Ripple is actually a technology that has a dual function; as a digital currency as
well as a digital payment network for financial transactions.
The way it works is that the Gateway functions as a credit intermediary that
receives and sends currencies to public addresses over the Ripple network.
This is why Ripple is less popular when compared to the other digital
currencies, with only a $1.45 value to date. It started off with a value of $0.001 in January, 2017 which is up by 20000% in December, 2017.
Ripple’s digital coin, XRP acts as a bridge for other currencies which includes
both fiat and cryptocurrencies. In Ripple’s network, any currency can be
exchanged between one another.
If user X wants Bitcoins as the form of payment for his services from Y, then Y
does not necessarily have to possess Bitcoins. Y can pay X to X’s Gateway using
US Dollars or any other currencies. X will then receive Bitcoins converted from
the US Dollars from his Gateway.
The nature of Ripple’s network and its systems exposes its users to certain
risks. Even though you are able to exchange any currencies, the Ripple network
does not run with a proof-of-work system like Bitcoin. Instead, transactions are
heavily reliant on a consensus protocol in order to validate account balances
and transactions on the system. The problem with XRP(Ripple) is that it’s not enabling any new features, but adding an additional cost that the competition does not have.
But Ripple does improve some features of traditional banks. Namely,
transactions are completed within seconds on a Ripple network even though
the system handles millions of transactions frequently.
Unlike traditional banks, even a wire transfer may take up days or weeks to
complete. The fee to conduct transactions on Ripple is also very minimal, as
opposed to large fees charged by banks to complete cross-border payments.
Like most things tech, the realm of cryptocurrency can be a bit complex to master and is still new to many. But the advantage of purchasing this currency is surely worth your investment in both time and money.
Thank you!