August 14, 2019

Ripple: Here is all you need to know about this blockchain project


Ripple is among the most complex blockchain projects in the world. It includes a cryptocurrency. But it’s not about the cryptocurrency. It also includes a blockchain network capable of running decentralized applications and smart contracts. But it’s not about that either.

Ripple includes a coin, a blockchain of sorts, and several platforms designed to allow for fast and cheap transactions to be carried out by banks all over the world. It aims to displace SWIFT as the system that moves money across borders in the planet, and it very well could achieve it.

In this article, we will explain you in full detail what Ripple is and why you should be interested in it.

We start at the beginning. Ripple Labs is a private company based in San Francisco. The founders were Chris Larsen and Jed McCaleb (of eDonkey fame, who then moved on to found Stellar Lumens). It’s been around since 2012 (called Opencoin in the beginning, then switched to Ripple in 2015).

The company has had a laser-light focus in making cryptocurrencies useful in the real world, especially at institutional levels. They’ve developed a series of technologies that aim to make the world’s international financial system quicker, safer, and cheaper. Ripple pursues that goal by providing several software platforms for banks, financial institutions, and remittance services, as well as a cryptocurrency (XRP), and a network of partners.

Unlike Bitcoin, Ripple is not just a digital asset but a very complex organization with a very clear purpose in mind. Join us as we explore Ripple in full detail.


The first ingredient in Ripple’s dish is called RippleNet. It’s a network of financial institutions that are using Ripple’s technology to improve their international money transfer service. Banks, money remittances, and other institutions.

Let’s illustrate Ripple’s idea. Alice lives in New York. She owns some really expensive chocolates she doesn’t want, but she wants to attend this baseball games she cares about. Then, we have Bob, who is in Los Angeles and owns a very rare stamp.

The stamp is not that interesting to Bob, but he’d like some good quality chocolate and he’d be happy to trade it. Charles lives in Alaska and he’s been looking for that particular rare stamp for a very long time and has a ticket for the baseball game in New York he can’t use anyway.

Under the traditional financial and trading system, it’s hard for our three friends even to know they exist, let alone come together and exchange their goods. So they can’t find each other, and they all have to keep that object they own and don’t appreciate all that much.

This is where Ripple comes in. Within Ripple’s world, if you have chocolate and want baseball, the system will find out how to make that trade happen. On top of that, the platform accepts payments in any currency (Bitcoin too) and the transaction cost is incredibly cheap ($0.00001). This fee is so low that it’s almost free, but it isn’t there to make the system profitable but to avoid DDoS attacks.


XRP is the cryptocurrency created by Ripple Labs to support their system. It’s a mediating asset and it’s the system standard currency. So value within the Ripple Network is written using XRP. Also, it’s used to exchange both fiat and digital currencies across borders.

You can think of it as a wildcard currency. If you own dollars in Boston but need to pay Euros in Berlin, then the network will take your dollars, convert them into XRP and send then to Berlin, where the XRP will be sold for Euros.

A feature in Ripple’s exchange protocol is that the tiny fee ($0.00001) it takes to complete the transfer is automatically “burned.” That means it disappears from the system and never comes back; it stops circulating. This helps prevent inflationary pressure on the coin, and it makes it expensive and inconvenient for spammers to try their tricks.
The founders.

As stated before, it was Jed McCaleb who started it all as early as 2004. Back then it was a prototype protocol, something of a proof of principle rather than an application. It was a neat set of computer code that did what it was supposed to do but that was going nowhere. That changed in 2013 when Mr. McCaleb started to look for investors for Ripple Labs. He also partnered up with some very well known names in the cryptosphere.

Mr. McCaleb is a famous computer programmer and entrepreneur who’s been behind some of the best-known projects in the digital world, not just cryptocurrencies. He created the eDonkey network and the Overnet. Besides Ripple, he’s also the man behind Stellar Lumens and Mt. Gox, a cryptocurrency exchange, which was the world’s main (with 70% of all Bitcoin’s trade volume).

The other founder is Chris Larsen who is an angel investor (the kind of investor that provides money for start-ups), a business executive and a privacy activist. Mr. Larsen is considered to be the richest man in the cryptosphere, and he’s co-founded many companies in fintech.
The list of Ripple investors is quite long, and it includes some very big names such as Andreessen Horowitz, Pantera Capital, Google Ventures, Seagate Technology, Santander, Standard Chartered among many others.

Ripple’s innovative consensus algorithm.

Ripple’s technology doesn’t include a blockchain. At least not in the same sense as Bitcoin or Ethereum. So how can it verify and ensure all transactions? By using the Ripple protocol consensus algorithm (RPCA) which the project’s own patented technology.

In this context, “consensus” means that every node in the network must agree with every other node on every transaction. This could sound like a “democratic” model, but it’s not because a majority is not enough, there must be unanimity at all times.

