With a 35,000% increase in value in 2017 and a market capitalization of over $118 billion, Ripple has become a hotly debated topic among analysts and investors alike. But what is Ripple? Is it like other cryptocurrencies? Why has it caught fire lately? Read on for answers to these questions.
1. What is Ripple?
Ripple is a payment solutions company, founded by Chris Larsen and Jed McCaleb. Its Ripple Transaction Protocol (RTXP) contains the cryptocurrency XRP. Ripple claims to provide faster, more reliable and affordable transaction solutions for financial institutions. The company has created one hundred billion XRP and currently owns 61% of the coins. The current plan is to launch a 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 the two: unlike Bitcoin, Ripple cannot be mined. The coin is not configured as a minable currency and its use is fixed on 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. All five validation nodes are controlled by Ripple. XRP has received criticism for the absence of independent trust validators. The XRP Ledger is available to everyone, so anyone can download it and become a validator. Many companies have their own nodes on the Ripple network.
3. Reasons for Ripple’s recent price rise
XRP’s recent price surge has a lot to do with the expected use of the coin by financial institutions and investment from investors who believe the hype. Ripple has been successful in winning banks as customers for its other products. Financial institutions prefer Ripple’s xCurrent because it offers real-time communication and fast corrections, thereby reducing delays in bank transactions. The company plans to introduce a new product, xRapid, that incorporates XRP. They see the new product as an opportunity to get banks to use XRP. Investors see the currency’s potential as a financial vehicle used by banks around the world.
Ripple, or more precisely, XRP, is a cryptocurrency on the rise. It is different from the leading digital currency Bitcoin because its supply is controlled by the founding company. Ripple is betting on banks adopting it in the future. It can be speculated that Ripple’s recent rise in value will fuel further debate about its viability as a cryptocurrency asset.