What is Ripple (XRP)? A brief explanation of features, benefits, and future trends for beginners!

 Ripple (XRP) was developed in 2004 by a company called "Ripple Inc." in the United States to solve the problems (time-consuming, high fees) of traditional international money transfers.

As of December 2020, more than 300 financial institutions in more than 40 countries are participating in the remittance network "RippleNet" provided by Ripple.

Among them are Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank of Japan, and the remittance system using the crypto asset XRP is attracting a lot of attention from all sides as a next-generation international remittance solution.

In this article, for those who want to start investing in Ripple or want to know what the future of Ripple will be, we will explain the mechanism and benefits of Ripple, the main services provided by Ripple and future trends. To go.

Note: The prices is in Yen (Japan Currency)

Ripple (XRP) is a virtual currency (cryptographic asset) created for the purpose of "high speed and low cost of international remittance"

Ripple was developed to solve the problems of traditional international remittances (time consuming, high fees).

The current international remittance is done via banks and remittance companies, and has the following problems.

• Remittance takes time
• Fee is high

In the case of international remittances so far, it took time to transmit remittance information and extra fees were incurred because the remittance information was transmitted via banks and remittance companies .

In a worse case, there have been many reports of troubles such as remittance information being stopped at an intermediary and money not being transferred to the target account forever.

Ripple has emerged to solve such problems.

The name "ripple" has three meanings

The name "ripple" is used in three main ways:

(1) Ripple as a company (Ripple Inc.) 

2 ) Ripple as a payment system (RTXP) 

3 ) Ripple as a virtual currency (XRP)

 XRP tends to be called Ripple, but strictly speaking, ③ is called XRP instead of Ripple .

* This article uses the expression Ripple (XRP).

XRP is a crypto asset used in the international money transfer system provided by Ripple.

If you have experience using cryptocurrency exchanges, you may have seen the notation XRP. Please note that on some exchanges, only XRP is written on the trading screen, and the word Ripple is not written.

It's easy to get confused by the various abbreviations, but keep in mind that the official name for cryptocurrency (cryptographic asset) Ripple is XRP.

The number of Ripple (XRP) issued is 100 billion

Next, let's check the basic information of Ripple in the list.

Currency abbreviation	XRP
birth	2004
Total number of issues	100 billion sheets (all issued)
Affiliated companies	Ripple Inc.
Representative	Brad Garlinghouse
Home base	California, USA
Official site	https://ripple.com/

 

Of particular note is the large number of issues.

Ripple has a maximum of 100 billion coins, while the maximum number of coins that can be issued is 21 million. Moreover, all 100 billion have already been issued.

The following is a comparison table of the maximum number of major coins that can be issued.

Currency name	Maximum number of effective sheets
Bitcoin (BTC)	21 million sheets
Ethereum (ETH)	Without limit
Ripple (XRP)	100 billion sheets
Bitcoin Cash (BCH)	21 million sheets
Nem (XEM)	About 9 billion sheets
Litecoin (LTC)	84 million sheets
Monacoin (MONA)	105.12 million sheets

 

You can see how many Ripple coins are issued compared to other coins, except for those with no upper limit such as Ethereum.

Among virtual currencies, the one for which the total number of issued coins is set is called "deflation currency", but setting the total number of issued virtual currencies makes it easier to understand the balance between supply and demand. The more people who want Ripple, the more valuable it becomes, and the value of Ripple naturally increases.

However, if Ripple soars too much, it could normalize the price by releasing Ripple's holdings to the market.

Mechanism and performance of Ripple (XRP)

Next, I will introduce the mechanism and performance of Ripple.

For the sake of clarity, let's compare the differences with Bitcoin in a table.

	Bitcoin (BTC)	Ripple (XRP)
Consensus algorithm	PoW	XRP Consensus
Remittance time	About 10 to 40 minutes	About 3.3 seconds
Payment / remittance system	Blockchain	XRP Ledger
Market capitalization (as of December 4, 2020)	37.2 trillion yen (1st place)	2.9 trillion yen (3rd place)
Development purpose	settlement	International remittance

The most important points will be explained below.

Is Ripple (XRP) Centralized?

Since there is no clear central administrator for so-called "decentralized" currencies such as Bitcoin and Ethereum, all decisions and changes must be made by an unspecified number of participants involved in the coin.

