Many banks and payment systems use Ripple technology to speed up and reduce the cost of international transfers. However, the XRP coin itself, due to excessive centralization (according to the SEC), may never reach the masses.
Features of Ripple
Ripple is a unique project of its kind. It is entirely different from the traditional blockchain. It is a decentralized database that operates on an agreement basis and conducts all transactions remotely. Any bank or other financial institution can integrate the Ripple protocol into its system. The system works not only with cryptocurrencies but also with goods, as well as with fiat. It is an infrastructure for interbank operations that can work under any authority.
Transactions created on the Ripple network can be edited or canceled. The transaction speed is currently the highest among all systems and cryptocurrencies - one and a half thousand operations per second. This makes it attractive for financial institutions making cross-border transfers.
Ripple has its cryptocurrency - XRP. It is noteworthy that the payment system can use not only it but also other assets. A commission is debited from the account for each transfer made not in XRP, which immediately burns out. This protects the platform from DoS attacks, as it makes them disadvantageous to hackers.
It is also worth noting that the developers immediately generated all the coins when the Ripple project was launched. A total of 100 billion coins were issued, which explains their low cost. At the same time, the founders of the project own more than half of all tokens, and less than 50% are in circulation. As the company explains, this helps keep inflation under control.
In 2017, Ripple froze 55 billion coins in its escrow accounts, 1 billion in each account. Now it unfreezes 1 billion XRP every month, and every 30 days, it returns to the escrow account those tokens that have not been sold. At the same time, community members are unhappy with this distribution of XRP and believe that their monopolized storage is the reason for price manipulation.
Another feature of the XRP coin is that it cannot be mined. There is no Proof-of-Work algorithm in the Ripple network itself, and the number of nodes is limited. Therefore, cryptocurrency can either be bought on the exchange or received as a reward for participating in scientific research on the Ripple Labs website or use the so-called XRP faucets - services where you can get coins for performing simple actions, for example, for watching ads.
Will XRP become a mass payment method?
The expert explained that XRP cryptocurrency can become a means to eliminate all the shortcomings in the international payment system SWIFT. Still, for this, it needs to attract more retail investors. Furthermore, it can be used for ETH to INR, LTC to INR and ADA to INR transactions, from all over the world and especially in the Indian territory, but also to buy ripple with PayPal using a P2P Exchange.
The crypto community members themselves are rather wary of XRP since it is centralized and managed by several people. The case when all the tokens on account of Jed McCaleb, the co-founder of the project, who decided to leave to create his Stellar blockchain, were frozen became indicative for investors. It turned out that the company can freeze any accounts that have XRP. At the same time, it is possible both to freeze a specific account and on a global scale.
The company's excessive centralization and total control of the coins discourage investors, and many do not even consider XRP as a cryptocurrency.
On the other hand, this system allows for cheaper and faster international payments than attracted financial institutions. Even though investing in the token itself is considered by many to be impractical, Ripple is currently a viable network, but nothing more.