Up and down.

In times of volatility, one can believe that there is really nothing that supports public cryptocurrency networks. But this is not exactly the case. Although they are of all shapes and sizes (so to speak), crypto-currencies all use the same ingredients: peer-to-peer networking, private key cryptography, and programming.

XRP, perhaps the crypto asset of 2018, is no exception.

Created in 2012 and now with a total value of $ 40 billion, XRP is today the third largest cryptocurrency network, the one that has advertised the company that manages its operations, Ripple, range of impressive partnerships .

One point of criticism that has emerged, however, is that most ads do not have much to do with XRP, but with other financial products of Ripple . At least some users did not know the distinction (even though CoinDesk has a guide for that).

But even those who envision the market (or who look from a distance) can benefit from a better understanding of Ripple's technology and its difference with another market segment, public cryptocurrencies like bitcoin and the like. # 39; Ethereum.

While all three exchanges are on public markets, XRP, as you will see, does not work exactly like the other assets you find on CoinMarketCap.

General Ledger and Consensus Algorithm

For starters, XRP is a cryptocurrency based on the XRP ledger. (You can think of XRP as similar to US dollars, and XRP Ledger as the official database of the Federal Reserve on banknotes, coins and notes.)

The governing part of how XRP moves on the XRP ledger is called XRP Ledger Consensus Protocol, or XRP LCP.

Like any distributed consensus protocol, a set of computers run XRP LCP in order to determine which transactions that were sent over the network are valid and, as such, agree on the history of the ledger.

In this, the algorithm faces a similar challenge to bitcoin, ethereum and other more decentralized cryptocurrencies – the double expense problem, whereby a user can try to send the same crypto transaction. currency twice in an effort to play the system. ]

While bitcoin and ethereum solve the problem with a consensus algorithm called proof-of-work (where miners use specialized hardware to solve complex mathematical puzzles to verify transactions and earn rewards), XRP uses something different. Its construction is based on a "trust-based alternative," in which a handful of nodes are elected to make the final decisions regarding the history of the general ledger.

This group of nodes is called the Unique Node List (UNL) and currently Ripple is supervising the nodes that are added to the list.

Following UNL guidelines, the nodes broadcast a vote on which the transaction history is correct, and the consistent majority will be chosen to advance the registry. According to a recent white paper, a 90% agreement between nodes is needed to ensure network security.

Because the network does not rely on evidence of intensive work and a complete network of competing computers to verify transactions, XRP LCP can handle a much higher flow of transactions settled in about four seconds.

Yet even these details are being experimented as society seeks to improve technology. Ripple researchers Brad Chase and Ethan MacBrough have even proposed a new algorithm named Cobalt to replace LCP XRP.

Instead of squeezing on a 90% knot agreement, Cobalt can work with only 60%.

Nodes and validation network

While the efficiency of the Ripple system is a plus for many, others are disabled by its centralization of the nodes.

Although users can individually define their own UNL, Ripple recommends its UNL based on its consistent and honest performance over time. As such, because other nodes may not be in agreement with Ripple's UNL (which defines the transaction history), the non-compliance with the recommended UNL may result in a sloppy payment.

There are currently 70 validator nodes and five recommended validation nodes, all of which are managed by Ripple.

This differs significantly from bitcoin and other public cryptocurrencies to the extent that anyone (with technical know-how) can launch a node and start securing the network, and n? Anyone who (with the right material) can start exploiting it. ]

But Ripple plans to add 11 more recommended nodes, run by trusted companies and universities, this year, and would also like to see all of its nodes phased out.

"At the present time, we see a number of third party validators building a history, they look good but at the same time they are still quite new, so they have not not the same thing. […] Five years of Ripple's validators, "said Stefan Thomas, the company's technical director, at CoinDesk.

On top of that, Ripple hopes that someday, network users will be able to set their own UNL based on their own personal settings.

Development and Governance

An area where XRP and its distributed ledger have the most common points are under development.

The complete XRP registry client software, named "rippled", was opened in 2013 and its development centers are located around Github.

Like bitcoin and ethereum, Rippled is derived from a system invented by programmers working on the Python programming language, whereby changes are added to the Github as "enhancement propositions".

In Ripple, they are called RIP (Ripple Improvement Proposals), which are presented in the form of a rough draft, then are subject to careful analysis before being merged with the big book.

The verification process of the new features here is just as intense as on bitcoin and ethereum, where a number of public debates have erupted over the years.

There are a total of nine major developers, who audit the code and run tests based on the proposed code changes, listed on the company's Github.

Compared to other cryptocurrencies, the main developer group of XRP seems thin, although the main listed developers of some cryptocurrencies have not touched the code for some time.

While XRP and its underlying technology have been criticized for being less frequently updated, the company has recently released new technical papers that detail the infrastructure and are put before academics for peer review .

Economics of Supply and Token

While bitcoin and many other cryptocurrencies have a defined number of cryptocurrency units, which are released from the protocol when minors validate transactions, XRP works differently.

All the XRP that will ever be produced – 100 billion – was created in 2013. Similar to the Ethereum "gas" unit, XRP is used to pay small fees for shipping of transactions across the network, but instead of minors, the XRP is destroyed.

The process acts as an anti-spam measure because people are less likely to attack the general ledger with spam transactions if these transactions cost money.

While this crypto carnage might worry some investors, in November 2017, the company did the math, saying, "At the current rate of destruction, it would take at least 70,000 years to destroy all XRP."

Although there are other concerns regarding the provision of XRP.

Initially, 20 billion XRP were granted to the founders and creators of the project. On top of that, the remaining 80 percent of the coins were passed to Ripple, which makes many people fear that the company could use these coins for less than ideal purposes, like throwing them in. a shovel and cause a large scale. devaluation of the crypto asset.

In response, however, Ripple announced last year that it would block all remaining XRP in a digital escrow that would slowly distribute the remaining chips over time.

Value Proposition

Still, many XRP enthusiasts seem less interested in the use of XRP to deter spam, and more interested in the possibility that it is used to make cross-border payments by some of the larger institutions of the world.

And this year, the industry has seen some of them materialize, even if only in pilot testing. Until now, Ripple has announced partnerships with Moneygram and a number of other money transfer providers, Santander UK and a large number of other international banking and payment providers.

All of these partnerships are not focused on the use of the Ripple product (there are three in total) that uses XRP. But more and more companies are interested in testing the use of XRP as "relay money", which means that customers can convert fiat currency to XRP or outside of XRP in order accelerate transactions.

According to Thomas, it is this liquidity that represents the present and future value of the XRP token.

"When you look at what leads to value, what motivates value, is the use," said Thomas, continuing:

"We think that, as a store of value, Ripple Inc., very invested in the result of the XRP doctrine, because of our participation in XRP, we are obviously believers. the long-term potential for XRP to increase in value as adoption approves the token. "

Image of the piece Ripple via Shutterstock

Leader in blockchain news, CoinDesk is a media that strives to achieve the highest journalistic standards and adheres to a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

