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Ripple (XRP) Logo
$ 22.62 B
XRP 3.21 B
~ 100.00 B
Total Coins Mined
~ 99.99 B
*General last updated 02/27/20 12:04:26 AM
Ripple was built as a real-time gross settlement system, remittance network, and currency exchange. The Ripple protocol is open-sourced and consensus-based, also supporting XRP, the networks native currency. As a digital asset, XRP can be used on the Ripple network to lower liquidity costs while minimizing settlement risk and delays. Using XRP, bank and non-bank payment providers can source on-demand liquidity from digital asset exchanges to process cross-border payments. The network supports tokens representing different kinds of value like fiat currency, frequent flyer miles, commodities, or even mobile minutes. Ripple has dozens of banking and payments-based partnerships across a wide range of financial institutions and boasts among the fastest settlement times for transactions within the crypto ecosystem.
Ripple (XRP) has a total distribution of 100 billion tokens, with 20 billion initially retained by the founding team who are also the founders of Ripple Labs. 80% of the remaining supply was given over to Ripple labs to ensure the viability of the Ripple network, and also to foster market maker activity and maintain strong XRP liquidity into the future. By 2017, Ripple placed 55 billion XRP into an escrow account which allows 1 billion tokens to be drawn monthly to be used and spent, and the unspent returned at the end of the period. The process resets the following month with an additional month-long contract. Ripple Charts allows the distribution and movement of XRP tokens to be tracked across the world.
Ripple was envisioned as a means to overcome the expensive and timely method of cross-border payments and settlement of transactions for financial services companies, banks, and institutions. Combining the security and reliability of the network with the XRP native currency allows for the further reduction of costs, and provides these institutions with access to new markets.
Today’s Ripple network and the current mandate was preceded by Ripplepay, founded by Ryan Fugger in 2004, predating Bitcoin and the Satoshi whitepaper by a full four years. At the time, Fugger was a web developer working out of Vancouver Canada for a currency exchange product based out of British Columbia. His idea was to build on the concept offered by the exchange model, but decentralize it and modify it in a way that would allow participants to create their own money. When Ripplepay debuted in 2005, it was branded as a financial service offering a secure payments gateway to members of an online community around the world.
Ripple was founded by Jed McCaleb, Chris Larsen, Arthur Britto, David Schwartz, and Ryan Fugger. Of the original team, only David Schwartz currently sits on the Ripple Labs board of directors where he serves as Chief Cryptographer. The current CEO of Ripple Labs is Brad Garlinghouse. Marcus Thatcher (SVP of Customer Success), Antoinette O’Gorman (Chief Compliance Officer), Stefan Thomas (Chief Technical Officer), Corey Johnson (Chief Market Strategist), Asheesh Birla (SVP of Product), and Ron Will (Chief Financial Officer) comprise the remainder of the board.
Ripple's Leadership Team
Jed McCaleb of eDonkey network along with Arthur Brillo and David Schwartz designed and built a digital currency system with the aim of consensus verification among members of the network as the means of operating and reward rather than the process of mining, deployed by other decentralized projects like Bitcoin.
The early team was joined by e-Loan and Prosper founder Chris Larsen, and with the help of Jed McCabe, the pair approached Ryan Fugger with their idea. A period of debate and transition within the broader Ripple community saw Fugger transfer leadership over to McCabe and Larsen, and as a team, the trio co-founded OpenCoin Inc.
The company began developing their new payment protocol dubbed the Ripple Transaction Protocol (RTXP) based on Ryan Fugger’s original designs. In early July 2013, XRP Fund II LCC (now just XRP II) was founded as a wholly-owned subsidiary of OpenCoin Inc. The day after the subsidiary announcement, Ripple announced the Bitcoin Bridge linking the Bitcoin and Ripple ecosystems. Users of the Ripple network could now send payment in any denominated currency to a Bitcoin address. In September, OpenCoin Inc. changed its name to Ripple Labs Inc., and Chris Larsen stayed on and remained CEO. The following day, under the terms of the ISC license, the Ripple network became officially open sourced, with its reference server and client becoming free software. Ripple’s partnership with ZipZap that same year was touted as a direct threat and possible competition to Western Union in the press.
Ripple released a client app on iOS allowing iPhone users to send and receive any currency directly on their phones. Ripples agnostic programming language project known as Codius, offering novel smart-contract solutions was also proposed that same year. Munich Germany’s Fidor Bank, an online-only financial services provider, was the first financial institution to announce a partnership that would showcase Ripple’s technology in real-time. In September of 2014, Cross River Bank, a New Jersey based institution and CBW Bank out of Kansas both announced partnerships with Ripple. December that same year, global payments service provider Earthport joined the list of financial service institutions looking to pilot the Ripple protocol. Earthport counts HSBC and Bank of America among its clients, and operates as a provider in over 65 countries. XRP saw its largest price increase to date in 2014 with a staggering 200% uptick in overall value.