On the other hand, Ripple is in a state where Ripple Inc itself can not move XRP freely because a company called "Ripple Inc." owns more than half of XRP and locks up most of the XRP it owns.

All transactions and changes in specifications are under the direction of Ripple Inc.

In other words, Ripple has different properties from "distributed" such as Bitcoin.

Use "XRP Ledger" instead of blockchain

For most cryptocurrency assets such as Bitcoin and Ethereum, transaction history is recorded in a transaction ledger on the Internet called "blockchain".

On the other hand, in the case of Ripple , transaction records are accumulated on a unique payment system called "XRP Ledger" . Unlike blockchain, which was developed for personal use, XRP Ledger is mainly a ledger for financial institutions such as banks and corporations.

In addition, the "consensus algorithm (consensus building)" is different between Bitcoin and Ethereum, which use blockchain, and Ripple, which uses XRP Ledger.

A consensus algorithm is "a kind of rule that defines who approves a transaction." In this consensus algorithm, Bitcoin uses a method called PoW (Proof of Work), and Ripple uses a method called XRP Consensus.

Ripple (XRP) does not employ mining

In the world of crypto assets, the series of operations from approving a transaction to receiving virtual currency as a reward is called " mining ". Ripple does not require this mining work, which is used in Bitcoin and other products.

As mentioned above, Ripple (XRP) has a maximum issuance limit of 100 billion, all of which were already issued when Ripple's distributed ledger began to move in 2005.

Basically, the virtual currency provided as a reward for mining is newly issued, so Ripple, which has no new issuance, is designed with a mechanism that is not premised on the adoption of mining in the first place.

Transactions are approved by approvers called validators. This validator cannot participate freely like Bitcoin mining in the world of "rejection at first glance".

Three benefits of Ripple (XRP)

Ripple has three main benefits:

1. Low cost international remittance

2. Remittance becomes simple

3. Partnering with financial institutions around the world

Let's take a look at what each of them is in turn.

1. Low cost international remittance

Originally developed to improve the efficiency of international remittances, Ripple boasts an overwhelming remittance speed. Another big attraction is the low fees for remittances.

Below is a table comparing Bitcoin and Ripple remittance speeds and fees.

	Bitcoin (BTC)	Ripple (XRP)
Remittance speed	About 10 to 40 minutes	About 3.3 seconds
Fee	0.001BTC * (approx. 2,000 yen)	0.15XRP * (approx. 9.75 yen)

 

(*) Calculated based on "1BTC = approx. 2,000,000 yen" and "1XRP = approx. 65 yen" as of December 3, 2020

(*) 0.001BTC and 0.15XRP are coin check virtual currency / remittance fees

From the table, you can see how fast and reasonable Ripple's remittance is.

As mentioned earlier, Ripple has adopted a consensus algorithm for approval work. Unlike Bitcoin's PoW, it does not require competition for an unspecified number of people to solve calculation problems, which simplifies the transaction effort and achieves overwhelming approval speed.

In addition, since XRP has a "bridge function", it is possible to exchange not only legal currencies such as yen, dollars and euros, but also virtual currencies such as Bitcoin.

2. Simple remittance

When sending money overseas at a financial institution, a high fee is collected via a financial institution that acts as a relay called "correspondent bank" until the money is deposited in the account of the destination country. Because you have to.

For example, when sending money from Japan to the United States, the yen is converted to dollars, and in the meantime, it goes through the correspondent bank that functions as a bridge. When you transfer fiat currency, you will be charged a fee each time you go through a correspondent bank, so the transfer fee will be high.

Also, when correspondent banks are closed, the procedure may be delayed and it may take some time to complete the transfer.

However, financial institutions around the world, including Japan and the United States, will be able to use the virtual currency Ripple (XRP) as a bridge to carry out overseas remittance procedures by using the Ripple (RTXP) system.

In other words, it is a simple flow of "Japanese yen-> Ripple (XRP)-> US dollar" because the financial institutions in both countries can process each other without the intermediary bank. In theory, remittances can be completed in seconds, and fees can be significantly reduced.

3. Partnering with financial institutions around the world

Ripple Net, an international remittance network provided by Ripple, is attended by more than 300 financial institutions in more than 40 countries around the world (as of December 2020).

No other crypto asset has such a proven track record in alliances, which is a testament to Ripple's worldwide attention.

