Ripple (XRP) is a cryptocurrency that runs on a digital payment network developed by Ripple Labs Inc. In a world where cryptocurrencies and blockchain platforms have continuously challenged the conventional financial sectors, Ripple has chosen a different path: to cater to the financial industry by making their processes faster and more secure through the use of blockchain technology.
Ripple works in much the same way as the SWIFT system — an international payment network used by banks and other financial intermediaries — by using blockchain technology to create bank-specific solutions for inter-bank funds transfer.
In the last couple of years, XRP’s value has taken a giant leap. It’s one of the biggest cryptocurrencies by market capitalisation. Due to its multi-function payment protocol, XRP has managed to leave its mark on the financial industry in a short period of time.
Read on to find out more about how Ripple works, what it is for, and how you can invest in it.
What is XRP?
XRP is the native token of Ripple. Ripple acts as a medium of exchange for cryptocurrency, fiat currency, and other elements of value. Its native token functions as an intermediate currency to other crypto and fiat currencies without discrimination, thereby making it easier to exchange one currency for another.
XRP transactions are settled on a peer-to-peer basis and are not subject to any waiting time. While bitcoin transaction validation takes minutes or hours, XRP transactions are confirmed within 4 to 5 seconds at a considerably lower cost than bitcoin.
Ripple does not use the proof-of-work (PoW) or proof-of-stake (PoS) as a consensus mechanism. Though its validation software can be downloaded by anyone, transactions are validated by a group of participants that are considered less likely to perform a fraudulent act. Unlike other cryptocurrencies, XRP is somewhat centralised as it has a default list of validators.