What Is Ripple?

Ripple is a system of global financial payments with no chargebacks. Ripple provides an infrastructure for banks to use real-time gross settlement (RTGS) systems and remittance networks that allow people and businesses to transfer money in any currency, including fiat currencies that rely on central bank ledgers.

You can send a payment to anyone, in any currency. The recipient only needs a Ripple wallet and access to a Ripple gateway that can accept a fiat currency such as Dollars or Euros.

Ripple is not a cryptocurrency because it does not employ blockchain. Rather, Ripple uses a consensus ledger system that allows for payments, exchanges, and remittances in a distributed process.

Ripple is built upon an open-source internet protocol similar to HTTP, allowing it to be adopted by anyone wishing to transact in fiat currencies using the internet.

How Does Ripple Work? 

When using Ripple, transactions are completed in seconds by matching the sender’s details with the receiver’s. Transactions are then confirmed on a distributed public ledger (database) via consensus among members of the network to ensure transparency and security.

RippleNet is a global payments network created by Ripple Labs that allows for cross-border transfers between banks around the world.

Ripple’s distributed financial technology allows bank customers to send real-time international payments across networks in different countries, with fees starting at just a few drops of an eyelash per transaction. 

The entire process is done with no chargebacks and the lowest processing cost for any cross-border payment system in existence today. What sets Ripple apart from its peers, though, is its currency agnostic platform.

The Ripple network isn’t tied to one currency or institution; rather, anyone with access to the internet can use it as a global currency exchange that doesn’t discriminate based on nationality or region.

Types Of Ripple (Currency vs. Network)

There are two types of Ripple: 

1. Payment Network (RippleNet):

The Ripple payment protocol allows for money to be sent between parties with the transaction validated by consensus among members of the network. This provides built-in security because no one can charge someone else back or prevent a transfer from occurring.

As mentioned, Ripple is not a cryptocurrency because it does not employ blockchain or rely on mining; rather, Ripple uses a consensus ledger system that allows for payments, exchanges, and remittance in a distributed process. 

The network consists of businesses and people with Ripple accounts, which are assigned with trust lines that allow them to hold balances in any currency, including fiat currencies that rely on central bank ledgers.

2. Currency (XRP):

The Ripple network has its own currency called XRP, which is used to pay fees on the network. RippleNet members may charge their customers or other businesses in their network a small fee to process transactions; these fees are accrued using XRP.

What sets XRP apart from most currencies is that it’s not tied to any country and can be used by anyone with access to the internet. What this means is that Ripple can be used as a global currency exchange that doesn’t discriminate based on nationality or region

What Are XRP Tokens?

XPR tokens are the currency used on the Ripple payment protocol. XRPs are publicly traded digital assets.

There are 100 billion XRP in existence, with about 55 percent currently in circulation. Ripple has a majority hold on the total amount of coins in existence – which many critics see as a weakness for the system.

XRP is used to process transactions by sending tiny amounts through the internet at almost no cost to speed up and reduce the cost of each transaction. 

To increase the value of its network, Ripple has locked up 55 billion XRP in a cryptographically-secured escrow account to be released at a rate of 1 billion per month for at least four and a half years.

Who Created Ripple?

Ripple was co-founded by Chris Larsen and Jed McCaleb.

McCaleb originally wanted to create a decentralized Bitcoin exchange, but after struggling to build one, he decided to start over with the cryptocurrency Ripple. What made McCaleb notable was that he started Mt. Gox, the first Bitcoin exchange at 18 years old. At 26, McCaleb sold it for $1 million and then co-founded Ripple in 2011.

Larsen currently serves as executive chairman of the company after stepping down as CEO in 2016. He was one of the first people to join McCaleb on his initial quest to create a new digital payment system. Larsen is also heavily invested in various cryptocurrency assets, including OmiseGo and EOS, through his firm,

Why Use Ripple? 

