The cryptocurrencies have caused a considerable impact on the way the world sees global economy during the last 10 years, going from how easy payments have turned out to be by using this network to its decentralization character that distinguishes them. However, this independence of fiat money usually generates distrust in many skeptics and/or in people who are not familiar with a concept that is not backed by the classic financial institutions, reason that led to the birth of Ripple (XRP), the first digital asset to associate with banks.

Ripple is a virtual Open Source payment system that uses Blockchain technology to make payments in real time. It is considered the currency of banks because it is used by large financial institutions around the world to conduct operations in a faster and cheaper way. It is available very well known wallet platforms such as Coinbase and has a large community of users who carry out transactions with it on a daily basis.

The objective of Ripple is to create a decentralized platform that allows economic transactions from anywhere in the world, without the control of any agency and avoiding the big blockages and commission systems that we find in the different banks, through an agreement with them. In this way the operations carried out are done instantly and with the minimum cost.

Ripple collaborates with large companies and banks around the world. Among them BBVA, Mizuho, Mitsubishi UFJ, Canandian Imperial Bank of Commerce (CIBC), National Bank of Abu Dhabi (NBAD), UniCredit, USB and Santander. Among the investors of Ripple can be mentioned such as Accenture, Andreessen Horowitz, Google Ventures and Seagate. The Ripple price has not developed as abruptly in the market as Bitcoin or other cryptocurrencies, in fact, each token has had a maximum valuation of $3, although it is currently oscillating between $0.37 and $0.4. Currently, the capitalization of the XRP currency stands in $16,787,929,242.

How does Ripple work and how different is it from Bitcoin?

One of the most striking features for Ripple investors is the speed with which transactions are made. In general, a common transfer can take hours or days to complete, while Ripple is able to confirm operations from 4 to 10 seconds. This is one of the most positive aspects of this digital asset, since in the case of Ethereum (recognized for its speed) takes around 2 minutes to successfully confirm a shipment, while Bitcoin takes 30-45 minutes to do so.

In addition to offering a high speed to send and receive payments, Ripple allows a significant volume of transactions, since it allows around 1500 operations per second, which greatly exceeds the capacity of Bitcoin and Ethereum to do this, thus enabling establish an optimal market flow when making deposits in real time.

Ripple is a pre-mined cryptocurrency, unlike Bitcoin, which means that, although it works much like the BTC blockchain does, there is no mining process to issue the tokens, which rules out the extraction of new ones. coins The full reserve is available for transactions worldwide, which means that new XRP can not be created, with a limit of 100,000,000 tokens. The developers of Ripple say that this is the reason why the transactions are so fluid.

This pseudo-blockchain works only to confirm the transactions that are made in real time. The nodes of this network perform the function of local exchange system (as PayPal would do), a feature that works to connect traditional payment systems with those specified in this protocol. The difference between Ripple and companies specialized in saving digital money, is that it does not need the authorization of a central authority and, although it has banking agreements, it has a decentralized nature, acting in this way as a self-managed bank, very particular in the crypto market.

The XRP network is managed with special centralized nodes. These nodes or validation servers do not offer an incentive such as Bitcoin’s Proof Of Work (POW), since the network is managed by independent-owned servers. This has led to accusations that the Ripple network is extremely centralized because most of the validation servers are operated by banks and Ripple Labs, a subsidiary of OneCoin.

XRP was conceived as a currency for banks and transactions, unlike Bitcoin, which was designed as a kind of digital gold: irreproducible, value backup, decentralized, and so on. The XRP properties allow money to be sent from one site to another regardless of the entity or currency (or cryptocurrency) used and at low prices and competitive times for traditional banking. In Ripple they thought of its digital currency as the traditional fiat currency, and it is designed to be easily used as a means of payment.

Why are banks so interested in Ripple?

Ripple was created to be more than a cryptocurrency, since it does not seek to be a simple method of payment, but a whole international cryptocurrency exchange platform, an objective that has been achieved over the years. Eventually, XRP would no longer mean competition for the banks, in fact, it would be covering the needs that they could not, which is why an association was inevitable. Ripple is also famous for having several applications such as The Ripple Code.

By not adopting the exact Blockchain method used by other cryptocurrencies such as Bitcoin and opt for a distributed ledger system with particular characteristics meant that its value was determined by a consensus among the members of the XRP community and not of mining, such as we have explained above.

This was seen positively by the banks, so it is logical to think about why BBVA and Bank of America decided to invest millions of dollars in this cryptocurrency.

If there is something that banks are looking for, it is capital savings and XRP is perfect if that is what you are looking for, since it allows the accumulation of money on a large scale while avoiding costly commissions. In the present it is one of the few digital assets that can provide this service at such a professional level.

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