The untamed world of cryptocurrencies is ruled by Bitcoin, but is there a new contender to the throne? Not Yet. But, with a 35,000% increase in value in 2017 and a market cap of over $118 billion, it has become harder to bet against Ripple’s success. But, what is Ripple? Is it like other cryptocurrencies? Why has it been on fire? Continue reading to get answers to all these questions.
1. What is Ripple?
Ripple is a payment solutions company founded by Chris Larsen and Jed McCaleb. Their Ripple Transaction Protocol (RTXP) contains the cryptocurrency XRP. Ripple claims to offer faster, reliable, and affordable transaction solutions for financial institutions. The company has created a hundred billion XRPs and it currently holds 61% off these coins. The current plan is to release a billion coins a month.
2. Difference Between Ripple and Bitcoin
Both Bitcoin and Ripple are cryptocurrencies that use block-chain technology. But, there is a fundamental difference between them: unlike Bitcoin, Ripple cannot be mined. The currency is not setup as a mineable currency, and its use is fixed to the is Ripple network.
Both Bitcoin and Ripple use validating nodes for validating ledgers. Bitcoin has about 10,000 trusted nodes while Ripple has only five. However, they plan to add 11 more over the next 18 months. The five validating nodes are controlled by the company itself. XRP has received criticism for the absence of independent trusted validators. The XRP Ledger is available to all, so anyone can download it and become a validator. Many companies run their own nodes on the Ripple network.
3. Reasons for Recent Price Hike of Ripple
The recent price hike of XRP has to do with the currency’s expected use by financial institutions. Ripple has been successful in gaining banks as customers for its other products. Ripple’s xCurrent is a product preferred by financial institutions because it offers real-time communication, quick corrections and avoidance of delays. The company plans on introducing a new product, xRapid, that incorporates XRP. They see the new product as an opportunity to get Banks to use XRP. Investors see the potential of the currency as a financial vehicle used by banks worldwide.
XRP is a rising cryptocurrency, and one can speculate that the recent increase in its value will fuel more debates about its pros and cons. Hopefully, by now, you will have a good understanding of the basics of Ripple.