There are many reasons why you might want to consider using Ripple:

  1. It’s fast, cheap & safe – transactions typically settle in under 4 seconds, with an average transaction fee of just 1/1000th of a cent!
  2. It’s currency agnostic – The Ripple network isn’t tied to one currency or institution.
  3. It’s scalable – Ripple is capable of handling up to 1,500 transactions per second (tps), which makes it an ideal choice for sending and receiving money globally.
  4. It’s secure – Ripple has its consensus ledger system, which protects against malicious threats by including gateways (the network member businesses) in the consensus process.
  5. It’s flexible – Ripple can be customized to meet the diverse needs of banks, corporations, and individuals.
  6. It’s reliable -Ripple is able to connect banks, payment providers, digital asset exchanges, and corporates through RippleNet to provide one frictionless experience to send money globally. What makes this possible is Ripple’s distributed financial technology, which enables a seamless experience.

What Can I Do With Ripple?

You can send and receive payments from anywhere in the world using a wallet or an exchange. What’s even better is that because it doesn’t use blockchain, your funds aren’t impacted by the processing delays traditional payment systems require. What this means is that you can send money across the world in a matter of seconds instead of waiting for 10 minutes, or even longer. In addition to speed, Ripple allows users to make payments directly from their preferred digital wallet, which means no additional account information needs to be entered.

How Can You Get Started With Ripple?

If you’re ready to start using Ripple, the first thing you need to do is open an account. Ripple is available on several major exchanges, so getting started is simple and straightforward. To get started, just follow these steps:

  1. Download a wallet – You’ll need to download a wallet that’s compatible with Ripple to store your funds. What’s great about this cryptocurrency is that you can use any digital wallet that supports XRP, so there are many options available to choose from.
  2. Buy some XRP – The next step is to purchase the amount of XRP you want to hold in your wallet, which you do by depositing funds into your account. What’s important to keep in mind is that Ripple isn’t available on every exchange, so you’ll need to search for one that offers XRP.
  3. Set up an account – After you’ve made the purchase, you’ll need to set up an account by entering basic personal details such as name and email address. You don’t have to pay a fee to use Ripple, since gateways cover the usage for free.

The Bottom Line

Ripple is a payment protocol which seeks to connect banks, payment providers, digital asset exchanges and corporates through RippleNet.

This allows for more seamless transfer of money globally by connecting them on one single network. It’s different from the other cryptocurrencies because it doesn’t use blockchain technology, meaning transactions are processed much faster than traditional systems. 

ipple is currency agnostic, meaning it can be used to transfer not only cryptocurrencies but fiat currencies as well.

More than 100 banks and financial institutions now use the Ripple protocol (RippleNet) to send money across borders. You now have access to an incredibly fast way to transfer funds from one bank account to another using a simple interface. 

What’s even better is that you also have access to the Gatehub platform, where Ripple can be traded for other currencies as well as fiat.

Ripple is a payment protocol that seeks to connect banks, payment providers, digital asset exchanges, and corporations through RippleNet. Unlike other cryptocurrencies, Ripple doesn't use blockchain technology, meaning transactions are processed much faster than traditional systems. Ripple is currency agnostic, meaning it can be used to transfer not only cryptocurrencies but fiat currencies as well.
Ripple works by connecting banks, payment providers, digital asset exchanges, and corporations through RippleNet. This system can be used for any currency as well as fiat money, allowing the transfer of funds from one bank account to another in mere seconds. This is possible because of Ripple's distributed financial technology, which enables a seamless experience.
You can use any digital wallet to store your Ripple funds, allowing for more convenience. The gateways cover the usage for free, meaning that you won't have to pay any transaction fees or it's very minimal. Ripple enables faster transactions than traditional systems do, taking only 4 seconds instead of 10 minutes. Ripple is fast and easy to use, as RippleNet is a simple to use protocol that even those who aren't as technologically advanced can quickly adapt.
Chris Larsen and Jed McCaleb co-founded the San Francisco-based startup OpenCoin, which developed Ripple.
Ripple is used by companies and banks all over the world, with more than 100 financial institutions and banks now integrated. This means your money is safe - Ripple doesn't hold on to your funds, so there's no risk of losing them or having them frozen.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.