Ripple is a digital payment system but slightly different from other cryptocurrencies. It is an open payment system that relies of a computer network. Ripple’s currency unit is XRP and operates a centralized Blockchain. Cryptocurrency enthusiasts have labeled it a threat to other decentralized currencies.
Ripple allows free flow of currency a step ahead of other currencies and the traditional banks. They assure their users of seamless currency ‘transportability’ through their real time transaction function. With a centralized approach, Ripple stand a better chance of diversifying and bringing the traditional banks onboard.
No Bitcoin Alike -POW- Mining… Is Ripple an Ordinary Database?!
The Ripple centralized system eliminates Proof of Work (PoW), a form of mining. They use a list of trusted nodes that help the system form consensus about the ‘current state’ of the network. This tends to eliminate the functions of a blockchain to come up with a trustless system that eliminates their miner output.
If indeed Ripple is using trusted nodes, it indicates that they are using a normal database to keep records of transactions and user accountbalances. However thereare critics who feel that Ripple is just a rip-off and is just another marketing blockchain technology to complement financial institutions that are embracing the latest currency trends.
It is understandably clear that Ripple facilitates banks to perform local and international transaction on real-time basis. This does not mean that it only serves the interest of the banks; it kind of offers ‘support’ for fast transactions. It is not an application that banks ‘use’ to do business.
Is Ripple a Threat to Bitcoin & ‘Company’?
What makes Ripple appear like a threat to other decentralized currencies is the fact that it complies with the authorities’ order to eliminate anti-money laundering like the traditional banks. This is in a bid to protect its diverse client base. Their advisory board is composed of mostly former government employees and that could raise a lot of eyebrows.
There is too much ‘acting the good guy’ with Ripple, if they are to play ball with major banks and companies, they need to ‘appear clean’ in front of Wall Street rules and regulations. They are trying to benefit not only the small players, the consumer, but also the big players in the money market.
Another characteristic that makes Ripple a threat to other currencies its goal to bridge that gaps left by other currencies and Bitcoin in particular. In a lays man language, Bitcoin stores value’ a simple system that helps you store, send and receive value in a digital data form. Ripple on the other hand provides the same facility but in an affordable and fast manner.
Comparing Ripple with other currencies is a fallacy. Ripple is one step ahead of other decentralized currencies; its public ledger supports cross-currency transactions and payments through an order book system. These are open source based software that allows incoming inputs from blockchains resulting in to controlled and fair order execution.
XRP 55 Billion in Escrow by December 2017!!!
Ripple, unlike its competition in the market seeks to come up with long term stability by use of a structured model of selling its XRP. It will achieve this through putting additional 55 Billion XRP in escrow by end of 2017 and an additional 1 Billion will be floated in the market every month. This has already started creating excitement among current and aspiring investors.
This has also helped Ripple gather renewed momentum and have since signed over 10 financial institutions that include BBVA. This is as a result of the speedy transactions from their payment platform. The move to sign up more financial institutions is to make digital currency and traditional currency transactions have a seamless platform to operate from and not threatening other payment providers and processors.
Despite Bitcoin being an established currency, there are functions that it cannot accomplish and that are what Ripple is trying to harmonize. Currently, consumers are using BTC primarily as an investment platform. Banks like UBS, Bank of America and RBC are the major beneficiaries of Ripple innovative business model that bridges that gap left by Bitcoin.
Most financial institutions and banks are in the pilot stage and once compatibility is achieved, threats, if any will be surface. Ripple however has real consumers that are using and benefiting from the trials and too much progress has been achieved. It is all about opening new horizons and stretching the capabilities of any modern currency payment system.
Like Ethereum, Ripple is only trying to come up with a solution; to provide a standard digital payment system solution that appeals to the financial sector. This does not pose any threat to the existing systems that other decentralized currencies are using.