Ripple is a virtual currency issued by OpenCoin, called Ripple Credits, also known as XRP, and its Chinese name is Ripple.

Ripple is the world's first open payment network. Through this payment network, any currency can be transferred. It is easy and fast. The transaction confirmation is completed within a few seconds. The transaction fee is almost zero, and there is no so-called cross-bank and different places and international payments.

Ripple open payment system is a virtual currency network (distributed P2P clearing network), future electronic payment platform. In 2004, Ryan Fugger launched the first implementation of Ripple. Its goal is to build a decentralized virtual currency system that allows anyone to create their own currency. Ripple is currently developed, operated and maintained by OpenCoin (currently renamed RippleLabs).

The Birth of Ripple

Perhaps in the eyes of outsiders, Ripple is a latecomer, but in fact the origin of the Ripple project is much earlier than Bitcoin. In 2004, Ryan Fugger launched the first implementation of Ripple. Its goal is to build a decentralized virtual currency system that allows anyone to create their own currency. Money in the Ripple network is represented by "debt", and all transactions are represented as changes in ledger balances.

It works like a bank's clearing system: when making an inter-bank remittance, the actual transfer of money between banks is delayed as much as possible into the night, when the bank calculates the amount due to it with other banks. It is possible that the money to be transferred from a certain bank just offsets the money to be transferred to the bank, so that it does not actually need to transfer any money out or in; The amount is generally much smaller than the sum of the customer's wire transfer amount.

The original intention of the Ripple project is to establish a distributed P2P clearing network: everyone is their own bank, which can issue and accept loans, and at the same time act as a loan channel (for example, A wants to borrow money from B, they do not know each other , but they all know C, then C can be used as a channel between A and B, C borrows money from B first, and then lends the money to A, which indirectly realizes that A borrows money from B).

The project has been supported almost by Ryan Fugger alone, and has achieved moderate success. However, there are not many users of Ripple, and it is only popular in a few isolated small circles. The reason is very simple: Ripple's design idea is based on acquaintance relationship and trust chain. His friends exist, otherwise a chain of trust cannot be established between this user and other users.

Total amount of Ripple coins

Ripple issued a total of 100 billion XRP. XRP is currently accurate to 6 decimal places. The smallest unit is called a drop. 1000000 drops are equal to 1 XRP, 1XRP=1000000dXRP. To put it simply, XRP is the basic virtual currency issued by OpenCoin and circulated in the ripple network. Just like Bitcoin, it can circulate in the entire network without being limited to the circle of acquaintances. Traditional currencies are stored in different financial systems, such as VISA/MASTERCARD credit cards or Alipay.

If you want to transfer money between different brothers, they will charge you a high fee, and different financial systems will have strict checks on your identity. XRP is used to pay a tiny fee on each transaction, XRP can be transferred between Ripple entry nodes and can be exchanged for any currency. The total number of XRP issued is fixed and was set at 100 billion at the beginning. Will not be reissued. Ripple's transaction fees are very low, only 1/1000th of a cent per transaction. This transaction fee is used to prevent someone from destroying the system through a large number of transactions.

Characteristics of Ripple

1. Low transaction costs

For transactions between different fiat currencies, a few percent is usually charged, plus transaction fees. Any transaction on Ripple is below 0.01$.

2. Anonymous

The Ripple network does not require users to provide email, name, or any other information, providing privacy for consumers.

3. Security

Sending Ripple is like sending cash. After receiving, there is no other fee. Payment is made by credit card and check. The payer must provide personal information, which may lead to fraud.

4. Reliable

Since ripple transactions are irreversible, merchants can trade with anyone without worrying about going back.

Functions of Ripple:

1. Two-way circulation of real and virtual currencies;

2. Multi-currency P2P exchange and payment;

3. P2P network credit;

4. Personal network liquidation.

Advantages of Ripple

Like Bitcoin, Ripple is also a shared public database, and it is also a global ledger of payments. The consensus mechanism allows all computers in the Ripple network to automatically accept updates to ledger information within seconds without going through a central data exchange. This processing speed is a major breakthrough in Ripple's engineering. It means that Ripple's transaction confirmation time is only 3~5 seconds, while Bitcoin takes 40 minutes.

