Ripple is a system of gross settlement in real time (RTGS), foreign exchange and remittance network developed by Ripple. Also called the Ripple Transaction Protocol (RTXP) or Ripple, it is built on the basis of a distributed open Internet protocol, a consensus ledger and a native currency called XRP (ripples). Launched in 2012, Ripple aims to allow “secure, instant and almost free global transactions of any size without rejection”.
It supports tokens representing fiat currency, cryptocurrency, commodity or any other unit of value, such as flight miles or mobile phone minutes. At its core, Ripple relies on a shared public database, which uses a consensus process that allows payments, exchanges and remittances in a distributed process.
In 2014, Ripple defended the security of his consensus algorithm against a rival Stellar network. Currently, Ripple is the third largest cryptography by market capitalization.
Used by companies like UniCredit, UBS or Santander, the Ripple protocol is increasingly being adopted by banks and payment networks as a settlement infrastructure technology, with American Banker explaining that “from the banks’ perspective, books – distributed reasons, like the Ripple system, have a number of advantages over cryptocurrencies like bitcoin “, including price and security.
Initial development (2004-2012). The predecessor to the Ripple payment protocol, Ripplepay, was first developed in 2004 by Ryan Fugger, web developer in Vancouver, British Columbia. Fugger conceived the idea after working on a local foreign exchange trading system in Vancouver and his intention was to create a decentralized and proportionate monetary system to allow individuals and communities to create their own money. The first Fugger iteration of this system, RipplePay.com, debuted in 2005 as a financial service to provide secure payment options to members of an online community through a global network.
OpenCoin and Ripple Labs (2012-2013)
OpenCoin started to develop a new payment protocol called the Ripple Transaction Protocol (RTXP) based on Ryan Fugger’s concepts. The Ripple protocol allows instant and direct money transfer between two parties. As such, the protocol can circumnavigate the fees and waiting times of the traditional correspondent banking system, and any type of currency can be exchanged, including USD, euros, RMB, yen, gold, air miles and rupees. To maintain security, OpenCoin has programmed Ripple to rely on a common ledger that is “managed by a network of independent validation servers that constantly compare their transaction logs”. The servers can belong to anyone, including banks or market makers. The company also created its own form of digital currency called XRP in a similar way to bitcoin, using the currency to allow financial institutions to transfer money with negligible fees and waiting times.
In 2014, Ripple Labs was involved in several development projects related to the protocol, launching, for example, an iOS client application for the iPhone that allows iPhone users to send and receive any currency over the phone. This Ripple Client application no longer exists. In July 2014, Ripple Labs proposed to Codius, a project to develop a new smart contract system called “programming language agnostic”.
Since 2013, the protocol has been adopted by an increasing number of financial institutions to “offer an alternative shipping option” to consumers. Ripple allows cross-border payments to retail customers, corporations and other banks, and Larsen was quoted as saying that “Ripple simplifies the exchange process by creating point-to-point, transparent transfers in which banks do not have to pay corresponding bank fees.” The first bank to use Ripple was Fidor Bank in Munich, which announced the partnership in early 2014. Fidor is a fully online bank in Germany. In September, New Jersey’s Cross River bank and Kansas-based CBW Bank announced that they would be using the Ripple protocol. In December, Ripple Labs started working with the global payments service Earthport, combining Ripple software with Earthport’s payment services system. Earthport’s customers include banks like Bank of America and HSBC, and operates in 65 countries. The partnership marked the first use of the Ripple protocol network. In December 2014 alone, the price of XRP increased by more than 200%, helping Ripple to surpass litecoin to become the second largest cryptocurrency and set Ripple’s market capitalization at around half a billion
On May 5, 2015, FinCEN fined Ripple Labs and XRP II for $ 700,000 for breach of the Bank’s Privacy Act, based on the Financial Crimes Enforcement Network’s additions to the act in 2013.
The Ripple Foundation is a non-profit organization. Created to encourage, support and develop open source technologies that allow the movement towards an open platform in the field of health.
They recently announced a partnership with the Bill and Melinda Gates Foundation to work on common purposes. In addition, big names like Amir Sarhangi have joined their ranks.
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