By
Eric Eissler
Eric Eissler
•
Updated on
March 7, 2023
•
6 min read
Ripple is a payment transfer protocol that uses blockchain technology to process payments. This technology has been of the interest of many banks for its ease of use and low cost to transact. It should be noted Ripple is not a crypto currency, it is a protocol, whereas XRP is Ripple's crypto currency. Ripple has gotten a lot of good press and bad press. To top it off, right now it's entangled in a lawsuit with the US Securities and Trade Commission (SEC).
Ripple, the protocol, caught the attention of many banks at the height of its price and popularity in 2018. Furthermore, Ripple has got an interesting backstory, because it existed before Bitcoin, not as a crypto currency but as a payment system. that we'll get into in the next section.
Ripple has been around longer than Bitcoin, but it wasn't a crypto currency back then in 2004 it was a payments system called RipplePay. RipplePay allowed users to extend credit to each other. It was founded by Ryan Fugger, a software developer in Vancouver, Canada, long before Satoshi Nakamoto released his first version of the Bitcoin blockchain. Ripplepay didn't use any blockchain technologies, but it had the same purpose allowing its users to send payments to other users around the world. In 2012, Fugger sold it to Jed McCaleb, Arthur Britto, and David Schwartz. The trio wanted to use it for their future digital currency network. The company that they founded was named OpenCoin.
OpenCoin used the RipplePay source code to build their crypto currency technology on top of it. From it they created a distributed ledger based payments system that would eventually evolve into Ripple and XRP. The company name changed, too, in 2013 from OpenCoin to Ripple Labs and then a few years later the name was shortened to just Ripple.
At the height of Crypto mania in 2017, Ripple got a lot of attention at the end of the year though 2018 when many banks were taking notice of the technology and signing up with the company to use the Ripple transfer protocol. The banks were not keen on using XRP due to the price volatility.
Ripple faced a lot of criticism when it entered into the crypto currency world because it is a company that is centralized. The idea behind crypto currency is that it is decentralized and there is not one centralized authority that governs it. In the early days of XRP's debut on the crypto markets, many were calling it a scam. At that time, during the frenzy of crypto buying many people would lose money on scammers creating fake tokens and then running off with people's investments.
The most current story is that of Ripple vs. The SEC. The SEC filed suit against Ripple alleging that Ripple engaged in an illegal securities offering with XRP. The SEC considers crypto currency as a security and thus creates a lot of regulation to jump through. However, according to a recent press release, the 15-month court battle is going very well and in Ripple's favor. If Ripple manages to win this suit, it might change how the SEC looks at crypto currencies and that may bring a giant reprieve for Crypto in the United States.
Because Ripple's XRP is centralized, the tokenmics that surround it are very different from other crypto currencies. For Ripple, there is no special ecosystem, rewards mechanism, or staking of any kind. It is in essence a pure payment system and nothing more. Recall that it started out as RipplePay, which was just a system for moving money around and paying others. A payment system remains.
From a technical perspective, Ripple's blockchain is different from other blockchain networks such as Bitcoin or Ethereum. On Ripple's blockchain, there is no proof of work algorithm, which means that there is also no mining. There is also no proof of stake algorithm either. When the XRP Ledger was launched originally in 2012, the entire 100 billion XRP tokens were initially pre-mined. After all the tokens were created, the founders retained some, about 20 billion, while 80 billion was given to Ripple, the company, which was tasked with distributing. Currently, a little more than 45 billion of the tokens are in circulation. The rest is mainly held in escrow with Ripple the company having power of attorney over it. Tranches of escrowed tokens are released month after month and Ripple uses them to do market-making for XRP. This way, the remaining XRP in escrow will be distributed to the public over time.
XRP is in a league of its own when compared to the other crypto currencies. Despite all the differences, let's take a look at how the price has performed since its release in 2013.
When CRP debuted in the market, in August 2013, it was worth only $0.004. As you can see from the above chart, the price action was relatively flat for 3 years before anything really happened. XRP finally broke into the scene in 2017, during crypto mania. In April and May of 2017, it only took a short amount of time for XRP to go from $0.004 to $0.33! In late December 2017, XRP went from $0.25 on 1 December 2017 to $3.37 on 4 Jan 2018. But those highs would not last long as crypto fever waned and the first big crash took place. By the end of January 2018, XRP lost most of its value and landed at $0.96. By mid September, it was worth $0.28 and continued on a slow downward trend, when it bottomed out at $0.14 on 13 March 2020. It was not until later in 2021 that things started to pick back up for XRP. In April 2021 it got up to $1.76, fell down to $0.63 in July and then shot up again to $1.14 in August. In 2022, it has not broken a dollar. A lot is hanging in the balance with the SEC suit. If Ripple can win that, we can expect to see the price shoot up for XRP and all of crypto as a precedent might be set.
Atomic Wallet is not offering any investment advice. Do your own research before investing in any crypto currency or traditional asset.
Atomic Wallet offers you a great place to store your Ripple tokens. Besides just being a wallet for storing, sending, and receiving, you can do much, much more with an Atomic wallet. Atomic Wallet has some great features such as having a built-in decentralized exchange/swap where you can buy more than 300 crypto currencies and have them securely stored in your Atomic Wallet. What's more is that you can stake a number of tokens right in the Wallet! On top of that, for each transaction you make in Atomic Wallet, buying, selling, or swapping, you are eligible to get up to 1% back per transaction paid out in Atomic Wallet's native token, AWC.
A significant advantage of decentralized wallets, in general, is the opportunity to manage cryptocurrency from any device. Still, you need to pay attention to how you store the backup phrase since that is the primary access to your funds. With Atomic, your Ripple wallet is protected as long as you keep your seed, or private key, in a safe and secure place.
If you still have further questions about Ripple, RippleNet, XRP, then look no further to our FAQ and Resources below. They should provide you with all the info you will need to know more about Ripple.
That's what we are going to soon find out just as soon as this court case ends with the SEC. The SEC alleges it is because it has no proof of work and no proof of stake protocols, the SEC says it's a security and it's an unregistered security at that. An unregistered security is illegal in the United States. Bitcoin, Ethereum and other cryptos that have the proof of work and proof of stake protocols are not being considered securities. That's strange. Why are they picking on Ripple?
Ripple is a payments system that is being used by banks for quick secure transactions. Instead of using SWIFT for international payments, which can take up to 3 days to settle, Ripple technology has made it so that transactions can settle in 4 seconds and cost pennies on the dollar when compared to SWIFT transactions.
XRP is the crypto currency token that you'll see on the exchanges and is subject to price swings. Due to the volatility, banks have opted away from XRP and settled for the Ripple payments system.
XRP is a medium of exchange that can be used for payments. It can be a store of value but unlike Bitcoin, XRP's value does not keep increasing, which is why it is seen as a payments solution and not a long term storage of value. The use of XRP is limited to that. There are no NFTs or metaverse worlds that you can enter into with XRP.
RippleNet is the software that banks are using in place of SWIFT to optimize their international payments. With a single connection, customers can access the best blockchain technology for global payments and payout capabilities in more than 40 currencies. MoneyGram was recently using RippleNet to send money internationally but in 2021 switched over to Steller.
Through the use of blockchain and modern APIs, Ripple enables financial institutions who are part of the network—RippleNet—to send money globally, instantly, reliably and for fractions of a penny.
According to Ripple, there are more than 300 financial institutions around the world that are using Ripple's growing global payments network to process their customers' payments. RippleNet allows for payments to be processed anywhere in the world instantly, reliably and cost-effectively. According to RippleNet some of its users include: American Express, PNC, Santander, SBI Remit and BeeTech.
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