Ripple is a leading global crypto payment protocol created by the US-based technology company Ripple Labs Inc. It supports all leading fiat currencies, cryptocurrencies, commodities, etc. Further, Ripple provides secure and instant financial services to users of any online community via a dedicated global network. Ripple focuses on transactions without chargebacks to proceed to payments more securely.
To facilitate custom-designed cross-border money transmissions, Ripple has launched its much-researched initiative, RippleNet, that ensures cost-effective cross-border real-time payments using XRP. XRP is a custom-designed digital currency, third in line in market capitalization, just behind the major coins. RippleNet comprises a network of institutional payment-providers like banks or money services, or businesses that use Ripple’s solutions to provide for frictionless money transmission globally. Ripple controls around 60% of the XRP tokens to facilitate cross-border money transmissions worldwide.
With the help of RippleNet, hundreds of financial institutions around the globe can be easily connected using a single API that makes money transmissions much faster, cheaper, and more reliable for the customers. With the single API, there is also no need to pre-fund accounts with On-Demand Liquidity (ODL). ODL is a service that uses XRP to source liquidity during cross-border money transactions.
How Does RippleNet Work?
RippleNet is an extensive network with multiple gateways as servers or validators. To interconnect these Ripple gateways, the network uses chains of trusts that bridge links between two gateways that trust each other. However, there can be indirect links of trust between the two gateways as well.
Each Ripple gateway transports payment IOU information to one another using HTTPS, which is the same protocol that banks have been using for years to secure online credit card payments. After a few seconds, a payment is made, Ripple triggers the gateways involved in a particular transaction to update their ledgers. Each transaction requires an average fee of 0.00001 XRP, which may increase accordingly for higher loads. After the transactions are updated in the respective ledgers, the tokens are destroyed so that the XRP token holders remain as beneficiaries if there is any shortage of XRP token supplies.
RippleNet is a peer-to-peer system that works on the Consensus protocol instead of mining. Therefore, all the Ripple network transactions are verified by the Ripple Protocol Consensus Algorithm (RPCA). The nodes or servers that work as validators “look” at the ledger reflect the current state of transactions on the Ripple network for verifying the transactions.
However, before the final verification is done, the validator nodes take all the valid transactions into account that have not yet been applied to the current ledger and publish them as the “candidate set.” Further, the “candidate sets” of all validators are grouped on the Unique Node List (UNL), and then votes are cast on the accuracy of all transactions. Transactions that get the maximum number of the “yes” votes are passed onto the next round. In contrast, transactions that do not receive enough votes are either discarded or included in the next consensus process’s candidate set. The final consensus round requires at least 80% of a validator UNL to agree on a transaction, and later they are applied on a ledger.
Advantages of RippleNet
RippleNet provides the following advantages to users:
- Faster Money Settlements: With Ripple, money settlements can be done faster, even more quickly than leading cryptocurrencies like Bitcoin or Ethereum. The transaction time for Ripple is 4 seconds, whereas, for Bitcoin or Ethereum, it is like 2 minutes to 1 hour.
- Unique Liquidity Solutions: With RippleNet, there is no need to pre-fund accounts because the ODL services source the required liquidity during cross-chain money transfers.
- Cutting-Edge Technology: Instead of using the standard blockchain technology, RippleNet leverages the cutting-edge technology of the Consensus protocol, and therefore confidentiality of transactions is better ensured.
- Supports Arbitrary Assets: This is one of the biggest advantages for the RippleNet users; the network supports arbitrary assets like fiat currencies, cryptocurrencies, tokens, commodities, etc.
- Internet-of-Vale Reduces Costs: RippleNet’s Internet-of-Value can dramatically lower the costs of payments, thereby reducing the overall time of payment settlements; 3-5 days to a few seconds.
Turkey Expansion Despite Facing Lawsuits From the SEC
Two consecutive lawsuits were charged against Ripple CEO Brad Garlinghouse and Chairman Chris Larsen by the US Securities and Exchange Commission for allegedly selling over $1 billion in XRP for promoting the tokens and paying third parties to support XRP. According to XRP coin news, the coin has lost almost half of its market value as investors began cashing out their holdings in favor of less contentious assets.
However, it could not stop RippleNet from expanding its reach. Recently, Kuwait Finance House has announced the launch of an instant cross-border payments service in Turkey. Further, they will be using RippleNet’s cutting-edge technology to bridge the gap of cross-border payments with Turkey. With this initiative, Turkey’s foreign direct money transfers will become much more convenient and faster for users. There will be no fees for instant money transfers to KFH-Turkey, and the service will be available through websites and mobile applications like iOS and Android. Despite SEC lawsuit, Ripple (XRP) has recorded a significant adoption rate, and hence, as per XRP predictions, the native crypto of Ripple might reflect considerable gains in the near future.
Thus, with the standardized rules and processes, RippleNet makes real-time money settlements more affordable and transparent. With banks offering the same features as FinTechs, they no longer appear to be from the outer world. RippleNet powers the Internet of Value conveniently for users.