With a 35, 000 % increase in value in 2017 and a market cap of over $118 billion, Ripple has become a much-debated topic among analysts and investors alike. But, what is Ripple? Is it like other cryptocurrencies? Why has it been on fire lately? Continue reading to get answers to these questions.
1. What is Ripple?
Ripple is a payment solutions company, founded by Chris Larsen and Jed McCaleb. Their Ripple Transaction Protocol (RTXP) contains the cryptocurrency XRP. Ripple claims to offer faster, reliable, and affordable transaction solutions for financial institutions. The company has created a hundred billion XRPs and it currently holds 61% of the coins. The current plan is to release a billion coins a month.
2. Differences Between Ripple and Bitcoin
Both Bitcoin and Ripple are cryptocurrencies that use block-chain technology. But, there is a fundamental difference between the two: unlike Bitcoin, Ripple cannot be mined. The currency is not set up as a mineable currency, and its use is fixed to the Ripple network.
Both Bitcoin and Ripple use validating nodes for validating ledgers. Bitcoin has about 10,000 trusted nodes, while Ripple has only five. However, the company plans to add 11 more over the next 18 months. The five validating nodes are controlled by Ripple. XRP has received criticism for the absence of independently trusted validators. The XRP Ledger is available to all, so anyone can download it and become a validator. Many companies run their own nodes on the Ripple network.
3. Reasons for Recent Price Hike of Ripple
The recent price hike of XRP has a lot to do with the currency’s expected use by financial institutions and investment by believe-the-hype investors. Ripple has been successful in gaining banks as customers for its other products. Ripple’s xCurrent is preferred by financial institutions because it offers real-time communication and quick corrections, thus reducing delays in bank transactions. The company plans on introducing a new product, xRapid, that incorporates XRP. They see the new product as an opportunity to get banks to use XRP. Investors see the potential of the currency as a financial vehicle used by banks worldwide.