Intro to Ripple

With the multitude of altcoins out there, it’s hard to sift through all the info. I hope to do some coin intros, to at least process what I’ve learned about certain coins.

Time to talk about Ripple. XRP is the coin that Ripple, the company, created.

XRP is comfortably the third largest coin sandwiched between Ethereum and Bitcoin Cash. It’s currently less than half the market capitalization of Ethereum. Hard to imagine, but as recent as Jan 8, it was higher than Ethereum and sat just behind Bitcoin.

I’ve done my best to read up on Ripple. Fortunately, there is a lot of information out there about Ripple which isn’t the case for a lot of coins.

Ripple is marketed toward banks that conduct cross-border payments. I remember when I had to move money from Canada to the US, I had to open a USD account in Canada, write a check to myself to deposit in the US, wait for 3 weeks, then I finally unexpected got charged a $50 fee. Ripple would have been perfect for this. If my two banks used Ripple, they would have sent XRP from my Canadian bank to my US bank. I would have deposited CAD into my Canadian bank and it would magically become USD in my US bank. The banks would have transacted in XRP behind the scenes for me.

XRP is fast. While Bitcoin transactions can take hours to complete, Ripple transactions take seconds. This is because it does not use mining or “proof of work”. Mining involves thousands of computers solving complex math problems in order to confirm a transaction. Instead of math, Ripple uses the “consensus” method. A group of “trusted servers” decide whether or not a given transaction is confirmed. If enough of these servers agree that the transaction is valid, then the transaction is confirmed.

Ripple is cheap. A bitcoin transaction can cost upwards of 20-30 dollars. A ripple transaction costs less than a penny.

Ripple often gets criticized for not being as decentralized as bitcoin. As I mentioned above, there are these “trusted servers”. So who determines which servers are trusted? Well, Ripple (the organization) does. This really bothers bitcoin diehards who don’t trust anyone, let alone large companies. Another way that ripple is not decentralized is that Ripple (again, the organization) owns about 60% of all XRP. Because XRP is not mined, this makes people worry that Ripple could flood the market with XRP to keep the price down.

Unlike a lot of other coins, there is no question that Ripple is a legitimate company. They have have legitimate partnerships with American Express, UBS, CIBC, Santander to name a few. They also have big investors like Accenture and Google, which again makes bitcoin diehards skeptical of too much power and influence in the hands of large organizations.

I also like how their CEO, Brad Garlinghouse, and lead developer, David Schwartz, are all over the place promoting ripple. They are well spoken and confident in their product. They are all over Quora answering people’s questions. There’s a great Youtube video of David Schwartz describing how ripple works. He looks and sounds like a computer genius and you can tell that he’s annoyed that he has to try to answer questions to common folks. The comments are also pretty funny.

Is XRP worth buying? I think it’s a relatively safe investment, emphasis on relatively. When crypto crashes, XRP is certainly not immune. However, it did grow 32,000% in 2017. Can it repeat this kind of growth? Probably not. It sits around $1 today after being over $3 several weeks ago. If right now it went up 3.5x, Ripple would have the same market capitalization as Bitcoin. So while you might double or triple your investment, you’re probably not going to get rich on it, but it’s a good addition to a crypto-portfolio.

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