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    Default What is a Ripple?

    What Is Ripple?

    Ripple, or sometimes called XRP, is both a cryptocurrency as well as a platform. Technically, Ripple is the brand of the firm and network, while XRP is the cryptocurrency. The Ripple platform would be an open system designed to facilitate quick and inexpensive digital transactions. Ripple has built a reputation for itself, and several financial institutions and analysts expect a good future for this network. The network is projected to boost the global liquidity of money by enabling transactions throughout the world and take place at record speeds and for minimal prices. XRP set it's all-time daily high on January 4, 2018 is when value of one XRP reached $3.84. However, a negative trend began following the peak, and by September 2018, XRP dropped more than 93 percent of its value from its January 2018 high, reaching a new low of $0.26 on September 11, 2018. Although there looked to be times of hope, the negative price trend lasted through 2018 and 2019, and the prolonged dismal performance culminated in XRP hitting it's all-time daily low of $0.12 on March 13, 2020.

    In November 2020, XRP had an increase in pricedaily it's high reaching at $0.77 on November 24, 2021. From November 2020, the price of XRP has shakily trended higher, reaching a daily high of $1.96 on April 14, 2021. The substantial and widespread May 2021 price changes in the crypto market that apply to the bulk of exchange-traded digital assets are presently mirrored in XRP's pricing. As on May 20, 2021 the estimated closing of XRP was $1.18.1 How can an investor acquire Ripple? Like other cryptocurrencies, Ripple is accessible on multiple different exchanges. XRP, Ripple's cryptocurrency token, may be acquired on a variety of exchanges, according to the Ripple website.

    Special Considerations

    What is the procedure for purchasing XRP tokens? For US investors, it is now a difficult issue to answer. XRP is traded on over 100 worldwide marketplaces and digital asset exchanges, as per the XRP Token FAQ. However, the Securities and Exchange Commission has filed a lawsuit against Ripple Labs, Inc. In December 2020, the Securities and Exchange Commission (SEC) filed a lawsuit towards Ripple, saying that their sale of XRP constituted an unregistered securities offering worth approximately $1.38 billion USD. As a result, numerous exchanges have removed XRP from their listings. In the United States, buying XRP has become more difficult, though not impossible, since several exchanges have temporarily ceased trade. Some exchanges may choose to de-list solely in US markets and/or in countries where they operate, or they may choose to de-list internationally. The following are some instances of well-known exchanges that have temporarily delisted XRP while the litigation is being resolved:







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    Phemex Crypto Exchange, which had earlier delisted XRP, has reversed its decision and reinstated XRP trading on its platform for both spot (XRP/USDT) and contract (XRP/USD) trading. As of May 21, 2021, it's unknown when the legal action will be resolved, or what the effects of the ongoing courts judgements and motions will be in the weeks and months ahead. While you may not have been able to buy XRP right now, the conclusion of this lawsuit has the historic potential to determine not just Ripple Labs, Inc.'s and XRP trading's future, as well as the regulatory future of cryptocurrencies. The cryptocurrency investing world appears to be restricted to Bitcoin from the outside. Bitcoin, being the very well cryptocurrency, is the market leader in terms of market capitalization and investor interest. There are, however, various additional possibilities for people looking to diversify their portfolio and try out cryptocurrencies that take a different approach to the notion of digital currency. One of them is Ripple's XRP. In March 2021, the cryptocurrency was placed fourth in terms of total market capitalization, after Bitcoin, Ether, and Binance coin. Let's look at what sets XRP apart from Bitcoin and other popular digital tokens.

    XRP vs. Bitcoin

    Bitcoin is a digital currency that is supported by a public blockchain record. It is used to make payments for products and services. The blockchain idea, which is a public database of verifiable transactions and record keeping, underpins the bitcoin network. Miners continuously validate transactions and add these to the Bitcoin blockchain. Miners are compensated with BTC when transactions are successfully validated in return for their time and the computational power required to validate the ledger in this way. Ripple Labs' products use XRP as their native coin. Its products are utilized for payment settlement, asset exchange, and remittance systems that function similarly to SWIFT, a service for international money and security transfers provided by a network of banks and financial intermediaries4. In comparison to Bitcoin, XRP is pre-mined and employs a simpler mining mechanism.

    What are the key distinctions between Bitcoin and Ripple?

