Ripple coin is one digital currency that improves payment protocols around the world. Bitcoin isn’t the only star on the block. Ripple coin (XRP) stands out in a way that the others don’t and this is why some economists consider it an alternative to the famous Bitcoin. In this post, you’ll find out why many financial institutions and banks are now taken by this digital currency as well as cryptocurrency.
What is Ripple Coin and When Did it Start?
Ripple coin’s platform has existed since 2012.Since then, many banks have accepted it as a trusted money transfer system. It operates within few seconds and aims to replace money transfer systems such as SWIFT. Let’s describe it with this scenario. Bill has to send money to Anne and both are in different parts of the world. Instead of them converting currencies, Ripple fixes the problem by replacing common currencies with Ripple coin. XRP, therefore, becomes the common currency used to exchange currencies.
In late December 2017, Ripple was declared the second-ranked cryptocurrency as it had $73.6 billion market cap. Since then its value has continued to increase and some users have been intrigued with its close strides behind Bitcoin. Ripple works with financial institutions and banks instead of using the public blockchain technology adopted by Bitcoin. Itstechnology involves a gateway which serves as the intermediary between two people who need to transact funds.
Ripple coin cannot be mined like Bitcoin. Instead, the XRPs are issued by the company. It operates a more transparent system that allows banks and investors to trust their stocks. The aim of Ripple coin is to improve global exchange of currencies, making them faster and easier. Big banks have validated XRP based on their collaborations with Ripple. Even Google is not exempted. But this doesn’t mean that this currency is flawless.
Some have said that Ripple’s connection with banks reduces the standard roots of cryptocurrencies as decentralized currencies. However, this hasn’t reduced its acceptance in the financial markets.
How Ripple Coin Works
If you’re wondering how Ripple coin works, we’ll break it down now. To exchange currencies and transfer payments, Ripple uses a link called Gateway. It serves as the intermediary between two parties and it’s responsible for receiving the currencies and sending it to the other person. Users need a trusted gateway to hold balances, and when they don’t trust a gateway, they can choose another.
Unlike other cryptocurrencies, XRP does not prefer one currency to another. Instead, it stands in as a common currency that makes currency exchange easier. Apart from this, it discourages double spending by operating a consensus protocol which authenticates transactions and account balances. While it is true that Ripple coin records are available on the platform, these histories are not made public or identified with any account.
Are youthinking about what makes Ripple coin better than banks? The Ripple network allows for very fast transactions when compared with wire transfer which banks operate. The transaction fees are also insignificant and you can always be sure that you’ll receive your funds just when you expect them. Plus, Bitfinex.com is one of the best exchange websites to use.