What is Ripple?

Ripple is a settlement system, currency exchange and remittance network. The Ripple protocol enables direct and instant value transfer between two parties anywhere in the world with negligible fee.

Gateways in the Ripple system issue and facilitate transfer of anything from USD, gold to airmiles and mobile minutes using the Ripple Protocol also known as the Ripple Transaction Protocol (RTXP). Validation of transactions in Ripple happens with the help of consensus among the validating nodes unlike mining in Bitcoin. If you’re not familiar with how cryptocurrencies work, we suggest you to first check out our guides on Bitcoin, Bitcoin Cash and Litecoin.

History

Back in 2004, Ryan Fuger a web developer from Canada, came up with the idea of a peer to peer decentralized monetary system — RipplePay. The main intent was to create a global financial network without intermediaries like banks involved. Jed McCaleb creator of Mt Gox and now co-founder of Stellar was working on his own currency system where the validation of transactions on the network would happen using consensus among the members unlike the proof of work system in Bitcoin which requires mining. He, along with Chris Larsen now Chairman of Ripple and the richest man in crypto, approached Ryan with an idea of a digital currency and then together formed a new company called OpenCoin.

OpenCoin started with the development of the Ripple Transaction Protocol for solving the problems they found in the banking system. They introduced the system of the validating server where trusted nodes on the network could come to consensus and validate transactions on the network. They also introduced XRP, the digital asset native to the Ripple protocol which could be used for instant value transfer anywhere in the world.

OpenCoin changed its name to Ripple Labs in 2013 and open sourced the protocol code under the ISC license. XRP became the second largest cryptocurrency overtaking Litecoin in 2014. Over this period Ripple Labs received funding from various VC firms and banks, including Google Ventures and Santander. The name was changed once again and this time it was changed from Ripple Labs to Ripple. Over the years, Ripple has partnered with more than 100 banks and payment services companies. XRP now is one of the most liquid assets with easy buying/selling access worldwide.

How is Ripple different from Bitcoin?

Bitcoin vs Ripple

Bitcoin aims to be the global decentralized digital currency while Ripple aims to be the payment system that disrupts networks like SWIFT. There are more differences than similarities.

Distribution

Bitcoin is distributed to the miners that solve the mathematical puzzle and include transactions in a block every ten minutes. There can only be 21 million Bitcoins ever. XRP distribution is different. When XRP was introduced, 100 billion XRP units were created. While some of the supply was distributed early among the founders and Ripple, most of it is now held in an Escrow.