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Ripple refers to both the cryptocurrency XRP, as well as its digital payment protocol which is being used by various banks and institutions all over the world. To understand the world of Ripple and what sets it apart from the rest, you will first need to understand the basic workings of the system itself.
In reality, Ripple has become more known for its payment solution and technology than for its cryptocurrency. This is because within the Ripple system, money can be transferred in whatever form the users prefer. The system allows transactions in US dollar, Euro, Yen, Pound, Bitcoin, Ether, Litecoin, or XRP. This open source platform makes Ripple easy to integrate into various other existing infrastructure and protocols, which is an advantage for both Ripple and its community of users.
The Ripple system operates in a very close system of trust between different parties, and there is also a system of debt or credit lines involved in the process. To simplify the process, the sender will log on to his Ripple gateway (conduit or agent), deposits the money into this Ripple gateway, and sends the instruction for the funds to be released to the receiver. The receiver will receive the funds by logging on to his preferred receiver.
In this Ripple payment protocol, the transfers are not limited to money. Cryptocurrencies can be sent as long as the gateways are able to transact in them. Gold and other precious materials may also be transacted. The important thing is to find gateways that are willing and able to perform the transaction.
Suppose, for instance, that the sender wants to send $1000 to the receiver, but the sender's own gateway does not have a direct trust relationship with the receiver's gateway. What the Ripple algorithm will attempt to do is to find a chain, or several intermediary gateways which can act as the conduit for the transaction to go through. Ripple's protocol will try to find the shortest and quickest link between gateways in order to process the transaction.
Now, what if the Ripple network has attempted to find a chain of trust between two different gateways to process a transfer, but cannot locate a chain? This is where the Ripple cryptocurrency or XRP comes into play. XRP may be used within the Ripple network to convert money or goods being transferred. All currencies and goods will have an XRP price, and the sender can then choose to convert to XRP, send the XRP through the chain, to get to the receiver. The receiver, meanwhile, can opt to convert the XRP back to the original currency from his own gateway.
In the Ripple network, users are transacting currencies, commodities, and other units of value seamlessly. Chris Larsen, one of the co-founders of Ripple Labs and who also has extensive experience in digital finance (having founded e-Loan and Prosper), referred to the Ripple protocol as "HTTP for money". Larsen likens Ripple to gold as a standard of currency, because gold requires liquidity, trust, and utility to become a standard. "It's analogous to the Bitcoin networks. Any user can use the protocol just like they would HTTP. You can build on top of it without licensing it from anybody,"......
Here Is What You'll Learn About...
- History Of Ripple
- How Does Ripple Work?
- Ripple And Other Cryptocurrencies
- Investing In Ripple
- Areas Of Concern For Ripple
- Current Happenings In Ripple
- The Future Of Cryptocurrency
- Advice For Investing In Ripple
- Much, much more!
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