard time for an interbank transfer between 2 countries is about 3-5 days, in the Bitcoin network it will take 15-30 minutes, then with the help of Ripple, such a transfer takes an average of 4 seconds.
• Low fees. Inside the Ripple network, the commission for 1 transaction is 0.00001 XRP and is intended primarily to protect the platform from DDOS attacks. Depending on the currencies of the sender and recipient, the commission for a transfer through a bank can reach 10-20% of the amount. In addition, all funds received in the form of commission payments are burned by the system in order to avoid high inflation.
• Conversion. Gateways support the free conversion of XRP to a wide variety of assets: fiat currencies, precious metals, stocks, etc.
• Confidentiality. Information about transactions in Ripple is freely available through a special application, but data about the original asset and its connection with a specific user is hidden.
• Legality. Ripple Labs is licensed in the US to work with virtual assets and has official representation in many countries around the world.

Ripple Labs International Partners

Currently, Ripple Labs partners with more than 300 banks and financial institutions around the world. Among them are such giants as Unicrefdit, BNP Paribas, TAS Group, UBS, National Bank of Abu Dhabi, ATB Financial, Deloitte, Canadian Imperial Bank of Commerce, Mitsubishi UFJ Financial Group, National Australia Bank, SBI Holdings and many others.

Low commission fees, high transaction speed and the ability to integrate your payment systems into the Ripple network attract more and more new customers to cooperate with Ripple Labs. It is safe to call Ripple the most used cryptocurrency in the global economy – of course, at the moment.

Ripple Development Prospects

Due to the gradual increase in the geography of use and the obvious advantages of Ripple in making international payments, Ripple Labs can be expected to compete with such mastodons as Western Union and SWIFT, with their subsequent gradual displacement from the market. However, this is rather an optimistic scenario – the inertia of thinking in the financial world is too great. A lot of time may pass before the majority of participants in the global financial system integrate Ripple into their business. In addition, it is worth separating the XRP “coin”, which is used only within the xRapid protocol, the so-called. “liquidity on demand” and the RippleNet network, which, in fact, is used by most partners of Ripple Labs.

On the other hand, marketplaces like Amazon, eBay, Google Express have already added XRP to the payment options for goods purchased on their sites. This – as well as the activity of developers in the search for new ways to use the coin – allows us to hope for further development, improvement and scaling of Ripple.