When people think of Ripple, they can immediately think of XRP cryptocurrency. However, Ripple's business, technology and ecosystem are not completely synonymous with XRP, although Ripple leverages the XRP currency for certain uses in its ecosystem.
So what is Ripple trying to solve? The progression of technology has significantly changed the speed and ease with which information moves globally. The movement of money, however, remained comparatively more complicated than, say, the transition from letters to email.
Cryptocurrency has provided significant improvements in the value transfer area, but cryptography, in a general and broad sense, lacks levels of compatibility with traditional currency systems. By leveraging blockchain technology, Ripple aims to help speed up and smooth the money transfer arena.
It is important to note that while the Ripple Company enjoys the XRP Ledger and XRP Currency in various capacities, the XRP Ledger and XRP Currency are independent of the Ripple Company, in accordance with extensive statements and materials issued by the company itself over the years of operation. .
Originally a money transfer platform known as RipplePay, started by software developer Ryan Fugger in 2004, Ripple as it works today is the result of a journey of transitions and developments over the years. Several people played influential roles on this journey, including Jed McCaleb, Arthur Britto and David Schwartz. The triad of engineers opted to look outside Bitcoin (BTC) to build their own solution after Bitcoin's launch in 2009. The result - the XRP Ledger, which went live in 2012.
McCaleb, the founder of the now defunct Mt. Gox exchange, left Ripple in 2014, going on to co-found Stellar (XML). Formerly Ripple's CEO, Chris Larsen now serves as Executive Chairman of Ripple's Board of Directors. Brad Garlinghouse took over as Ripple's CEO in 2017 after Larsen announced his decision to step down in 2016.
The XRP currency reached significant price hikes of around $3 per currency in early 2018, a considerable increase from trading value below the $0,05 level in early 2017.
In 2019, a Series C financing added $200 million to the Ripple company for its ventures.
In December 2020, regulatory uncertainties emerged regarding Ripple. According to a complaint filed by the US Securities and Exchange Commission (SEC), Ripple sold the XRP to investors in the US and the global public as part of an unregistered bond sale that raised more than $1,3 billion .
As the cryptocurrency industry is new compared to traditional finance, the regulatory status of cryptographic assets has emerged as a topic of discussion over the years. The Commodity Futures Trading Commission (CFTC) expressed a view of Bitcoin and Ethereum (ETH) as commodities, although the classification was more nebulous for other digital assets.
Under the SEC's motion against Ripple, the commission claimed that the XRP was a bond, which would then come under the SEC's jurisdiction. A petition was filed by a group of people who bought the XRP, citing arguments for classifying the XRP as something other than a title, although there are gaps in the petition's justification.
Ripple argued that the SEC's action came long after the creation of the XRP and that other US government agencies gave the XRP a different rating than a bond.
Ripple — its main business areas
Banks use the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system to process international transactions. While this is effective, there are increased costs and operational overhead compared to what might be possible with the latest technologies. Through a series of solutions, at its core, Ripple essentially aims to provide an efficient system for the direct transfer of money that is settled in real time, being cheaper, more secure and more transparent than other transfer systems employed by financial institutions. traditional ones.
Ripple promotes a narrative he calls the Internet of Value, or IoV. According to this narrative, Ripple believes that people should be able to transfer money and information at the same speed. Think about being able to send money at speeds similar to sending text, for example.
Ripple is a company focused on advancing the world of payments, which has historically proven to be clumsy and fragmented. There are several branches and solutions under the Ripple brand umbrella — RippleNet, the XRP Ledger, the XRP currency and the RippleX.
RippleNet is a global network that financial institutions can use to transfer money faster, with greater transparency and at less cost through a unified system, as opposed to the fragmented traditional ecosystem that banks have historically worked with. RippleNet requires the use of only one application programming interface (API). Previously, Ripple also had products called xRapid, xCurrent and xVia, although the company combined these solutions to form RippleNet in 2019.
How RippleNet works
Speed is important in today's world. In the traditional institutional money transfer world, participants globally must interact with each other, essentially figuring out how to work with different systems that may or may not be easily compatible.
With RippleNet, Ripple has essentially created a global network that largely adheres to a certain structure and set of parameters, making interactions between participants simpler, smoother, and more transparent, while lowering transaction costs and times.
Traditional centralized financial institutions can take days to complete transactions due to the different systems involved in the process. This can make the current scenario slow, error-prone, expensive, and can negatively impact the efficiency of a business transaction.
RippleNet also has a feature known as On-Demand Liquidity (ODL), which eliminates the need for pre-financing when it comes to international transactions. So how does EAD work? When one entity wants to send money to another across countries, each of them can have a different currency on hand.
One of the parties may not wish to receive Canadian dollars if they reside in Sweden, for example. Using XRP as an intermediary between two different types of trustees, RippleNet's ODL can facilitate transactions with each side sending and receiving its native currency.
The traditional world of money transfer is out of date when it comes to the speed, efficiency and cost of communicating and moving data — the results of technological advancement. Ripple's solutions aim to eventually bring the world of global money transfer up to speed.
In the traditional world, as far as centralized financial institutions are concerned, sending international money can involve many procedures. Transaction times and fees can vary, but generally remain relatively expensive and take a day or two to complete, with the sender bearing the transaction costs. RippleNet, on the other hand, cuts transaction time and costs.