- Ripple users can be assured of faster Transaction confirmations. The waiting period is usually less than 10 seconds.
- Ripple network charges the users very less compared to others.
- The Ripple network processes XRP transactions and also fiat currencies and cryptocurrencies. So, this is a more versatile platform for making transactions.
- A number of well-known financial institutions are using the network already. Examples include Yes Bank and Axis Bank.
- Ripple has been criticized for its somewhat centralized nature. The Ripple system has a default list of validators which violates the concept of a decentralized mechanism.
- If large amounts of XRP are released at an inopportune time, the value of existing XRPs can be undermined.
- The 2020 SEC lawsuit filed against XRP has made the investors dubious about its future prospects. Some crypto exchanges have paused listing XRP after this development.
- XRP is not as successful as Ripple network, on finer analysis. Many financial entities that rely on the Ripple network have not embraced XRP yet!
- Its main rival, the Swift network is being used by many banks and financial entities globally.
The naysayers and reluctance of the governments in many countries to embrace cryptocurrencies have not been able to resist crypto enthusiasts from moving ahead! With time, the number of crypto exchanges is going up and the same can be said about crypto coin variants. However, some of the crypt exchanges and their native coins are unique in nature and they cater to specific sections of users. One such example is Ripple. This is a Blockchain-powered money transfer network meant to address the needs of the financial services sector. Its native crypto token named XRP ranks within the top five cryptocurrencies. The only glitch thwarting its successful run is a Securities and Exchange Commission lawsuit.
The basics of Ripple
Ripple can be defined as a payments settlement system that also serves the purpose of a currency exchange network. Ripple can be used to facilitate exchanges for various fiat currencies. It also supports exchanging cryptocurrencies like Bitcoin along with commodities like gold. It was designed primarily to be a substitute for SWIFT, the system used by banks to facilitate international money transfers. When the users make a transaction using Ripple, the network collects a small amount through XRP, as the transaction charge. The fee is minimal compared to what typical banks charge for making such payments.
The basics of XRP
XRP is cryptocurrency-powered by the XRP Ledger. This Blockchain was set up by David Schwartz, Arthur Britto, and Jed McCaleb. McCaleb and Britto set up Ripple later. You can purchase XRP as an investment and also as a coin that can be exchanged in lieu of other cryptocurrencies. It is also useful for financing transactions made on the Ripple network. The Blockchain of XRP operates a little differently. It uses a unique distributed consensus mechanism for validating transactions. XRP transactions get confirmed much faster than Bitcoin. It is supported by crypto exchanges like Coinmama and KuCoin.
Most blockchain-based cryptocurrencies rely on a distributed verification system called mining. It facilitates the introduction of new currency in the system and clears transactions. This is given as a reward to the verifiers. XRP was “pre-mined”, unlike most other coins. The XRP Ledger has 100 billion tokens and these are released periodically. A smart contract is deployed to release XRP in the market from time to time.
Usage scenarios for XRP
You can utilize XRP much like mainstream digital currencies. This can be either for potential investment or transactions. The Ripple network can be used for processing various types of transactions. You can, for example, exchange your USD for XRP using the Ripple network. Then you can use those XRPs to buy euros. There is no need to use any banking service. While it looks like an additional step involved, the time required is less and charges are also lower. You can save both time and transaction fees this way.
Should you purchase XRP?
The advantages of using XRP and the Ripple network are quite obvious and these can be useful for amateur as well as seasoned crypto users. However, industry veterans think that owing to the SEC lawsuit, XRP is not suited for beginners in this sector. Until the issue is sorted out, XRP remains a volatile investment. However, the Ripple network is already in use by many users and well-known financial institutions. It is way better than typical banking systems to execute international money transfers.