    The following are the primary differences between Bitcoin and XRP:

    Both have their own ways for verifying transactions

    Instead than using the blockchain mining idea to authenticate transactions, the Ripple network employs a unique distributed consensus process in which participating nodes poll each other to verify the transaction's legitimacy. This allows for near-instant confirmations without the need for a central authority. As a consequence, XRP stays decentralized and outperforms many of its competitors in terms of speed and reliability. It also implies that, in comparison to Bitcoin, which is regarded an energy hog, the XRP consensus method uses very little energy.

    XRP is cheaper and faster than Bitcoin

    Bitcoin transaction confirmations can take several minutes and are linked with significant transaction charges due to the intricate and expensive nature of mining utilized in the cryptocurrency. XRP transactions are verified in seconds and have very cheap transaction fees. XRP transactions are charged in the same way as bitcoin transactions are. A tiny amount of XRP is billed to the user each time a transaction is completed on the Ripple network (individual or organization)

    There are more XRP coins on the market

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    At the time of debut, about 1 billion XRP were pre-mined and progressively released into the market by the company's major investors. Bitcoin, on the other hand, has a supply limit of 21 million coins, which means there can only ever be 21 million Bitcoin in existence. The artificial scarcity of BTC has sparked investor interest in the currency's potential as a store of wealth.

    XRP and Bitcoin Have Different Circulation Mechanisms

    When miners discover bitcoins, they are released and added to the network. They have no set release date, and their supply is mostly determined by network speeds and the complexity of the algorithm used to create coins. The release of XRP is controlled by a smart contract. According to an in-built smart contract, Ripple expected to distribute a maximum of 1 billion XRP tokens every month; the current circulation is above 50 billion. Any XRP that is not spent in a given month will be returned to an escrow account. This system assures that an overstock of XRP cryptocoins will not lead to abuse, and it will take several years before all of the cryptocoins are available. Overall, XRP outperforms bitcoin in terms of transaction processing times and transaction fees.

    Bitcoin vs. Ripple Example

    Here are some analogies to help you grasp both using real-world examples.

    Peter, who lives in the United States, goes to Walmart and pays in US dollars. He can also use his US dollars to buy other currencies for trading and investment, such as GBP or JPY, and then sell them for profit or loss at a later date. Bitcoin is a digital money that functions similarly to real-world US dollars, for example. Peter can buy something with bitcoins and pay for it with bitcoins, or he may buy bitcoins for trading and investing and then sell them for profit or loss at a later date, just like any other fiat currency like the GBP or JPY. If Peter in the United States wishes to transmit $100 to Paul in Italy, he may do so by asking his American bank to do so. Following the appropriate charges, Peter's American bank will send instructions to Paul's Italian bank, using the current SWIFT system, to credit Paul's account with the equal euros (or USD). This process may entail substantial costs on both sides and might take many days to complete. Ripple, a payment and settlement system with its own currency, the XRP, comes to mind. For asset transfers on the Ripple network, Ripple's payment mechanism employs XRP tokens. Peter may quickly convert the same $100 into comparable XRP tokens, which may then be sent to Paul's account via the Ripple network. Paul will get the XRP tokens after the transaction has been verified and authenticated by the decentralized Ripple network. He'll have the option of converting it back to USD or indeed any currency he wants, or keeping it as XRP tokens. The verification procedure is much faster than bitcoin and other traditional money transfer mechanisms.

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    Ripple is a technology that acts as both a cryptocurrency and a digital payment network for financial transactions. It was first released in 2012; was co-founded by Chris Larsen and Jed McCaleb. Ripple's core process is a payment settlement asset exchange and remittance system, similar to the SWIFT system for international money and securities transfers, which is used by banks and financial intermediaries that trade cross-currency.
    The token used for the cryptocurrency is predefined and uses the XRP token. Ripple is the company and network name, and XRP is the cryptocurrency token. The purpose of XRP is to serve as an intermediary exchange mechanism between two currencies or networks - as a sort of temporary settlement layer denomination.


    Ripple is a blockchain-based digital payment protocol and network with its own cryptocurrency, XRP.
    Instead of using blockchain mining, Ripple uses a consensus mechanism, through a group of bank servers, to commit transactions.
    Ripple transactions use less energy than bitcoin, commit in seconds, and cost very little, while bitcoin transactions use more energy, take longer to commit, and include higher transaction costs.
    Ripple is among the top five most valuable blockchain-based tokens by market capitalization.

    • Understanding Ripple

    Ripple operates on a decentralized, open-source, peer-to-peer platform that allows seamless transfer of money in any form, whether in dollars, yen, euros or cryptocurrencies such as litecoin or bitcoin. Ripple is a global payments network and counts leading banks and financial services among its customers. XRP is used in their products to facilitate quick conversion between different.

