Is Ripple a cryptocurrency ?

Ripple is actually a technology that has a dual function; as a digital currency as well as a digital payment network for financial transactions. It was launched in 2012 and co-founded by Chris Larsen and Jed McCaleb. The cryptocurrency coin under Ripple is labeled as XRP.

Unlike the other cryptocurrencies, Ripple operates on an open-source and a peer-to-peer decentralized platform which allows a transfer of money in any form, both fiat and cryptocurrency Ripple uses a middleman in the currency transactions. The medium (the middleman) known as “Getaway” acts as a link in the network between two parties wanting to make a transaction. The way it works is that the Gateway functions as a credit intermediary that receives and sends currencies to public addresses over the Ripple network. This is why Ripple is less popular when compared to the other digital currencies.

Ripple’s digital coin, XRP acts as a bridge for other currencies which includes both fiat and cryptocurrencies. In Ripple’s network, any currency can be exchanged between one another. If user X wants Bitcoins as the form of payment for his services from Y, then Y does not necessarily have to possess Bitcoins. Y can pay X to X’s Gateway using 18 US Dollars or any other currencies. X will then receive Bitcoins converted from the US Dollars from his Gateway. The nature of Ripple’s network and its systems exposes its users to certain risks. Even though you are able to exchange any currencies, the Ripple network does not run with a proof-of-work system like Bitcoin. Instead, transactions are heavily reliant on a consensus protocol in order to validate account balances and transactions on the system.

But Ripple does improve some features of traditional banks. Namely, transactions are completed within seconds on a Ripple network even though the system handles millions of transactions frequently. Unlike traditional banks, even a wire transfer may take up days or weeks to complete. The fee to conduct transactions on Ripple is also very minimal, as opposed to large fees charged by banks to complete cross-border payments.