What comes to mind when people mention Ripe is the XRP cryptocurrency. Nevertheless, Ripple has a completely different business, ecosystem, and technology from the XRP cryptocurrency, even though Ripple makes use of XRP for in its ecosystem and harnesses it.
The major problem Ripple intends to solve has remained oblivious to many people. With the rapid evolvement of technology around the world, the ease and speed at which information travels around the world has been significantly altered. In comparison, the movement of money has, unfortunately, remained at a relatively slow and complex stated when compared to other realities. For instead, how we evolved from sending letters to emails.
Cryptocurrency has proven to be a platform for the provision of extraordinary upturns when it comes to the transfer of value. But the issue remains that, cryptocurrencies generally lack the desired level of compatibility with traditional money system. Hence, the intent of Ripple is to harness traditional blockchain technology to help create ease and smoothen money transfer around the world.
Overview Of How Ripple Works
Compared to most cryptocurrencies, the Ripple network carries out transactions that rely on a consensus in protocol which allows it to ascertain account balances and transactions on the network systems instead of employing a proof-of-work or proof-of-stake system to carry out its transactions. The consensus protocol works to enhance the credibility of the network system by preventing double-spending issues.
When there is a transaction initiated by a Ripple user through several gateways, but still tries to stand the same amount-let’s say $200-to the gateway systems, the consensus protocol will automatically delete all transactions except the first one. This takes an average of five seconds to carry out. Without a central authority which chooses who can set up a node and ascertain transactions, the Ripple platform is classified as decentralized.
How Ripple and XRP Works as One
Ripple is in fact not a cryptocurrency when looked at from a technical perspective, in 2013, it was formulated from a protocol known as OpenCoin. What Ripple Essentially does is to facilitate open-source payments. However, the cryptocurrency which runs on the Ripple network is XRP. In this vein, Ripple and XRP uses a similar symbiosis to each other in the same way the Ethereum network, and it’s crypto, Ether does. Ripple XRP primarily focuses on developing cross-border payments for companies, compared to Ethereum, whose price changes depend on how decentralized the finance world is.
Factors Affecting the Price of Ripple
The Ripple/XRP cryptocurrency hit giant price height in early 2018, reaching around $3 per coin. This was a significant improvement considering that it traded at around $0.05 in the early months of 2017. There was a $200 million Series C funding added to the Ripple Company for its strides.
Ripple faced plenty of regulatory uncertainties in December 2020, most was which was based on a complaint by the US Securities and Exchange Commission (SEC), alleging that Ripple Sold XRP to investors in the United States and around the world as part of an unregistered securities’ sale with generated over $1.3 billion in sales funds.
Ripple price increased in 2021 but is yet to get nowhere close to the heights if reached in early 2018. This makes Ripple different from other cryptocurrencies. For instance, the price of Ethereum steadily reached new all-time highs-a feat elusive to Ripple. As a matter of fact, Ripple price increase occurred relatively late in comparison, happening in 2021 compared to 2020 for most of the other cryptocurrencies, as the United States SEC sued Ripple in 2020. This suit resulted in Ripple Price dropping sharply from $0.70 to $0.20.
The cryptocurrency industry is relatively new in comparison with the traditional financial industry; hence, the regulation of cryptocurrencies has been a major debate topic for years. The Commodity Futures Trading Commission (CFTC) believe that some cryptocurrencies such as Bitcoin and Ethereum can be classified as commodities, unlike other digital assets whose classification is difficult to excerpt.
Regarding the Securities and Exchange Commission’s lawsuit against Ripe, the SEC are of the opinion that Ripple is a security, which makes it directly under their regulation and jurisdiction. However, there have been petitions by groups of people who hold XRP, arguing that XRP should be classified as something else aside security. One could neutrally say that the petitioners rational do not hold much water.
With Ripple arguing that the SEC’s action was more of an oversight, came a long time after XRP was created, and other United States government agencies have classified Ripple as not a security, the outcome of this suit is expected to have a massive impact on the future price of Ripple. Meanwhile, Ripple price will remain around its current rate steadily.