Co-founded in 2012 by Chris Larsen and Jed McCaleb, Ripple is both a cryptocurrency and a digital payment network for other kinds of transactions. Considered by some as the next-generation Bitcoin, it uses blockchain technology, which over time is moving away from the accusation of being overly-centralised, with systems in place to change this gradually over time.
Ripple works differently to many digital currencies like Bitcoin. Ripple is technically the payments network behind the cryptocurrency officially known as XRP, although it is often referred to simply as Ripple. This means that, unlike Bitcoin which was launched to steer clear of banks, Ripple allows bank payments, able to handle up to 1,500 transactions per second in comparison to 10 with Bitcoin.
While Bitcoin was founded as a totally decentralised network, with users contributing their own computing power to process payments in return for mining new Bitcoin, Ripple has created a set amount of 99 billion Ripple XRP coins ready to be sold or traded or used as a gateway between different assets to avoid traditional fees and transaction times. There are currently 38 billion units in circulation.
Due to offering a seamless and frictionless service Ripple’s XRP has overtaken Ethereum as the second largest in the market by a considerable margin, with some calling for Ripple to take over Ethereum and topple Bitcoin from the top spot.
With its stability, efficiency and rumours that SWIFT, the major global banking payments network, might work with Ripple, there is the potential for a big increase in the use of Ripple coin, particularly if Ripple’s cross-border remittance tools are faster and cheaper than Bitcoin.
Ripple has also grown considerably since reports that its payments system was being tested at global banks including American Express, Santander and UBS, with Japanese and Korean credit card companies planning to pilot the technology. Over a twelve-month period, each unit of Ripple is now worth around USD2.20 on online exchanges, up from USD0.006. However, it is not certain if Ripple will hold its value with such a large supply available, though it has value as an asset since it is being built with the help of banks and large institutions.