Ripple, Ripple Labs and XRP are one of the things that can cause the most confusion in the world of cryptocurrencies. And it is that this triad of words, are closely related to each other but basically refers to very different things and here we will know these differences.

EIt's common to mistake Ripple, Ripple Labs, and XRP. All three are part of the same thing, but the truth is that they are very different things. Well, in this chapter we will explain the differences between them and how they are born.


The Ripple protocol

When we talk about Ripple we are talking about an open payment protocol. This payment system serves to create a system capable of settling debts among its different users. These debts can be of any type, regardless of whether there are no currencies, minerals such as gold, bonds or other digital currencies.

Although the idea of ​​Ripple was born a decade earlier. The first version of the protocol that we know today was presented in April 2013 by Jed McCaleb. The company responsible for developing this software was the OPENCOM, which would later change its name to Ripple Labs.

As we mentioned the history of the Ripple protocol started in 2004. Back then, an electronic money transfer protocol called Hawala hard development work began. Although Hawala is a trust-based transfer protocol, its operation is completely different from what is known. And is that the model of operation of Hawala is very simple. This is based on the theory that we are all only 6 people away from anyone on the planet. Thanks to this model Hawala allows money to be sent through an acquaintance, and this in turn of another acquaintance until reaching the destination. This sought to create a fast, secure and economical system to send money to any part of the world.

And it is that we imagine for a few seconds that you want to send money from Spain to Peru. Since there is a currency exchange and they are very distant countries, a traditional shipment would be expensive and very slow.

If you are in Spain and find a person who has a bank account in Spain and a bank account in Peru, you can enter the money in their bank. In this way, the person can send the money in Peru to the recipient at the same moment. This can be done even without a bank. As you can see this not only saves the costs of the bank, currency exchange, but also time. All this makes it possible for international transactions to be made only in minutes instead of days or weeks.

However, doing this manually is very complex to manage, especially on large scales, being slow and inefficient again.

This is where the idea of ​​the Ripple protocol (then RipplePay) is born. Ripple is a decentralized protocol that promises to be able to facilitate fiat currency exchange system operations in this or other scenarios. In addition to coordinating everything necessary at high levels with the aim of allowing individuals, companies and communities to transfer value throughout the world.

XRP cryptocurrency

The problem came when some Ripple users bombarded the network to congest it and render it useless. Since placing orders in the protocol was free, anyone could create hundreds of millions of orders and crash the system.

Thanks to the birth of BitcoinRipple was able to implement a protection to counter that.

To prevent this type of spam, in 2013 Ripple Labs created the XRP coins. XRP a cryptocurrency based on Bitcoin. This is an open source development, which uses cryptography, accessible to everyone and traceable, which would serve to apply a transaction cost that discourages network attacks.

For the XRP cryptocurrency, it has been decided to develop its own validation system called RPCA protocol. This consensus algorithm is based on a distributed ledger or DLT, instead of blockchain.

This system has validating nodes and monitoring servers. The monitoring servers distribute the network transactions among the validators and allow the Ledger to be consulted. While the validating nodes do the functions of the tracking servers. Are these nodes those who have the task of validating transactions and closing each page of the Ledger.

If you want to read the whitepaper from XRP, you just have to Download the pdf document from its official page by clicking here. You can also venture into the world of XRP by buying Ripple at exchanges.

The company Ripple Labs

Ripple Labs It is a private company that created the Ripple protocol and the XRP cryptocurrency. It was founded in 2012 by Jed McCaleb y Chris Larsen beside Arthur Britto, but it has its origin in a project that started Ryan fugger in 2004, and its mission is the development of different software solutions for the banking sector and payment providers, facilitating the execution of operations and moving from the current expensive system (which is resource-intensive and extremely slow) to a simplified system , agile and with very low costs.

Founders of Ripple

Low-quality copy of Ripple's original founders' initial agreement

The current Ripple Labs project promises to carry out global transactions without any friction between financial institutions, instantly, reliably and profitably.

Especially works to meet the needs of traditional banking using the method SWIFT for the transfer of capital and use Nostro accounts. This structure is based on the fact that banks and central banks have accounts in other banks with large capitals. All this to facilitate the transoceanic transfer of capital, generating that there are millions of motionless dollars and that do not give returns.

Ripple proposes to develop three software such as xCurrent, xRapid y xvi that allow transferring capital in a transoceanic way with very low commissions and structural costs. All of these transactions settle in seconds. These tools use XRP in a second layer as a bridge coin. This allows, for example, to send dollars from the United States and receive the equivalent in yen in Japan. All this without the need for the sender and receiver to make the change to XRP. This is because the operation is done automatically at both ends of the operation.

Summary of concepts

Therefore we must understand that normally in many media the word Ripple is used incorrectly to talk about the XRP cryptocurrency or the company Ripple Labs, but they are different things:

  • Ripple: Protocol for a network of payments / debt compensation.
  • XRP: Cryptocurrency used to pay for transaction costs within the Ripple network. It is the cryptocurrency that is listed on the markets.
  • Ripple Labs Inc: Private company that develops the Ripple protocol and that launched XRP, a cryptocurrency that controls a large part of the existing tokens.