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Everything You Need to Know About XRP and the Ripple Payment Network

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While many cryptocurrencies aim to decentralize the banking system, one currency stands alone in their attempts to collaborate with banks: Ripple.

In our past two articles, we’ve spotlighted the top 10 cryptocurrencies to look out for in 2018 and the top trends to know about to invest wisely in cryptocurrency in 2018. Both articles had one common topic: Ripple.

While Bitcoin was created to decentralize the financial industry, Ripple is the only digital asset actively working with banks to improve rather than undermine their operations. Ripple boasts the ability to process on average over 1,500 transactions per second, making it the fastest cryptocurrency on the market. Ripple has teamed up with Western Union, Santander, American Express, and more to test the fastest cross-border transaction network available.

The process of making cross-border payments is unnecessarily tedious. In the internet era, the only reason why a currency transfer should take a week to process is because of  outdated procedures. Ripple attempts to create the currency exchange for the digital age. While traditional international transfers require two banks, two reserve banks, two correspondents, and up to a week to process, Ripple offers a transfer method that reduces the time and costs of traditional methods while also offering less failure points and higher security.

Check out Team KoinOK’s Medium post for a smooth summary of how Ripple changes the traditional transfer process.

The other major difference between Ripple and Bitcoin lies in their ledgers. While Bitcoin has a completely decentralized ledger enabled by proof-of-work, Ripple is owned by a private company. Ripple’s internal ledger does not use proof-of-work, but rather a consensus protocol with an amendment system that enacts all amendments that receive 80% support from developers over the course of two weeks. Ripple’s ledger is internal and therefore centralized.

Ripple consists of two components: the digital currency (XRP) and an open payment network that facilitates the transactions. Ripple markets the payment network toward banks as a way of enacting real-time settlements. Ripple is designed as a currency-agnostic transaction system. In order to avoid a currency exchange, currencies are converted into XRP and then sent to the recipient. Unlike Litecoin, XRP are not intended in the long run to be used by consumers to purchase products, but instead to be a middle-man currency that enables instant transactions. XRP and the Ripple network are designed to create a currency-agnostic value web designed to do for currency transfer what email did for messaging.

Rather than take our word for it, check out this awesome summary by Ripple CEO Brad Garlinghouse:

WHAT IS THE CONNECTION BETWEEN THE VALUE OF XRP AND THE PAYMENT NETWORK?

The acute investor must ask: if the Ripple payment network is Ripple’s main innovation, then what is the value of XRP? The long-term value of a cryptocurrency will be dictated by the problem that it is solving. If Ethereum becomes the platform for executing smart-contracts for a massive corporation like Amazon, then that ensure it’s existence in the long run, improving its function as a  store of value. If Ripple becomes the main transfer network for banks, its existence in the long term will be ensured and the function as a store of value will be greatly enhanced.

BOTTOM LINE

The transparency of the team behind the Ripple network and their vision of the platform instills great confidence in its ability to maintain value as a currency. If Ripple can achieve its goal of creating an internet of value where banks can exchange currency as easily as information, then it will definitely have the staying power to outlast the alt-coins and attain significant value over the coming years.

How Adopting Cryptocurrencies Could Benefit Your Business

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Bitcoin-Trading-featured-898x463Are you missing out on a once-in-a-lifetime opportunity to get in on a currency that could continue to dramatically increase in value over time?

Whether or not the recent surge in value of Bitcoin is a fluke, many agree the idea of cryptocurrency is here to stay. With physical cash having already taken a backseat to credit cards, does it stand to reason that digital currencies will become more prominent in the years to come? Many people are betting big on the answer to that question being yes.

Last week, we explored an overview of cryptocurrencies. For businesses with their eyes on the bottom line, the question becomes: Should you accept cryptocurrencies?

Here are the major factors to consider in making your decision of whether or not to accept cryptocurrencies:

THE POSITIVES:

FRAUD PROTECTION

One of the biggest pros of cryptocurrency is the way in which it protects your business from the risk of fraud. When payments are made through credit cards and PayPal, merchants risk these charges later being reversed if they are deemed a fraudulent purchase. With Bitcoin, payments are irreversible, so the bill for fraud is no longer footed by merchants.

INSTANT INTERNATIONAL PAYMENTS

The internet enables the sending of cryptocurrencies overseas to be as easy as sending them across the street. With no central authority to verify transactions, not only do international payments come with no additional cost, they are instant. Cryptocurrencies offer international payments with no extra fees, 0 business days to transfer, and no minimum or maximum transaction amounts, making them an excellent payment option for businesses looking to expand to far-reaching markets.

CHOOSE YOUR OWN TRANSACTION FEES

Instead of paying fees per transaction, cryptocurrencies allow you to pay fees that determine the speed at which money is received. The processing power required to process transactions is distributed across computers on the internet. Network owners make money by allowing merchants and users to use their systems to process transactions. Thus, users can choose their fees based on how fast they require their payments to be sent.

NO PCI-COMPLIANCE NECESSARY

While accepting credit cards online typically requires PCI-Compliance to ensure credit card information is stored safely, cryptocurrencies require businesses to secure their wallets without necessitating the federally-imposed fees that come with processing sensitive information like credit cards. Blockchain technology ensures that cryptocurrencies are secure and that security is cheaper to maintain.

ACCESS A NEW CROWD

As an emerging market with niche followers, the cryptocurrency audience is known for their fervor for all things related to their passion. By adopting cryptocurrencies at an early stage in their development, a business can set itself apart and expand their market to receive visibility from the avid cryptocurrency crowd that has invested in cryptocurrencies at this early stage.

THE NEGATIVES:

MARKET VOLATILITY

Perhaps the greatest detriment to the cryptocurrency movement is the erratic nature of the value of the currency. Bitcoin is the staple cryptocurrency and with its value fluctuating wildly from day-to-day, most cryptocurrency owners would rather save their Bitcoin in hope that its value continues to spike than spend it on consumer goods.

What’s more, retailers may be afraid of accepting something that could lose value fast. When Square announced it was piloting a program to buy and sell Bitcoin through its app, Bitcoin’s price skyrocketed. If a major retailer like Amazon or Target were to elect to accept Bitcoin at their locations, no doubt Bitcoin’s value would spike once again. Thus, the silver lining of the market volatility is if a retailer does begin to accept it early, they could potentially make a large return on their initial investment.

REGULATORY LANDSCAPE

Another major issue for merchants to consider is forthcoming regulations and potential litigation relating to the cryptocurrency markets. With cryptocurrencies still in their infancy, lawmakers are working to enact regulations to govern and tax them. As cryptocurrency becomes more mainstream, merchants that accept cryptocurrencies will have to be adaptable to periodic changes in the laws which govern cryptocurrency.

BOTTOM LINE

While there are some risks in accepting cryptocurrencies, there are potentially massive rewards. Becoming an early adopter of major cryptocurrencies when they are low in value is an investment that could pay off big time if the value of the currencies continues to rise. For forward-thinking entrepreneurs who are ready to adapt to their business environment, the decision to accept cryptocurrency is an easy one. As they say: the early bird gets the worm.