Today, we will discuss a very unusual, controversial, and a well-known cryptocurrency that was abandoned by its creators.
We are talking about Ripple, of course, also known as XRP. This one goes among the first top three cryptocurrencies and it offers quick and cheap transactions.
History of Ripple
The history of the Ripple cryptocurrency is tightly related to the development company called Ripple Labs. Back in 2005, when no-one even had the brightest idea of Bitcoin arrival, the company launched RipplePay, a financial service for sending over money between the Internet users.
But after the creation of Bitcoin in 2009, the Ripple developers decided to go all-in in a new direction that implied the development of cryptocurrency in terms of speed and cost-effectiveness. They also initially targeted financial sector, specifically their development of cryptocurrency for banks.
As a result of their efforts in 2012, a new payment system was created — Ripple. It supports transactions with any assets and it has its internal cryptocurrency — XRP. But the community didn’t take it lightly, accusing Ripple Labs of creating a centralized cryptocurrency. That’s why in 2014, Jed McCaleb, a co-creator of Ripple, decided to fork the network, resulting in a new competitive cryptocurrency — Stellar.
Details of the operations
The Ripple network can process more than 1500 transactions per second, while the transfers are instant and practically free. But in order to prioritize large-scale consumption, the developers had to drop the decentralization and mining.
Yes, you’ve read it right. Ripple doesn’t have mining. At the moment of the network launch, 100 million XRP tokens were generated, some of which went to the market, while the rest kept stored on the developers’ accounts. Today, there are around 40% of tokens in circulation, the other 60 are being managed by smart contracts and gradually enter the market.
In the Ripple network, validation nodes process and confirm the transactions, so in theory it looks like a decentralized payment system. The point of this, well, decentralization is to ensure that the network will not be affected by the sudden abruption of validators, including the node of Ripple Labs.
So if any Bitcoin user would like to download the software and startup the full node to participate in the network support, it doesn’t work like that for Ripple. The developers single-handedly choose the validators and hand out these rights exclusively to their partners in banks, as well as the providers of e-payment and cryptocurrency exchanges.
The average users can only get to install the Ripple-supported wallet and use it for cryptocurrency transferring. As a protection mechanism against spam, 20 XRP tokens are frozen in order to activate the wallet. You can’t get around this limitation.
What you should know about Ripple
The business model of Ripple is set in a way to render the network transfers practically free, with a notable exception of a minimal fee as means to fight off spam transactions. Ripple Labs profits not from the network maintenance but from the software sales to banks and other financial companies.
These days, the Ripple company has over 100 partners, including global financial companies such as Santander bank and American Express payment system. In regards to Asian markets, the Ripple payment system is promoted by SBI Ripple Asia consortium which owns several leading banks of the region.
Now, everything looks really well for investments, but in reality, all these partner companies are using xCurrent software that doesn’t actually work with XRP cryptocurrency. Instead, Ripple has another software product called xRapid which works with XRP token. But the banks don’t chase after this one because of the cryptocurrency volatility and the absence of legislative regulation.
It’s worth noting that most of the positive news regarding the Ripple company doesn’t necessarily relate to the XRP cryptocurrency.
How Ripple became XRP
It’s only recently that the Ripple cryptocurrency went through rebranding. Since then, its official name, as well as trademark have been changed to XRP. This was decided upon several US court trials fueled by unsatisfied investors. They wanted to acknowledge the status of XRP cryptocurrency as unregistered security belonging to Ripple Labs. And of course they also demanded to be paid of compensation.
Evidently, the developers didn’t like how grim the situation turned out to be. Surely it could affect business and the price of cryptocurrency which they sell from time to time. That’s when they went through a series of statements, saying that the Ripple company merely developed the code behind the XRP cryptocurrency, hence they’re not controlling this very network. And to put more credibility to their words, they renamed the cryptocurrency from Ripple to XRP. They even slammed a new logo.
The future of Ripple
No matter how many times Ripple Labs claims of the XRP independence, its price rate will still depend on their actions, as well as the official stance of U.S. Securities and Exchange Commission. The perfect solution would be to disacknowledge XRP as type of securities, and have the Ripple partners move to using xRapid.
There’s also no point in excluding the possibility of XRP growth, in case of new Bitcoin flight to the Moon and the whole cryptomarket with it. Previously, Ripple has risen in price from $0.25 to $4, moving to the second place by capitalization. But then, the price of XRP has returned to $0.30, and this is exactly the reason why the unsatisfied investors filed for the trials.