Ripple, with its fast remittance speeds and low fees, is attractive to banks and remittance companies. Also, unlike Bitcoin, which has no administrator, it is owned and locked up by a corporation called Ripple, which seems to give a sense of security to companies considering hiring.

Currently, many banks and remittance companies have announced partnerships with Ripple, and in Japan, well-known banks such as Mizuho, ​​Mitsubishi UFJ, and SBI Holdings have announced partnerships.

Although not a partnership, Ripple has been funded by GV (formerly Google Ventures) in the past. The IT network champions who are at the forefront of the times also seem to be looking at Ripple.

Challenges facing Ripple

Ripple, which seems to be doing well as it continues to form alliances with financial institutions around the world, actually has the following issues.

1. Existence of rival "SWIFT"
2. Securities problem

The two issues will be explained in detail below.

1. Existence of rival "SWIFT"

The first issue is the existence of an organization called " SWIFT ", which is a rival for Ripple .

Called "International Interbank Financial Communications Association" in Japanese, SWIFT is a Belgian-based non-profit organization responsible for current international remittances. The recent rise of Ripple is not always welcome for SWIFT, who works in the same field of "international money transfers."

The battle for share with rival SWIFT is an unavoidable issue for Ripple.

It will be a big issue for Ripple in the future to appeal how it is a better remittance system than SWIFT and to have more financial institutions introduce it.

2. Securities problem

The second is the so-called “ securities problem ”.

The problem is that in the case of virtual currencies that have an operating company like Ripple, those issued by that company for the purpose of earning money may be classified as "securities" like stocks and corporate bonds. It originates from the question.

If the US Securities and Exchange Commission (SEC), which is in a position to make that decision, recognizes Ripple as a security, Ripple may be delisted from cryptocurrency exchanges.

You may also like this: Thorough comparison between Bitcoin / BTC and Ripple / XRP! What's the difference?

The latest news about the future of Ripple (XRP)

In order to know the future of Ripple and the upcoming trends, it is necessary to check the news about Ripple frequently. In particular, information about partnerships and updates can easily affect prices, so don't miss it if you're trading Ripple.

In this section, we will introduce the latest news about Ripple.

You can also check the latest information on Ripple's official website , Twitter .

[December 12, 2020] Spark token snapshot completed

On December 12, 2020, Flare Network reported that a snapshot of Spark (FLR) tokens for crypto asset XRP holders was completed.

Flare Network is a project that aims to implement smart contracts on XRP Ledger with the support of Ripple's investment division "RippleX". Spark tokens are native tokens issued by Flare Network.

Flare Network reported on its official Twitter account that it ended the Spark token snapshot with block number "60155580".

XRP holders who are eligible to receive Spark tokens will first be granted tokens equivalent to 15% of their XRP holdings after implementing the Flare Network network, with the remaining 85% averaging 3% per month for a minimum of 25 months and a maximum of 34 months. It will be distributed one by one.

[October 14th and 15th, 2020] "Swell 2020" will be held

The annual big event "Swell" sponsored by Ripple was held for two days from October 14th to 15th, 2020.

Swell is an international conference that brings together celebrities from the political and economic, banking, and blockchain industries to discuss the future of finance, and has been held annually since 2017 by Ripple.

This time, which was held for the fourth time, Ripple's new loan service "Line of Credit" was introduced. Line of Credit is an XRP loan service for companies that use the international remittance service "ODL (On-Demand Liquidity)" that uses crypto assets XRP.

The Line of Credit service will enable financial service providers, including SMEs, to make international remittances using ODL more easily than before. As a result, it is expected that more companies and financial institutions will adopt ODL in the future.

[March 18, 2020] Partnership with Thai fintech company "D-Money"

On March 18, 2020, Ripple announced a partnership with Thai international money transfer company DeeMoney.

D-Money aims to realize a lower cost and more efficient remittance service than before by utilizing RippleNet, in which more than 300 financial institutions participate in the world.

D-Money has already used RippleNet for inbound remittances from South Korea, Indonesia, Singapore, Israel, the Middle East and Gulf countries, and plans to use RippleNet for outbound remittances from Thailand to foreign countries in the future. doing.

[February 26, 2020] Concluded a partnership with Dutch remittance company "Azimo"

On February 26, 2020, Ripple announced a partnership with Azimo, an online money transfer service company headquartered in the Netherlands.