Fidor Bank announced further plans to integrate Ripple into a new real-time international money transfer network in an effort to not only enter the US market, but also court millennial users. By May, Western Union also announced their interest in Ripple and that they planned on experimenting with the technology. The Commonwealth Bank of Australia also jumped aboard in 2015, announcing plans of integrating Ripple for intra-bank transfers between its subsidiaries. Ripple Labs was fined in May 2015 by the US Financial Crimes Enforcement Network (FinCEN) and forced to pay $US 700,000 for violating the Bank Secrecy Act as the company was found in contravention of FinCEN enforcement regulations recently set out in 2013. As part of official remedial steps, Ripple agreed to only have XRP traded through registered money service businesses (MSB’s) in the United States, and an overhaul of the Ripple protocol. Changes to the protocol include the integration of advanced AML transaction monitoring to the network. The current release of the sever is version 0.70.1. Ripple opened an office in Sydney, Australia towards the end of 2015.
Early 2016 marked the opening of additional European offices in London, United Kingdom, and Luxembourg in an effort to help support protocol neutrality. In June 2016, Ripple became the fourth blockchain company to receive the Bit License in the State of New York, through the Department of Financial Services. SBI Ripple Asia announced the plans for a new conglomerate of banks that would use Ripple’s payments and settlements technology across a new network. The grouping launched in October 2016 with 42 member banks. Ripple announced the first interbank group for global payments based on distributed ledger technology and financial services around the same time as the Japanese consortium bank launch.
Members of Ripple’s Global Payments Steering Group (GPSG) include Canadian Imperial Bank of Commerce, Royal Bank of Canada, Bank of America Merrill Lynch, Mitsubishi UFJ Financial Group, Santander, UniCredit, Westpac Banking Corporation, and Standard Chartered.
Unlike other crypto assets, XRP is not a plug-and-play solution requiring node rewards and block validation via using gas the way Bitcoin or Ethereum, or any of the other alt-coins operate. The system incorporates a shared public ledger/database, the contents of which are decided upon by a consensus. The ledger holds both information on account balances, and also information on buy/sell offers for other currencies or assets. Users on the network can make payments to each other with the aid of cryptographically signed transactions in either fiat currencies or Ripple’s native XRP. Transactions in XRP are processed through an internal ledger, while those in other denominations like fiat or other assets, only the amount owed is recorded on the Ripple ledger, and assets denominated as debt obligations.
Ripple uses its own proprietary Ripple Protocol Consensus Algorithm (RPCA). It is applied every few seconds by all nodes on the network in an effort to maintain its agreement and correctness. If consensus is reached, the current ledger becomes ‘closed’ and maintains itself as the last closed ledger. Assuming no fork in the network, this last closed ledger which is maintained by all nodes in the network is identical.
In practice, the RPCA works as follows;
Gateway – any individual or entity that allows users to deposit/withdraw money through Ripple’s liquidity pool. Gateways accept deposits from users and also issue balances placed through the Ripple ledger. They can also redeem ledger balances held against deposits when currencies are withdrawn. They act similar to banks, but instead of a string of different financial institutions with different internal systems, they all share the Ripple protocol.
Server – any entity running on the Ripple Server software (not Ripple client software).
Ledger – records the amount of currency in a given user’s account, representing the ‘ground truth’ of the network. It is consistently updated with transactions that pass through the consensus process.
Last-closed Ledger – most recent ledger that has been ratified through the consensus process, representing the current state of the Ripple network.
Open Ledger – current operating status of a given node, with each node maintaining its own open ledger. Those transactions that are initiated by end-users of a given server become applied to that server’s open ledger. Transactions are not finalized until they pass through the consensus process, making a given open ledger in that process become the last-closed ledger.
Unique Node List (UNL) – each server maintains its own UNL, which is a set of all other servers which are queried when determining consensus. Only votes of other members of the UNL of a server are able to determine consensus rather than every node on the network. This makes the UNL a sub-network, which when taken collectively is ‘trusted’ by a server to not attempt to defraud the network.
Rippling – trust is ‘extended’ to the Ripple gateway by users. This is a manual creation of trust which signals to RippleNet that a given user is comfortable with the gateways counterparty risk. Quantitative limits on trust may be arbitrarily placed by given users, alongside similar limits for each deposit on that gateway. Allowing multiple gateways with the same currency brings the advanced option of ‘rippling’. This subjects the user’s balance in a given currency to alternate or ‘ripple’ between different gateways. The total balance remains unaltered, and users can earn small transit fees for provided inter-gateway liquidity.
There are three layers to the Ripple Protocol, each aimed at covering a specific service for enterprise clients;
xCurrent – Ripple’s proprietary software which enables banks to facilitate new cross-border payments services with low to zero latency, lowering their overall settlement costs. It is interoperable with an institutions existing risk, compliance and information security structures. The software is installed directly into existing infrastructure and built to integrate with the institutions existing interface using an API through a translation layer. This layer can consume traditional payment message formats, allowing compression and integration of the time frame. Members of RippleNet using xCurrent are connected through the first real-time gross settlement (RTGS) system built on a distributed ledger.
