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January 8, 2025 | 07:49 pm
TEMPO.CO, Jakarta - The cryptocurrency realm is an ever-evolving landscape, given the vast innovation in global finance and beyond. Ripple is among the key players in this space, often linked with a project called Ripple Labs, a tech company that developed a global payment system based on blockchain technology. Its major draw is the cross-border payment abilities, enhancing the efficiency and speed of international transactions.
For the currency, Ripple utilizes XRP as a bridge in each transaction. As highlighted by Forbes, Ripple is set apart from most other cryptocurrencies due to the company’s unique consensus mechanism and business model, as XRP was pre-mined at launch with a total supply of 100 billion tokens.
The brief explanation may give you a glimpse of Ripple, but the question of “What is Ripple?” still lingers. Citing Investopedia and Forbes, this article will take you to an in-depth discussion on Ripple.
Ripple’s History and Development
It all started in 2012, when Ripple was founded by Chris Larsen, Jed McCaleb, Davic Schwartz, and Author Britto. Initially, the company stood as OpenCoin before finally standing with its current name.
Over the years, Ripple has undergone significant developments, with acquisitions being one of the company’s key strategies—in 2023 and 2024, the company acquired Standard Custody & Trust and Metaco. Given these moves, Ripple is likely positioning itself to enhance its plan to offer crypto liquidity services to institutions.
By 2024, Ripple introduced its stablecoin, backed by cash and cash equivalents. However, as of October 18, 2024, the stablecoin is still awaiting regulatory approval. As a result, Ripple has partnered with major centralized and decentralized cryptocurrency exchanges, but the stablecoin remains unavailable for purchase until approval is granted.
Ripple’s Role in the Industry
Ripple plays a crucial role in the cryptocurrency and blockchain industries as it addresses one of the global finance’s most significant pain points—slow and costly cross-border transactions. While other cryptocurrencies like Bitcoin are often associated with volatility and long transaction times, Ripple offers a solution that enhances speed and reduces fees.
The Ripple network operates using the Ripple Protocol Consensus Algorithm. In this efficient system, designated servers compare transaction records and reach a supermajority agreement to validate transactions. This method enables XRP to settle transactions in just 3-5 seconds and process up to 1,500 transactions per second, making it far faster than traditional blockchain networks.
Banks can either use XRP as a bridge currency or utilize Ripple’s messaging system to streamline their existing currency transfers. One thing is certain: the network will automatically determine the most cost-effective route.
Key Features of Ripple
Ripple stands out in the cryptocurrency market for several reasons:
Transaction speed
Ripple transactions are processed in 3-5 seconds, providing a practical method to meet banks’ real-time needs for payment.
Low transaction fee
XRP transactions are inexpensive, typically costing a fraction of a cent (0.00001 XRP). Meanwhile, traditional transfer fees can cost from around $25 to $50.
Scalability
Ripple excels in handling high-volume transactions at once, to be specific, 1,500 transactions per second.
Cons of Ripple
Like any other technologies, Ripple also has cons for its use, including:
Centralization Concerns
The significant control of Ripple Labs over 48 billion XRP tokens in escrow leads to concerns about centralization.
Regulatory Challenges
Ripple is facing ongoing legal battles, particularly with the U.S. Securities and Exchange Commission (SEC), which has raised concerns about the classification of XRP as a security.
How is the Future of Ripple?
Similar to Bitcoin’s fluctuating market, Ripple also showcases a comparable level of volatility. While Token Metrics predicts the future of Ripple (XRP) to be quite promising, challenges like reaching a $500 valuation soon may be highly unlikely.
With the growth and trend towards the digitization of the global economy and the pursuit of more optimized options for cross-border payments, Ripple and XRP could play a vital role in shaping the future of finance.
But, at the end, investing in cryptocurrencies goes together with risks that should not be overlooked. Therefore, it’s essential to conduct thorough research and evaluate its fundamentals before making any decisions.
Editor’s Choice: Consensys 2024 Survey on Crypto in Indonesia: Awareness Increases, But Cryptocurrency Concept Still Unrecognized
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