What is Ripple XRP? – New Zealand’s XRP Overview

Ripple XRP logo icon with white back ground

What is Ripple XRP? – An NZ Cryptocurrency Rundown

Ripple (XRP) is a centralised cryptocurrency, that aims to make it faster and cheaper to send money around the world. While most cryptocurrencies try to get far far away from governments, banks, or any form of central control, Ripple is the opposite.

Ripple is trying to work with the old school banking system to change the way international payments work.

First created by Ripple Labs in 2012, like Bitcoin, Ripple uses a distributed transaction ledger (blockchain) to maintain payment security and accuracy. However, this is where similarities end.

XRP transactions are performed across a permissioned blockchain. Every transaction is processed by a validator who has special permission to help maintain the Ripple payment network. This is very different from Bitcoin. With Bitcoin, it is possible for anyone to help validate transactions.

What’s good about Ripple XRP?

  • Fast – 4sec (compared to 2min for Ethereum, 10min+ for Bitcoin, and 1-5 days for traditional cross-border payments)
  • Scalable – can (theoretically) scale to handle the same volumes as the Visa network
  • Cheap – currently it costs 0.00001 XRP (just fractions of a cent) to send a payment on the network
  • Ripple has a very impressive partners list already
XRP ripple partners list

You can see Ripples full partnership list here – but the list includes many huge names such as:

  • Westpac
  • ANZ
  • HSBC
  • The Bank of America
  • Western Union
  • The Bank of England
  • JP Morgan
  • The Royal Bank of Canada
  • The Commonwealth Bank of Australia
  • The National Bank of Abu Dhabi
  • Sony Bank
  • The Bank of Thailand
  • Barclays
  • Mitsubishi Corporation
  • American Express

With over 200 partnerships with major banks like ANZ, Westpac and the Bank of America – the future of XRP at this point of time looks bright.

Ripple XRP coins with people pointing to various things on red blueprint

Is Ripple XRP a company, currency or network?

The structure around Ripple is more complicated than most cryptocurrencies, and “Ripple” can actually mean a few different things:

  1. First, there’s Ripple the currency, or XRP as it’s known for trading. This is the coin that you can buy.
  2. Then there’s the privately held company behind the currency, known as Ripple Labs
  3. Finally, there are the Ripple networks, or the infrastructure and systems created by Ripple Labs. These are known as XCurrent, XVia and XRapid, and they all do different things.
Ripple XRP logo on silver coin

How does XRP work?

For the last 40 years, a Belgium company called SWIFT has dominated the global payments infrastructure. Facilitating roughly 5 trillion dollars per day on its network, Swift has undoubtedly held the throne for global international payments over the last half-century.

Due to this domination, however, they haven’t been working hard on upping their game and innovating. This is why In 2019, it still takes 1-5 days to send money overseas using the traditional money transfer system. This is where Ripple comes into play.

1. Bank A wants to send money to bank B.
2. Bank A uses Ripple’s payment system to instantly convert local currency into XRP
3. XRP is sent from Bank A Bank B in less than a second with minimal fees
3. Bank B receives XRP and instantly converts it to their local fiat

Ripple XRP transaction speeds infograph

What does it mean to be ‘Centralised’?

Ripple is built on blockchain technology, just like Bitcoin. Unlike Bitcoin, however, Ripple is centralised. This means that only a limited number of users/computers (known as “nodes”) can validate the transactions on the network. The Ripple network has 55 nodes, and these nodes are appointed by Ripple Labs. For comparison, there are no limits on the number of nodes on the Bitcoin network, and anyone can opt-in to be a Bitcoin node.

It’s also interesting to note that Ripple Labs holds 60% of all XRP, and the founders of Ripple own 20%. So only 20% of XRP is actually out there on the market.

Stack of gold XRP coins

Ripple Vs. Bitcoin

Ripple uses a permissioned blockchain because Ripple is designed to be used by mainstream banks and payment processors.

Banks occasionally have to reverse a transaction or freeze customer funds at the request of law enforcement official. However, with Bitcoin, reversing payments is not possible.

By comparison, reversing payments and freeing customer deposits with Ripple is easy. As a result, XRP and the Ripple network is fully compliant with anti-fraud, anti-money laundering, and other worldwide regulations governing traditional payment settlements.

Stack of gold XRP coins

Is Ripple a Good Investment?

Ripple’s payment network is already being used by several major banks and financial institutions. XRP coin prices have also previously topped highs of almost $4. Many, therefore, consider XRP a top coin to watch in the run-up to 2020. Others, though, aren’t so sure.

Some believe that Facebook’s Libra undermines the basic use case of XRP. Others believe that the risk to XRP is minimal. This is because Libra is designed to be used by everyday Facebook users. ⁠— Not banks or mainstream financial institutions.

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