Every node must agree, if even a single one doesn’t then the whole network works to figure out why that is happening first, and, then, to fix it so that the consensus can be restored and the network can move on to the next thing.

Ripple’s uses

Unlike many other cryptocurrencies, Ripple and XRP are not meant to be a general use system or a retail coin. This platforms and currency are designed with the following applications in mind:
Efficient currency exchange. There are many fiat currencies in the world and most of them can’t be directly exchanged. Banks and remittance services usually buy US dollars as a mediator and then use those dollars to buy the local currency of the target country to complete the operation.

This makes things rather slow and expensive because there’s a commission to be paid when you buy the USD and when you sell them. Ripple can also be the mediator currency for this process, but it’s much quicker and cheaper than the USD.

Quick international transactions. In Bitcoin, a transaction takes about an hour to be confirmed. In the traditional financial system, international transactions are quite expensive, and they can take days. In Ripple, it takes four seconds, and it’s very cheap.

Means of trade. What’s your hobby? Vintage vinyl records? Collecting action figures? Coins? Stamps? You name it, with Ripple you can turn your local currency into a digital asset that allows you to tap into all those markets quickly and safely.

The Benefits

While Bitcoin is (and will probably always be) the leading name in crypto coins, Ripple’s unique features make it more convenient for everyday use, even if it’s not as famous yet. First of all, Ripple doesn’t require mining, and it’s built from scratch to be a day to day tool. As such, it doesn’t need as much power as Bitcoin, and the transactions are quicker and cheaper.

The project aims to serve banks, and it’s not a loose confederation of programmers as many other assets are, but a real corporation. While this doesn’t mean the currency has a central authority as such, the network is governed, and that makes it easier for traditional players to trust the technology more quickly.

Last but not least, XRP can be exchanged into any other digital or fiat currency in the world, or even gold, coffee or oil, very cheaply.

These benefits are so real that many of the world’s biggest banks are adopting Ripple to do all their international transfer business. Among them are Santander, Axis Bank, Yes Bank. Westpac, Union Credit, NBAD, and UBS just to name a few.

Is it a good investment?

Well, it has pros and cons. Is it 100% safe? It’s not. No investment in this planet is completely safe, there is always a risk and digital assets have been even more volatile than traditional financial markets.

That makes them a lot more exciting but also a lot riskier. In the end, it’s your own decision and you must do your own homework before you jump in. Here is some relevant information to get you started with your research.


As a corporation, Ripple is a real institution that has earned the trust of many other corporations and companies such as banks.
There is no inflationary pressure for Ripple because all tokens are already in existence.

As more banks join the Ripple Net and use the platform and the currency to complete their own operations, the token’s value can only go up as all that activity creates demand. And Ripple is getting, on average, a new bank per week to come on board into the system.


The centralization in Ripple is very controversial. While David Schwartz (the company’s CTO) has gone to great lengths to prove that Ripple is even more decentralized than Bitcoin, not everybody has bought it. In some aspects, Ripple is more like a bank than a crypto coin
Ripple Labs still owns 61 percent of XRP.

The company has ensured that it won’t have influence over the price by placing all those tokens under an escrow smart-contract, but they still own it.

It’s all open source. Everybody can read the code which means, anybody can run it and try to hack it. It’s hard to beat a network in which the consensus must be unanimous to perform an operation, but it could happen.

Ripple’s bad mojo

Ripple is a very solid project, started by people with big reputations in the cryptosphere, it’s grown solidly, and it’s proven its usefulness to the world already. And yet, it remains one of the most criticized and unpopular crypto-projects in the world. Why is that?

Ripple is trying to make life easier for banks. This in itself is controversial for crypto fans. Remember that when Satoshi published the Bitcoin protocol and brought the network alive, he stated very clearly the objective of having Bitcoin get rid of all banks and the world’s traditional financial system.

So, in this sense, it’s working against the original idea of a cryptocurrency, and that’s controversial.

Ripple talks a big game. They claim to have lots of banks the world over that are using their platform, and, they’re right, that information is authentic. The problem is that those banks (except for Santander and a handful more) are not using Ripple’s platform in production.

They’re just testing it. And those who are really using it, are transacting fiat money, they’re not using the XRP token so maybe they’re not as persuaded to go with Ripple all the way.

Another issue is transaction freezing. The network allows for Ripple to freeze a transaction if it thinks there’s a good reason for it. This can’t possibly happen in Bitcoin, for instance, and the action of any central authority is not a welcome feature in the digital asset community.

So now you know. There is more detail to find out about Ripple. We cover news and technical details about this project very often so if you want to learn more, you just need to browse through this website and find some more of our articles.

[Image courtesy of Flicker]

Disclaimer: All information provided through this article should not be regarded as investment advice, nor should be taken for granted for crypto trading purposes. Before making any investment or trading plans, make sure to inquire about the information diligently by carrying out your very own research. Thank you.

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