    • Ripple currencies like a Hawala digital network

    To understand how the system works, consider a money transfer structure where the two parties at each end of the transaction use their preferred intermediaries to receive the money. In effect, Ripple works like a digital hawala service. Hawala is an informal method of transferring money, usually across borders, with no physical money actually being moved.
    Let's say Lawrence needs to send $100 to David, who lives in a different city. Lawrence provides the funds to be sent to David to his local agent, Kate. Lawrence also provides the funds with a secret password that David must answer correctly in order to receive funds in his city. Kate alerts David's agent Rose to the details of the transaction - recipient, funds to be refunded and the password. If David gives Rose the right password, Rose will give him $100.
    However, the money comes from Rose's account, which means Kate owes Rose $100 (which will be paid off at a later date). Rose can keep a journal of all Kate's debts, which Kate would pay on an agreed day, or make counter transactions that would balance the debt. For example, if Rose were also Martin's agent and Martin needed to transfer $100 to Itios whose agent is Kate, this would balance the $100 owed to Rose since Itios will be paid from Kate's account.

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    Although the Ripple network is a little more complex than this example, it demonstrates the basic principles of how the Ripple system works. From the example above, you can see that trust is needed to initiate a transaction - trust between Lawrence and Kate, Kate and Rose, and David and Rose.
    Ripple uses a medium, known as a Gateway, as the link in the chain of trust between two parties who want to make a transaction. The Gateway acts as the credit intermediary that receives and sends coins to public addresses over the Ripple network. Any person or company can register and open a gateway, which authorizes the registrant to act as an intermediary in exchanging currencies, maintaining liquidity and transferring payments over the network.

    • Ripple's Digital Currency XRP

    The digital currency, XRP, acts as a bridge currency to other currencies. It does not discriminate against any fiat currency / cryptocurrency, which makes it easy to exchange any currency for another. Each currency in the ecosystem has its own portal, for example CADBluzelle, BTCbitstamp and USDsnapswap. If David wanted bitcoins as payment for services rendered to Lawrence, Lawrence need not necessarily be in possession of any bitcoins. He can send payment to his gateway in Canadian dollars (CAD) and David can receive bitcoins from his gateway. A gateway is not required to initiate a complete transaction; multiple gateways can be used, forming a chain of trust that spreads among users.

    Maintaining balances with a gateway exposes the user to counterparty risk, a risk that is also present in traditional banking. If the gateway does not honor its responsibility, the user may lose the value of their money held on that gateway. Users who do not trust a gateway can therefore transact with a trusted gateway which in turn handles the "untrusted" gateway. In this way, the IOU will be negotiated through a trusted or credit-certified gateway. Counterparty risk does not apply to bitcoins (and most altcoins), as one user's bitcoin is not another user's IOU or liability.

    • How Ripple works

    The Ripple network does not work with a proof of work (PoW) system like bitcoin or a proof of bet (PoS) system like Nxt. Instead, transactions rely on a consensus protocol to validate account balances and transactions in the system. Consensus works to improve the integrity of the system, avoiding double spending.
    A Ripple user who starts a transaction with multiple gateways but tries to send the same $100 to the gateway systems will have everything but the first transaction deleted. The individual distributed nodes decide by consensus which transaction was made first. Confirmations are instantaneous and take about five seconds. Since there is no central authority that decides who can configure a node and commit transactions, the Ripple platform is described as decentralized.
    Ripple keeps track of all IOUs in a given currency for any user or gateway. IOU credits and transaction flows that occur between Ripple portfolios are publicly available in the Ripple Consensus Book. But even though financial transaction history is publicly recorded and made available on a blockchain, the data is not tied to the ID or account of any individual or company. However, the public record of all trades (ie the blockchain) makes the information susceptible to measures of anonymity.

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    The Ripple payment system is primarily aimed at banks, although individual investors may speculate on the price of XRP.
    Special Considerations
    Ripple improves on some of the disadvantages attributed to traditional banks. Transactions are settled in seconds over the Ripple network (although the platform handles millions of transactions frequently). This is different from banks, which can take days or weeks to complete a wire transfer. The fee for performing transactions on Ripple is also minimal, with the minimum transaction cost required for a standard transaction set at 0.00001 XRP, compared to the high fees charged by banks for performing international payments.
    In May 2021, an XRP was worth about $1.60, and Ripple was the fifth-largest cryptocurrency with a market capitalization of about $60 billion.

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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