As of January 2019, the Ripple network had a total of 200 financial institutions on their network and was secured by major banks including JNFX, SendFriend, Transpaygo, FTCS, and Euro Exim Bank.
Still, the Ripple blockchain is different than all the other blockchains existing out there.
In fact, it’s so much different that Ripple Labs doesn’t even consider Ethereum and Bitcoin as their competitors.
Wait, is the Ripple network even a blockchain? Honestly, the answer depends on who’s answering.
Is Ripple a blockchain?
Let’s start with the definition from Ripple‘s official website:
Ripple provides one frictionless experience to send money globally using the power of blockchain.
As you can see, the company believes that it uses “the power of blockchain”.
Nevertheless, some people moderately disagree with the definition.
How does the Ripple network achieve consensus, indeed? And does the existence of a consensus as such make Ripple a blockchain?
The Ripple network consists of trusted validators that decide through voting if the transaction is valid.
When a validator receives a transaction it consults with other trusted validators. So that when 80% of those validators vote “valid”, the whole network accepts the new state.
This list of trusted validators is called a Unique Node List (UNL). Deciding who will be included in the list, is completely up to the person who runs the validator. Nevertheless, Ripple provides recommendations.
That brings us to the reasons why people don’t want to call Ripple a blockchain.
The problem is not even the limited number of trusted validators that might collude, rather the fact that the whole network is maintained by one organisation — Ripple Labs.
In which way does that affect the network? Here is an example.
You can’t mine Ripple token, XRP, like Bitcoin or Ethereum. The company has determined that they would issue 100 billion of XRP. But who can guarantee they won’t change their mind and go for more?
In view of this, it probably would be safer to say that Ripple is a decentralized ledger, not a blockchain.
But again, the network was built on other principals, in comparison to Bitcoin or Ethereum, and serves the interest of the banking system.
Is the Ripple token (XRP) different from other tokens and coins?
To answer that question, let’s first talk about core differences between tokens and coins.
Being a member of the crypto community, you might have heard more than often people use those terms interchangeably.
You might have used the terms interchangeably yourself – but please stop. Are you even interested in what kind of money you will get on your account: tokens, coins or XRPs?
What you call a coin acts merely as a form of money, storing value on public, decentralized and permissionless blockchains over time.
A token, though, is kind of more creative.
A token might act as a form of money on public, decentralized and permissionless blockchains but that’s not all it can do. Ether fuels transactions on Ethereum, NEO stored in the wallet earns dividends, Dash allows users to vote on dominant resolutions for the network.
The question is what is Ripple, then? A coin or a token?
XRP is a product of the private, centralized and permission-based blockchain, which is totally opposite of everything listed above.
Let’s sum up.
For one thing, XRP is a black sheep circulating around due to the participation of banks and other official financial bodies. It’s very private, and to enter the network, you need permission.
On the other hand, that black sheep does act like a token. It might represent commodities, fiat currency, cryptocurrency, frequent flier miles and mobile minutes.
The ground truth is that in the undefined blockchain ecosystem of nowadays there can hardly be right or wrong answers, and let’s embrace XRP as the bridge between the traditional financial world and upcoming decentralized future, shall we?
What value does Ripple add?
Here is the quote from Ripple‘s official website
By joining Ripple’s growing, global network, financial institutions can process their customers’ payments anywhere in the world instantly, reliably and cost-effectively. Banks and payment providers can use the digital asset XRP to further reduce their costs and access new markets.
Deconstructing that definition, Ripple has got the ability to move assets around the globe quicker because there are no intermediaries between corresponding financial institutions.
Currently, this kind of transactions takes place on Western Union or SWIFT that have separate offices in every country they work in.
Ripple Labs doesn’t need the offices in all the countries, since local banks are already there. All those banks have to do is to join the Ripple network.
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How to create a Ripple (XRP) wallet? ← P R E V I O U S
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