With a 35,000% increase in value in 2017 and a market capitalization of over $118 billion, Ripple has become a topic of much discussion among analysts and investors. But what is Ripple? Is it like other cryptocurrencies? Why is it burning lately? Keep reading to get the answers to these questions.
1. What is Ripple?
Ripple is a payment solutions company founded by Chris Larsen and Jed McCaleb. Their Ripple Transaction Protocol (RTXP) contains the cryptocurrency XRP. Ripple claims to offer faster, reliable and affordable transaction solutions for financial institutions. The company has created one hundred billion XRP and currently holds 61% of the coins. The current plan is to issue one billion coins per month.
2. Differences between Ripple and Bitcoin
Both Bitcoin and Ripple are cryptocurrencies that use blockchain technology. But there is a fundamental difference between them: unlike Bitcoin, Ripple cannot be mined. The currency is not set as a mineable currency and its use is fixed to the Ripple network.
Both Bitcoin and Ripple use validation nodes to validate ledgers. Bitcoin has about 10,000 trusted nodes, while Ripple has only five. However, the company plans to add 11 more over the next 18 months. Five validation nodes are controlled by Ripple. XRP has received criticism for the lack of trusted independent validators. The XRP Ledger is available to everyone, so anyone can download it and become a validator. Many companies are running their own nodes on the Ripple network.
3. Reasons for Ripple’s recent price increase
The recent increase in the price of XRP has a lot to do with the expected use of the currency by financial institutions and the investment of investors who believe the hype. Ripple has been successful in getting banks as customers for its other products. Ripple’s xCurrent is preferred by financial institutions because it offers real-time communication and fast corrections, thereby reducing delays in bank transactions. The company plans to introduce a new product, xRapid, which includes XRP. They see the new product as an opportunity to get banks to use XRP. Investors see the currency’s potential as a financial instrument used by banks around the world.
Ripple, or more precisely, XRP, is a cryptocurrency on the rise. It differs from the leading digital currency Bitcoin because its supply is controlled by the founding company. Ripple is counting on banks to adopt it in the future. It can be speculated that Ripple’s recent increase in value will fuel more debate about its viability as a cryptocurrency.