Ripple, is a digital currency, which can also be used for transfer of money from one person to another. Just like cryptocurrency, the transactions in Ripple, are also stored in a common ledger that allows auditability and is unalterable in nature. Ripple is definitely not a pseudonym of cryptocurrency. But is one tweaked form of cryptocurrency, created to perform the intended task. The financial information stored in one ledger N+1 is compared to the transactions stored in N+2 and if there is any disparity in the transactions, recorded in both the ledgers, it is identified immediately. The required alterations are made with immediate effect to avoid a slip up in the future.
Ripple or XRP as it is labelled, is used to transfer real currency or precious metals like gold without any transaction cost and at a high speed. The Ripple gateway is a middleman or financial intermediary that facilitates the transfer of money from one person to another. To enable a transaction, the sender (individual or a company) has to register with the Ripple gateway. This will help the registrant to transfer, deposit and withdraw funds.
The main principle underlying this ripple currency is that one need not have the same currency denominations to complete a transaction. For example, Kate may need bitcoins whereas Frank may have only Bitcoins. The payment gateway enables a transaction as it doesn’t differentiate between the currencies of different countries.
How’s Ripple different?
This centralised digital currency in the realm of decentralised currencies works in a different way that makes it distinct from the cryptocurrency King- Bitcoin. Unlike Bitcoin that uses blockchain technology, Ripple uses Hash tree technology to complete a transaction. Ripple currency is introduced to facilitate easy transfer of lots of cash from a number of people within less span of time. For example, the ripple protocol can facilitate 1500 transactions per second among different people at the same time, whereas Bitcoin can facilitate only 10 transactions per second.
Ripple doesn’t use lots of energy like Bitcoin and doesn’t require proof of work to complete a transaction. No one company can claim the development of Bitcoin as lots of people are involved in it. But, the development of Ripple can be attributed to Ripplelabs and hence it is a private currency, unlike other cryptocurrencies. Ripple doesn’t create inflation because the 100 billion Ripple currencies that were initially issued during ICO are in circulation without any further additions to the number of that currency.
The value of ripple currency has faced many swirls as the value increased to a historical high in 2017 along with other cryptocurrency and recorded a dip in value early this year.
In short, Ripple is one form of cryptocurrency that is issued by Ripple Labs that facilitates monetary transactions between different people across the planet. Ripple uses a different Hash Tree technology to save transactions that are constantly validated by comparing different transactions across the servers. The transaction cost in Ripple currency is negligible and it has enabled 35000 million transactions, by far. This digital currency uses UNL and not block chain as in Bitcoin to secure the transactions stored in the server.