Ripple is one of the most popular cryptocurrencies, currently in the third rank based on overall crypto market capitalization. The digital currency has held the third position for quite a while, especially in the first quarter of 2018. Besides, it is the only cryptocurrency that utilizes an indigenous protocol—the Ripple Transaction Protocol (RTP), which is designed to provide instant, low-cost, global currency exchange and payments.
The Ripple Transaction Protocol (RTP) utilizes a decentralized system to supervise exchanges and payments. The network uses XRP coins, which are already pre-mined and the maximum supply set at 100 billion coins. The coins are meant to be a rare asset with a decreasing supply. Coin holders can use them to facilitate currency swaps within the network.
In 2017, Ripple was among the top performers in the crypto market, the period in which its price increased by a whopping 35,500%. All the same, the digital currency is relatively a new entrant into the market, compared to Bitcoin and Ethereum.
That said, the facts outlined in this article could help you know Ripple network better. It is helpful to learn how the digital currency works, and the key benefits it has over other leading digital assets.
#1. ‘Ripple’ is not the official name
While users keep referring to it as Ripple, the official name of the cryptocurrency is XRP. Technically, you cannot buy “200 Ripple.”
The term Ripple is derived from Ripple Labs, the company that developed the XRP token. For most people, Ripple is easier to remember and more captivating than XRP.
To illustrate the point, the cryptocurrency bitcoin usually takes the small letter while other digital assets such as Ripple, Stellar, Cardano, and others mostly start with capital letters. This is because bitcoin is not the name of a company while the names of other digital currencies refer to a company.
#2. Ripple is not mineable
Because of the crypto mining process, the circulating supply of mineable cryptocurrencies decrease. A good example is bitcoin. In the mining process, users bring together computing power to process payments for the newly minted tokens or blocks. Mining also increases the circulating supply of other cryptocurrencies.
For Ripple, the process of mining has no place in the network because the maximum supply of the cryptocurrency (100 billion), already exist. However, not all of them are in circulation.
#3. Only one product of Ripple uses the XRP token
Interestingly, Ripple offers three diverse products, but only one uses the XRP token. Even the company’s main product xCurrent does not utilize the XRP cryptocurrency.
xCurrent allows inter-banking transactions and provides compatibility between both fiat and cryptocurrencies. Actually, the partnership between American Express and Santander utilizes the xCurrent product.
xCurrent system utilizes the xRapid product for its trade, which offers various key benefits. For instance, it makes transactions faster and opens up new markets. However, the product is not in practice yet.
#4. Currently, only 40% of XRP tokens are in circulation
While 100 billion XRP tokens exist, a better majority is not in circulation yet. As of this writing, Ripple Labs owns 60 billion XRP tokens. 6.25 billion XRP tokens belong to direct owners and a further 55 billion are in escrow accounts, awaiting future distribution. It’s anticipated that in the near future, there will be one billion distributed every month, which could increase the circulating supply of the cryptocurrency in the coming years.
Currently, Ripple sells at $0.865 according to CoinMarketCap with a circulating supply of 39.1 billion tokens. The cryptocurrency has clinched the third position in terms of the largest cryptocurrency by market cap.
#5. Ripple is not a payment currency
Many new people in the cryptocurrency space hold the idea that every cryptocurrency is designed to be a payment method. However, several cryptocurrencies, including Ripple are not meant to be a payment currency. For example, XRP tokens are not accepted at any point of sale—at least not any time soon. All the same, Ripple Labs is just fine with that.
It’s important to know to know that Ripple, as a cryptocurrency, simply serves as a means of payment transfer. In other words, it helps users transfer funds from one point to another, more efficiently than other methods. This is because it is cheaper and faster than other existing alternatives.
#6. Ripple Network Works Faster
Compared to bitcoin or Ethereum networks, Ripple is faster. An average bitcoin transaction takes nearly 90 minutes while sometimes it takes between 10 and 30 minutes. Ethereum network is faster but still takes around five minutes or more.
Ripple seeks to become the fastest mode of money transfer, working instantly. According to Ripple website, the network will take only four seconds to process a single transaction. This could be a big advantage over the current wire method, especially for international transfers.
Based on the transaction speed, Ripple network can handle bigger volumes of transactions than the major cryptocurrencies. In fact, bitcoin and Ethereum can handle nearly 3 and 15 transactions per second respectively, which brings about the question of scalability.
On the other hand, Ripple network can consistently handle 1,500 transactions per second. The company says it is possible to scale the network to handle fifty thousand transactions per second, which nearly matches Visa’s network potential. Based on the benefits, many financial companies such as Santander, American Express, and MoneyGram International are out to test the Ripple technology.
#7. Ripple Charges Miniature Transaction Cost
Transaction cost is still one of the biggest hurdles facing other cryptocurrencies. For mined digital currencies, miners receive the fees as incentives for using their computing knowledge and power to process the transactions.
In this regard, some cryptocurrencies such as bitcoin offer very high transaction costs. In the last quarter of 2017 and first quarter 2018, bitcoin’s transaction fees spiked to more than $20 per transaction. As of this writing, the average transaction fee in bitcoin network is $1.74 according to Bitinfocharts.com. However, this still sounds less practical for daily payment transactions.
Ethereum, the second-largest crypto network, charges around $0.4 per transaction in fees. On the other hand, Ripple currently charges less than a penny in transaction fees. As of this writing, the average transaction fee on the Ripple network is $0.0056 delivering more than thirty thousand transactions per hour. This is according to information published here.
Ripple Set for Major Real-world Implications
Since its inception, Ripple has carved an important niche in the crypto market, following its remarkable footing and the ability to transform the way people transfer money over long distances. All the same, Ripple is a unique cryptocurrency, different from bitcoin and Ethereum in several ways that investors should investigate.
Ripple is meant to be a rare digital asset with a constantly decreasing supply. There are more than one hundred trading pairs on various crypto exchange platforms, through which investors and traders can acquire XRP tokens. In our next article covering the Ripple Network, we’ll expose various trading options on various exchanges giving systematic guidelines on the entire process.
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Tony is a writer for the crypto space. He presents cryptocurrency and blockchain topics to the public in a way that he only can. While carefully researched, this article should not be taken as an express investment guide. Do your own research and consult a financial advisor before you invest in cryptocurrency.
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