Ripple Cross-border Payment Diagram
xRapid – Allows the minimization of liquidity costs for payment providers and other financial institutions, alongside an improved customer experience. It leverages RippleNet’s native currency XRP to offer on-demand liquidity, lowering overhead costs, facilitating real-time payments, and extending this services through to emerging markets.
xRapid Liquidity Chart
xVia – built for corporations, payment providers, banks, and other financial institutions looking to send payments throughout various networks on a standardized interface. xVia offers a unique and simple API with no software installation necessary, enabling seamless payment settlement globally. The service can be calibrated to include various information like invoices.
xVia Payment API Diagram
The Bitcoin bridge acts as a link between the Ripple and Bitcoin networks making it possible to pay any given Bitcoin user directly from a Ripple account without the need to ever hold any digital currency or asset. Merchants accepting Bitcoin can accept any currency in the world through the bridge. Sending a payment through the bridge exchanging US dollars for Bitcoins without the sender having to hold Bitcoin initially is possible, and there is no need to use an external exchange.
Ripple Labs built their API to be developer friendly, with the payment network plugin based on the REST API standard, a popular protocol in the developer community.
RippleNet’s native currency. One million ‘drops’ equal one XRP, with 100 billion XRP created during inception. The supply schedule is fixed making XRP an asset with an algorithmically controlled dissemination, and shrinking availability as time goes on. XRP is not dependent on third parties and is as such the only redeemable currency in the RippleNet with little to zero counterparty risk. Other currencies or assets in the RippleNet are debt instruments and are displayed as balances. RippleNet users who transact in XRP are not obligated to hold it as a store of value or medium of exchange, but all participants must hold a reserve of 20 XRP for anti-spam purposes.
Transactions conducted in denominations other than XRP carry a transaction fee. This fee is to protect against network flooding in an effort to make network attacks to expensive for hackers. A RippleNet completely free to access would enable hackers to broadcast large amounts of fake accounts known as ‘ledger spam’ or fake transactions like ‘transaction spam’ in a concerted effort to overload the network.
The interoperability of the RippleNet with the existing infrastructure of enterprise level institutions that leverage its API makes it incredibly convenient and easy to integrate within existing risk, compliance, and other internal measures. The flexibility of XRP as a native currency on the RippleNet and also its ability to act as a bridge currency with the Bitcoin ecosystem further contributes to Ripple’s wide-scale popularity and overall fungibility.
XRP sits as the third highest ranked crypto assets within the greater blockchain ecosystem. Ripple Labs designed their enterprise level software to specifically cater to the international financial services community in an effort to lower cross-border settlement costs, decrease transaction latency through ultra fast API access and interoperable gateways, and as such, leverage XRP the networks native asset to provide secure, on demand liquidity.
Ripple has staked its reputation on being the concierge transaction and settlement service for leading-edge financial institutions. Because of this, Ripple has made major strides in the last few years by securing dozens of high-profile international partnerships across all levels of the financial industry.
Users can conduct cross-currency transactions in under 5 seconds. Payments are authorized only by account holders, and processed without third parties or intermediaries. Ripple will automatically validate account balances for the purpose of payment transmission and confirmation is delivered with little to no latency. No chargebacks exist for payments, and they are also irreversible, with XRP as a currency immune to freezing or seizure. As of 2015, new identity verification procedures were integrated into the RippleNet. Ripple has a proprietary algorithm (Path-finding Algorithm) that identifies the cheapest pathway between two currencies for transaction purposes.
User’s can act as market makers, offering arbitrage services such as rippling, intra-currency gateways and market liquidity. Hedge funds, or OTC desks can also act as market makers. The more market makers seeking to provide an increasingly diverse menu of transaction options/services, the more efficient and better populated the path-finder algorithm within the network operates. Users can pay each other without taking on unnecessary counterparty or foreign-exchange risk.
Ripple’s complete list of publically acknowledged partnerships and institutions currently experimenting with different features of the RippleNet is outlined below.
Ripple’s impact within the wider crypto community is a mixed bag of reactions. Some people are skeptical of the fact that XRP is basically ‘pre mined,’ having generated the total fixed supply of XRP tokens at time of inception, rather than relying on node validation and mining like Bitcoin. Others have noted that they find the retention of 20% (20 billion XRP) of the total supply by the founding team to be on the high side. The fact that Ripple only uses a few core nodes for validating transactions and network consensus contributes to the notion that Ripple may not be truly decentralized. When Jed McCabe and Arthur Britto decided to gradually sell off their holdings of XRP over several years, it did well to assuage certain doubts within the community.
There is also an argument to be made that speculators within the crypto space may not know what they are buying with Ripple’s native XRP, and because of that there still remains a large divide over whether XRP will become ‘the standard’ and solidify its base as a mainstay or if it is just another exotic financial instrument designed strictly to cater to the needs of the established financial community worldwide. Ripple Labs recently donated over $US 50 million into blockchain-specific academic research in a bid to foster greater dialogue about the incumbent technologies now making their way through the academic pipeline and also social discourse overall.