Ripple – the leading crypto of the week. What is it like?

According to Coinmarketcap, on Tuesday, June 20th, Ripple’s asset XRP has surged more than any other cryptocurrencies in the top 10. The altcoin has increased its value by 13% within the last 24 hours. Thanks to such impressive performance, Ripple has restored its $12 bln market cap that has gone down last month.

Today, Ripple looks like a definitive winner among all other cryptos, whose value has barely changed this week. Despite the lack of decentralization other cryptocurrencies are famous for, Ripple seems to have found its own niche. Traditional financial institutions show growing interest for Ripple, recognizing its potential to become a global payment network. Such acceptance helps Ripple to gain ground in traditional markets.

What does “Ripple” stand for?

According to the forecasts, if Ripple maintains its general trajectory, it will not only overcome the rivals like SWIFT, but also effectively create new ways of moving the money. Eventually, we will be able to move money as fast as information.

Sounds impressive, doesn’t it? Let’s see what Ripple is all about.

When Brad Garlinghouse, the CEO of Ripple, is trying to explain to his mother what he’s working on, he says “It’s simple. We are selling banking software”. Of course, it isn’t nearly as simple. Ripple has to go through an identity crisis in oder to figure out who their clients are and what issues they are trying to solve.

Normally, there is two types of banking software. The developers are either trying to compete with banks, or are aiming to save banks from themselves. Ripple, however, does a bit of both.

Principles of functioning

The startup Ripple was founded in San Francisco in 2012. The mission of a company with the same name was to create an opportunity to perform fast, secure and almost free global transactions. Later, the vector has been shifted towards business apps for blockchain. As of now, over 60 banks are in the process of implementing the software solutions provided by Ripple.

Ripple is functioning based on principles similar to Bitcoin’s. This is why many people assume it’s also a cryptocurrency. However, there is a significant number of differences between those two. Ripple’s source code is the property of its developers, which means that only the company can verify the transactions. Unlike Bitcoin, Ripple isn’t a cryptocurrency. It has become a very popular payment protocol used by the banks to help settle their infrastructure. Although, Ripple does have its own native cryptocurrency named XRP. The asset is continuously taking spots in the top 5 cryptocurrencies by market capitalization. Over the last year and a half, the company has been selling about 300 mil XRP per month.

In a long term perspective, Ripple is aiming to build an internet of value – a global payment network to improve value transfer. Inside of the said system, any monetary value can easily flow from a bank ledger to a public blockchain, and end up in a mobile money system. All the components would be working together to ensure fast and easy transactions from one side of the globe to the other.

Once the technology expands, it will be able to transfer any forms of value and not just the money.

Identification crisis

Before dominating the world, Ripple will need to sort out its branding policies. As of today, it is the only blockchain startup that sells software to large banks while funding its further development expenses with its own cryptocurrency.

Historically Ripple wasn’t getting much public attention, even from the cryptocurrency enthusiasts. It wasn’t able to enjoy the limelight like Bitcoin or Ethereum. One of the main reasons could be the number of turns Ripple has taken on its way to success.

The initial plan was to make a “better Bitcoin”. While the original Bitcoin network is able to only process seven transactions per second, Ripple wanted its transactions to be as fast as Visa. The company didn’t support the views of Bitcoin-maximalists and decided to work together with banks, instead of attempting to fight them.

Why do we need Ripple?

Modern international banking faces plenty of issues: low transaction speed, high fees ($5-$50 U.S dollars per transaction), and lots of reoccurring errors. Additional fees may apply when using foreign-exchange services. Ripple makes international transactions much less of a headache. All information is being stored in a distributed shared ledger, making it easier for banks to access and exchange the data. If something is wrong with a transaction or the information is missing, the banks will know about it before initiating a transaction.

Ripple is an example of how fintech startups can significantly improve the payment system. The company’s mission is quite ambitious. Ripple doesn’t just want to help banks with performing international transactions. If the company succeeds, it can potentially solve banks’ liquidity problems.

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