The similarities between Ripple and Bitcoin

The design goal of the Ripple network is to seamlessly transfer any form of currency, whether it is USD, EUR, GBP, JPY or Bitcoin, providing a solution.

Stephen Thomas, a senior developer of the Ripple protocol and an advocate of Bitcoin, said: Ripple will open more gateways for Bitcoin users, and it will be an easier and simpler bridge for Bitcoin to connect to the mainstream financial world. The same as Bitcoin:

1. Ripple, like Bitcoin, is open source. Through the P2P communication network, XRP, like Bitcoin, can be transferred between accounts without any third-party software.

2. Like bitcoin, ripple is sent through the Internet, the transaction is irreversible, and both provide the unique anti-counterfeiting proof of digital currency.

3. Ripple uses the same underlying encryption technology as Bitcoin

4. Ripple has multi-signature support (ripple supports multi-signature authentication)

5. Very low transaction costs

6. Anyone can run a ripple server

The difference between Ripple and Bitcoin

1) The Ripple network supports multiple currencies. In addition to its own Ripple coin, it also supports fiat currencies (such as the US dollar, euro, yen, etc.), and intends to support bitcoin in the near future, and may support all virtual currencies in the future.

2) The Ripple network automatically performs exchange rate conversion. That is to say, users can use any type of currency to pay others with any other type of currency, so as to realize the circulation of all currencies in the whole network.

3) Ripple's transaction confirmation process can be completed within a few seconds. Ripple introduces a "Consensus" mechanism, through the voting of special nodes, transactions can be verified and confirmed in a very short period of time.

4) The Ripple client does not need to download the blockchain. It discards the verified ledger chain on ordinary nodes, and only keeps the latest verified ledger and a link to the historical ledger. Therefore, the workload of synchronizing and downloading the ledger is very small.

5) Ripple does not need and cannot mine.

6) The total amount of Ripple coins not only cannot increase, but can only decrease. The company has created 100 billion units of Ripple coins, plans to eventually issue 75% of Ripple's currency supply, and promises to never issue more. Users need to spend a certain amount of Ripple coins (the amount is very, very low, about 1/1000 cents) for each transaction. This transaction fee is not handed over to anyone, it just disappears out of thin air. Therefore, Ripple coins will only become less and less, but at a very slow rate.

How Ripple makes money

Ripple currency (XRP) is a digital currency based on mathematics and cryptography like Bitcoin, but unlike Bitcoin, which has no real use, XRP has the main bridge currency and guaranteed security functions in the Ripple system, among which The function of ensuring security is indispensable, which requires that the gateways participating in this agreement must hold a small amount of XRP.

Theoretically speaking, there are not many XRPs that gateways need to buy, and the price is very cheap. 1 XRP is only 0.4 cents (as of March 14, 2015, the price has risen to about 1 cent ). Like Bitcoin, the amount of XRP cannot be "overissued" (the total amount is 100 billion), but since each transaction will destroy a small amount of XRP, this means that the amount of XRP will gradually decrease. If the Ripple protocol can become the mainstream payment protocol in the world, gateways will have a wider demand for XRP - the demand is strong but the quantity is decreasing, which will lead to the appreciation of XRP.

Ripple Labs holds 77 billion XRP, valued at a simple price of 0.4 cents, worth about $300 million. Ripple Labs said that in order to have more participants in the Ripple protocol, they will gradually donate 55 billion XRP to users in this system, leaving 22 billion for themselves. And if the Ripple protocol becomes the mainstream payment protocol and the number of XRP decreases, XRP will appreciate in value. Even if most of the XRP is donated, the value of Ripple Labs can still be very high.

This is just an assumption. After all, this payment protocol is still a nascent thing. Up to now, the first and only bank in the world to announce access to the Ripple protocol is Fidor Bank of Germany, which is an Internet direct sales bank actively exploring in the field of digital currency, headquartered in Munich, Germany. Previously, the bank's work with bitcoin was also seen as a groundbreaking move.

Although it has started, the Ripple protocol still has a long way to go to "conquer" banks, especially traditional banks that are not as innovative as Fidor.

*Source of content: MBA think tank, Zhihu, etc., compiled by YouToCoin, if reprinted, please indicate the source.