Ripple is a what some call a crypto 2.0 network, which is much more than a digital currency and a payment system. Ripple is in fact a digital payments network for real-time transactions, which has a digital token (XRP) associated with it. The value of XRP has risen by a factor of 40x in 2017 alone.
The RipplePay protocol on which Ripple is built, actually predates Bitcoin. Still, the actual Ripple network was only launched in 2012. Besides its own, native currency (XRP), the Ripple network allows the transaction of any currency. What’s more, it also lets users issue their own currencies.
What most laymen know about the Ripple network is limited to its native currency, XRP. XRPs fulfill several key roles within the larger Ripple system. They are used as reserve for any address using the network, and they also pay transaction fees. Used as a bridge currency within the network, the XRP also doubles as an efficient anti-spam mechanism.
The peculiarity and draw of the Ripple network consists in its IOUs – user-created currencies. The network allows for the direct trading of these IOUs, among other perks, such as multi-currency bouncing.
Critics of Ripple are quick to point out the flaws of the system, the biggest of which is arguably that Ripple itself actually owns some 61% of the issued XRPs. Unlike Bitcoin and other crypto currencies which are mined on the go, Ripple released 100 billion XRPs upon the launch of the network, after which no new tokens were added. Of those XRPs, 61% is still in possession of Ripple, meaning that the operator currently sits on some $16 billion worth of digital currency – not exactly a reassuring position for the market at large. If Ripple decided to release a significant chunk of its XRP holdings at one point, the whole Ripple market would come crashing down.
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