Understanding Ripple: Pros and Cons


Do you know exactly what is Ripple and how it works? Even if you do we are quite sure that you don't know its exact use case and if and how the value of Ripple varies in cryptocurrency exchanges. Read this article to know the pros and cons of Ripple and much more in-depth knowledge of this cryptocurrency.

If you are someone who is associated with the cryptocurrency exchange market like Coinswitch, you would surely know what Ripple is. Its position is only after Bitcoin and Ethereum, and if you have been planning to invest in Ripple, you are at the right place.

What is Ripple?


Ripple is a cryptocurrency that aims to solve the problems faced while making international payment transfers. It is the third most valuable cryptocurrency after Bitcoin and Ethereum.

It can be defined as a global platform for exchange, settlements, and making payments. Ripple coins (XRP) are exchanged on this platform to make the transactions possible.

It was introduced in the cryptomarket in 2012 with just one aim—offer a frictionless experience for sending money globally by making use of the blockchain technology.

So, this cryptocurrency is different from Bitcoin and Ethereum. Bitcoin is a digital currency, Ethereum is a platform for developing smart contracts, and Ripple is a platform that aims to make international financial transactions easy.
Ripple coin creation and its circulation is another point of difference. In most of the cryptocurrencies, new coins are created by a process known as mining. In the case of Ripple, this is different. There are 100 billion Ripple coins, and all were built right when Ripple started. Ripple Price Prediction by Coinswitch shows a bearish run and is expected to quadruple in next 5 years.
Let's now take a look at how Ripple works.

How does Ripple Work?


Ripple serves as a payment platform which is faster and more efficient. Ripple is based out of a software program that enables the development of a credit system. The Ripple nodes function as local exchange systems so that the entire system works as a decentralised mutual bank.

Like other Blockchains, Ripple too uses consensus mechanism where a set of servers validate the transaction but it is itself not a blockchain. Ripple makes use of a HashTree algorithm that creates a single hash value of all the data and this value is validated by all the participating servers.

The Ripple network can be thought of as a social service that depends on the trust of its customers. However, Ripple and its currency XRP are both independent entity. Ripple platform itself can be used to transact fiat currency without the need for XRP tokens which many Ripple enthusiasts are not aware of. XRP tokens can act as tool exchange for any digital currency be it a fiat currency, gold or even credit card points.

Ripple comes with its share of benefits and disadvantages. Read on to know more:

Ripple Pros and Cons


Pros
Ripple as a cryptocurrency has many advantages and they are:
  • Transaction Fees: The standard transaction fee on the Ripple network is 0.00001 XRP, and each XRP costs $0.69. This means a transaction is almost free. As there are no miners, there is no one to take the fee. As a result, the Ripple coin that is used to make the fee payment is destroyed. This, in turn, means the number of such coins is decreasing every day, and their values are increasing.
  • Transaction Speed: Transactions are quite fast and way faster than other cryptocurrencies.
  • Partnerships: Ripple has found acceptance in the standard economy, unlike other cryptos. It is already being piloted by many payment apps and large financial institutions.
  • Transactions Per Second: Ripple since its inception has handled over 35 million transactions without a glitch. Compared to Bitcoin and Ethereum which can handle only 3-6 transactions (excluding the scaling layer transactions) and 15 transactions per second respectively, Ripple can handle 1,500 transactions per second. A recent upgrade has made it possible to scale this capacity to 50,000 transactions per second.

Cons
The cons include:
  • Centralisation: Ripple is not decentralised, and this happens to be its main problem.
  • Focuses on large corporations: The partnership of Ripple is with large financial corporations, and it has not much to offer to customers like us.
  • Competition: Ripple faces tough competition from cryptos like Stellar. Also, customers cannot buy Ripple coins on Coinbase.

  • Conclusion


    You already know how Ripple works and what its benefits and cons are. The Ripple developers are already working on decentralising Ripple, so that should come as a relief.
    It has plenty of room to grow and has a lot of potentials. Ripple as a cryptocurrency is here to stay.


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