Review on XRP by Huseyn Akberov

What is ripple?

Ripple is a payment settlement system and currency exchange network that can handle transactions all over the world. The idea is for Ripple to act as a trust agent between the two parties to the transaction, because the network can quickly confirm whether the transaction is proceeding normally. Ripple can facilitate the transaction of various fiat currencies, cryptocurrencies like Bitcoin, and even commodities like gold.

"Ripple was designed from the ground up to essentially be an alternative to SWIFT [the leading remittance network], or to replace the settlement layer between major financial institutions in other ways," said Pat White, CEO of Bitwave.

As long as users use the network for transactions, the network will deduct a small amount of XRP (a cryptocurrency) as a fee.

"The standard fee for transactions on Ripple is set at 0.00001 XRP, which is the lowest compared to the large fees charged by banks for cross-border payments," said El Lee, a board member of Onchain Custodian. At the end of April 2021, the price of XRP is $ 1.38 per token, which means that the transaction fee is only $ 0.0000138. Chapter

What is Ripple?

XRP is a cryptocurrency that runs on XRP Ledger, which is a blockchain designed by Jed McCaleb, Arthur Britto, and David Schwartz. McCaleb and Britto will discover Ripple and use XRP to facilitate transactions on the network. You can buy XRP as an investment, as a currency to exchange for other cryptocurrencies, or as a way to fund transactions on the Ripple network.

It is worth noting that the working principle of the XRP blockchain is slightly different from most other cryptocurrencies. Other cryptocurrencies open their transaction ledgers and verification processes to anyone who can solve complex equations quickly, but transactions are secure because most ledger holders must agree to verification to add them.

In contrast, XRP's Ripple network centralizes things slightly: Although anyone can download its verification software, it maintains what it calls a list of unique nodes, and users can choose these nodes to verify their transactions based on what they think they are participants. . It is unlikely to be disappointed. Your default list currently contains 35 trusted validators. Ripple decides which verifiers to approve for this list and constitutes six of the verification nodes. However, users can opt out of this default list and assume that Ripplebacked validators are completely removed from their transactions instead of building their own list of trusted validators. This will allow the network to continue to approve transactions even if Ripple does not continue to participate or even continue to exist.

As new transactions appear, validators update their ledger every three to five seconds and make sure they match each other. If there is no match, they will stop to find out what the problem is. This allows Ripple to verify transactions safely and effectively, giving it an advantage over other cryptocurrencies such as Bitcoin.

"The confirmation of the Bitcoin transaction can take minutes or hours, and is generally associated with high transaction costs," said Lee. "XRP transactions are confirmed in about 4 to 5 seconds at a much lower cost." How to mine XRP

"Mining" is a distributed verification system used by most blockchain-based cryptocurrencies. It not only facilitates transactions, but also provides a mechanism for introducing new currencies into the cryptocurrency system, usually as a reward for the work of the validators that support the network. For example, the total supply of Bitcoin is limited to 21 million tokens, which are continuously released as more and more transactions are verified. On the contrary,

XRP is "pre-mined", which means that the XRP ledger creates 100 1 billion tokens are then released regularly. Ripple owns approximately 6% of these shares as an incentive to help the cryptocurrency continue to grow and succeed over time. Another 48% or so is reserved for regular marketing through sales.

Understandably, this raises concerns that a large amount of XRP may be released immediately, thereby diluting the value of other XRP already in circulation, because part of the value given to any coin is its relative scarcity.

"The company tries to reduce uncertainty by implementing various mechanisms (trust, predictable releases, etc.)," said Tim Enneking, Director of Digital Capital Management. The difference between mining and pre-mining may also be a reason for your conflict with the SEC, because the SEC may think that XRP is not so much a currency, as it is a different and more strictly regulated security, such as a stock .

Ripple's advantage

Quick settlement. The transaction confirmation is very fast. They usually take 4 to 5 seconds, and it may take a few days for the bank to complete the wire transfer, or it may take several minutes or hours to verify the bitcoin transaction.

Very low cost. The cost of completing a transaction on the Ripple network is only 0.0001 XRP, which is only a fraction of a penny at the current exchange rate.

Multifunctional switching network. The Ripple network not only uses XRP to process transactions, it can also be used for other fiat currencies, cryptocurrencies, and commodities.

Used by large financial institutions. Large companies can also use Ripple as a trading platform. Santander, Axis Bank, and Yes Bank are some of those using the network, showing that it has a higher institutional market adoption rate than most cryptocurrencies.

Waviness deficiencies

is somewhat concentrated. One of the reasons for the popularity of cryptocurrencies is that they are decentralized and take control of the big banks and governments. Due to its default list of validators, the Ripple system can be a bit centralized, which goes against this philosophy.

Prefabricated XRP is available in large quantities. Although most of the Ripple supply that is not in circulation is stored in escrow, it is possible to introduce large quantities at untimely times, which may affect the value of XRP.

Recent actions taken by the SEC against XRP. In 2020, the SEC filed a lawsuit against Ripple, saying that because it can decide when to launch XRP, the company should register it as a security. It may slow down until this problem is resolved