Azimo has already introduced "ODL (On-Demand Liquidity)", an international remittance system that uses XRP, and is using it for remittance services to the Philippines.

Azimo has set out a policy to continue to develop more remittance routes using ODL. As ODL becomes more widespread due to Azimo's market development, it is expected that Ripple's name recognition will increase accordingly.

[January 21, 2020] BitPay launches XRP payment service

BitPay, a major cryptocurrency settlement company, announced that it now supports XRP on its platform.

With this update, users of BitPay wallets can now use XRP for payments at shops that support the company's services.

BitPay, which is affiliated with various retailers, also supports the purchase of gift cards such as Amazon and Google Pay. As the number of partners increases in the future, it is expected that the demand and liquidity of XRP that can be used with BitPay will also increase.

[January 8, 2020] Started international remittance service with Siam Commercial Bank in Thailand

On January 8, 2020, Ripple is partnering with Siam Commercial Bank of Thailand to realize high-speed and low-cost remittance using the international remittance application "SCB Easy" developed by Ripple's technology. Announced that.

In addition, both companies are also working on developing cross-border payment services using QR codes, and have announced that they will expand into the micropayment market as well as the remittance field.

Four projects that will influence the future of Ripple

There are four projects that represent Ripple:

• On-Demand Liquidity
• RippleX
• Hyperledger
• Line of Credit

I will explain each project one by one.

On-Demand Liquidity

On-Demand Liquidity is software that minimizes remittance costs by using XRP as a bridge currency and is Ripple's flagship service.

This software, formerly known as "xRapid", has now been renamed to On-Demand Liquidity (commonly known as ODL).

ODL is already being used by major remittance companies such as MoneyGram and Western Union, and 24 companies, including financial institutions, are adopting ODL at SWELL (a large event sponsored by Ripple) held in 2019. Was announced.

Since ODL is a remittance service that uses XRP, it is expected that as ODL becomes more widespread, the demand for XRP will increase and its value as a currency will increase.

Reference: On-Demand Liquidity

RippleX

RippleX is a subsidiary of Ripple's Investment and Innovation Division. Originally the company name was "Xpring", but it was changed in October 2020. RippleX aims to provide entrepreneurs and developers with investment and start-up support using Ripple's decentralized ledger "XRP Ledger" and digital currency XRP.

Until then, XRP had only a limited use for international money transfers, but with the birth of RippleX, XRP has also been used in the investment field.

Companies that RippleX has invested in so far include lending platform "Compound", content monetization platform "Coil", DeFi app "Dharma", and blockchain game startup "Forte".

Hyperledger

Hyperledger is an open source joint development project that was launched with the aim of utilizing blockchain technology in various fields other than crypto assets.

Ripple participated in this project, launched by the Linux Foundation in December 2015, in March 2018.

Many global companies such as IBM, American Express, Intel, and JP Morgan participate in Hyperledger, and companies such as Hitachi, NTT Data, NEC, and Fujitsu also participate from Japan.

Ripple's participation in Hyperledger is "an important step in establishing the Internet of Value, which Ripple advocates as a corporate philosophy," he said on Twitter .

Line of Credit

Line of Credit is an XRP lending service for companies and financial institutions participating in RippleNet . With the birth of this service, companies participating in RippleNet will be able to make international remittances using ODL more easily than before.

On the official website of Ripple, "The Line of Credit provided by Ripple allows financial institutions to use XRP to make cross-border remittances immediately and at low cost. By fixing the rate at the time of payment, users can repay XRP at a small fee at their convenience. "

Q & A about Ripple (XRP)

Here are some frequently asked questions about Ripple in a Q & A format.

Q: What was Ripple developed for?

Ripple was developed in 2004 by a company called "Ripple Inc." to solve the problems of traditional international money transfers (time-consuming money transfers, high fees, etc.).

Q: How long does it take to transfer Ripple?

Ripple (XRP) completes the transfer in about 3.3 seconds.

Q: What is the record high for Ripple?

The highest price of Ripple (XRP) so far is "1XRP = about 400 yen" recorded in January 2018.

Q: What is the current price of Ripple?

You can check the current price of Ripple from the real-time chart page .

Q: How do I buy Ripple?

To purchase Ripple (XRP), you must first open an account on the crypto asset exchange and deposit Japanese Yen. Once the transfer from your financial institution to your exchange account is complete, you can actually proceed with the purchase of Ripple.