First, let us understand that Ripple is both a currency as well as a platform. Its platform is an open source protocol, which is created to allow quick and inexpensive transactions. Quite contrary to Bitcoin that wan never intended to be an easy payment gateway, the power of Ripple will surely make it rule all the international transaction worldwide. However, nothing firmly can be claimed about its future at the moment.
Ripple comes with its own currency (XRP) but also allows everybody to use the platform to create their own via RippleNet.
It is a network of institutional payment-providers including banks and money services businesses that use solutions developed by Ripple to offer a seamless experience to send money across the globe.
Let us understand with this example.
Assume that Avi stays in Ahmedabad and has guitar he does not need anymore. He wants to go for the upcoming IPL final, but is not able to get the ticket. Secondly, Ms Veronika stays in Gurugram and owns a rare Buddha idol she would like to give away for a guitar. Lastly, there is Mr. Brown living in Mumbai, is hunting for a rare Buddha idol, and has the IPL final ticket.
Now, in general scenario, these people would never be able to meet each other and stay unaware of the fact that someone at some corner of his own country may need their ‘invaluable’.
However, Ripple has the power to bring the trio together. It will connect them and look for the shortest and cheapest combination to make it happen.
In addition, Ripple allows to make payments irrespective of the currency including Bitcoin and charges the lowest fee. Only $0.00001. Yes, you heard it right. It is not free just because it has to curb DDos invasions.
It’s a token used for representing the transfer of value across the Ripple Network. The major purpose of XRP is to function as a mediator for other –Both cryptocurrencies and fiat-exchanges. For a layman, XRP is a ‘Joker’. Not that dreadful antagonist from Batman but the card that can be any other card. If you want to exchange from euro to pound, transaction will not go that way. It is always euro to euro and pound to pound to cut down the transaction cost on Ripple is $0.00001.
There is an interesting fact about it, once the transaction of $0.00001 takes place this amount will not be listed there anymore on the platform as well as cannot be restored. Thu, after every transaction the world loses $0.00001. This was the basis idea behind the creation of XRP to intercept spammers’ invasions.
This protocol as a working prototype was created way back in 2004. But the real story starts in 2013, when Jed McCaleb, the creator of the EDonkey network invited a bunch of world rank investors to invest in Ripple Labs.