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What is Ripple?

BitForex Editor
Dec 29, 2020

Many people are asking if ripple is a currency like Bitcoin or a platform for transfer. If that is also your question, then the answer to it is just right below. Defining ripple singly as a cryptocurrency or as a platform is not complete because they both serve a combined purpose. In this article, the explicit definition you need to know what Ripple truly is, how it works, and the benefits are carefully elaborated.

What is Ripple?

Ripple is both a platform for transferring any kind of currency and also a name was given to a form of cryptocurrency known as XRP. The platform which is known to act as a middle man to different financial transactions works with a high delivery speed that makes it better than other payment platforms. It does this by connecting gateways which are the payment agents with some lines of code that are known to be secured.

The Ripple platform comes in handy to solve the problems of having to do cross-border transactions that take days to it be completed and charge high. With its currency, XRP at its beck and call, it makes it easier to link up the transaction with a common currency in use. Aside from the extremely reduced period that ripple platform has helped cut short from the forceful imposition by traditional banks, it also bypasses the country's rules and policies. In fact, banks use the ripple network these days to get their business done on time without hiccups.

What is XRP?

As earlier mentioned, then XRP is the form of ripple currency that is fast becoming a household item owned by many crypto enthusiasts as it is already ranking fourth in the market. Just like Bitcoin and any other crypto, Ripple can be purchased and exchanged for a fiat currency. Interestingly, this currency can also be exchanged for other cryptocurrencies. For instance, if you want to transfer Bitcoin but you have dollars, the ripple is a master card that can solve that problem by undergoing some transfers to get it done. Plus the cost of doing those transactions is as little as $0.000001 which makes it a cheaper and better alternative crypto and platform option.

How does ripple work?

Imagine you need dollars and all you have is your grandma's gold she left for you as an inheritance and someone else wants gold but has Bitcoin stored up in his wallet. If you decide to use the ripple platform to do your business, ripple automatically connects you with someone who needs what you have and someone who can give you what you need. The person holding Bitcoin doesn't have dollars but ripple can get another person that has dollars but needs Bitcoin. It is like a chain but it requires trusted parties to get it done.

Having imagined the previous illustration, take another one of your friends trying to send you money from his town A. Your friend takes the money to a payment agent after he might have given you the password required to receive it before depositing it there. The payment agent will then call another agent close to you to give you money and refund it back when there is a similar transaction to be done in town A. This is how Ripple works but in a more advanced form that gives a wider option as seen in the first illustration. So, the Ripple platform uses the ripple currency to mediate between any financial transaction that needs to be performed.

What is it used for?

The Ripple (both platform and currency) is used for so many things of which just three would be emphasized here because of their widely known importance.

1. Transacting faster

While other transaction options such as banks and Bitcoin may take hours or days for confirmations to be done, the ripple takes a few seconds to do that. Even with the number of ripple currencies that tipple has in store which is more than a 100billion, it still takes it lesser time to deliver accurate transactions. So, with ripple, the issue of having to wait weeks for a cross border deal to be done, just blink an eye and see it done.  

2. Saving exchange cost

Anything that has to do with cross-border transactions traditionally comes with a lot of costs because of the exchange rate. For instance, if you want to send Euro but you have Bitcoin, the exchange to dollars first before it is then converted to Euro is usually not pocket friendly and that is why ripple is the best way out. Ripple doesn't totally remove those elaborate charges because of DDoS attacks but reduce them to make it reasonably affordable for anybody.

3. Creating a flexible payment ecosystem

The ripple platform allows for currencies to be created to permit transactions to be faster depending on the user. So, if for instance, you want to send a form of currency that you think would be received faster, ripple allows that alteration and that is why it is an open-source network.

Even with all this description, the title questions still beg for an answer to whether the ripple is a good form of investment or not? See these three highlights that answer that question.  

1.It is backed up with a credible organization yet it is centralized and can be controlled anytime.

2.It saves cost and doesn't allow inflation to take root yet it is open source and can be accessed but anybody.

3.It has a bright future if banks are fully sold out to it but it is just like being an investor in a bank because of the centralization.

So is it a smart decision to invest in ripple? The highlights have surely helped you see the benefits and risks of any decision you make concerning ripple. You just need to know the right time and choose wisely.

Final thoughts

No doubt, you have seen what ripple is and its complicated network with the XRP which is the best option for transacting funds. If you want to really benefit from all that has been listed here, invest in ripple and enjoy a better transacting experience for all agreements.

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