XRP is the centralized cryptocurrency created by the company Ripple Labs, as a solution aimed at allowing banks and financial entities of all kinds to use the power of blockchain technology to improve their cross-border transaction systems.
Atime you know what the company is RippleLabs and protocol Ripple, we will talk in detail about the characteristics of its token, the XRP. XRP cryptocurrency (by its market identifier) is an cryptocurrency operating on Ripple's open source platform since 2012. The bases of its creation have been very different from other traditional cryptocurrencies, this being a centralized currency.
XRP cryptocurrency is known as banks' cryptocurrency. The truth is that this description is perfect for her. The protocol Ripple is intended to be a complement to the current banking system, where international transfers help to transform from fiat money, gold and even air miles. The goal behind its design was to make such transactions faster and cheaper.
XRP is a cryptocurrency? totally different from Bitcoin. It is centralized and objectionable. But first of all, let's understand a little more about the currency that many know as Ripple, even though Ripple is the protocol, and XRP the currency.
XRP is a cryptocurrency that does not require as many confirmations as is the case with Bitcoin, and its consensus system is completely different, since it uses its own consensus protocol. It seeks to be used to make cross-border payments almost instantly. It is a currency that some banks and financial institutions seek to adopt as a tool in their processes. Another feature of XRP is that it is designed to make possible the connection of different payment systems. This allows you to mobilize money in different denominations quickly.
However, the price to pay for all this is very high: XRP is one of the most centralized cryptocurrencies in the ecosystem. Many people consider that it shouldn't even be called a “cryptocurrency”. It is a centralized and objectionable currency, being possible to veto addresses, freeze assets, and manipulate the issuance of the same at the whim of the owners of the currency, something totally contrary to Bitcoin. In a nutshell, XRP is a cryptocurrency with the same manipulative power as fiat money. Only in this case, the manipulation is by a company instead of a government, RippleLabs, who acts as its central bank.
Now let's know a little more about this cryptocurrency and its striking features.
Yes, for now we will call it cryptocurrency, since people search for it as "cryptocurrency" in search engines and we want this post to be positioned to shed light on it.
The Ripple protocol was created in 2004 as a working prototype. Although its true story begins in 2013, when the creator of the network EDonkey, made an invitation to a group of top-tier investors to invest in the company Ripple Labs, based in California, United States.
The founder of the Ripple company was Ryan fugger, whose intention was to develop an exchange system that was decentralized. And that it allowed its users effective empowerment over their own resources. In 2011, the founder of EDonkey, Jed McCaleb He hired Chris Larseny and they began to develop a cryptocurrency idea whose transactions were verified by consensus by the network. Later in 2012, they approached Fugger with the idea of this cryptocurrency, and after several discussions, Fugger gave up the company. Thus leaving McCaleb and Larseny as the founders of the corporation the OPENCOM.
Here begins the development of the Ripple protocol and its payment and exchange network. In 2013, the OpenCoin corporation changed its name to Ripple Labs Inc, and this year it officially launched the cryptocurrency. Later in 2015 he made another change; leaving the company with the name of Ripple, as it is currently known.
In 2016, Ripple was licensed as a virtual currency by the New York State Department of Financial Services, and in 2017 announced that several corporations and banking institutions had joined its project. Among them, the Spanish banking giant BBVA.
Thus, Ripple was established not only as a cryptocurrency, but also as a means of payment. In that their transactions only take around 4 seconds to complete, thus becoming a simple and fast cross-border network, but also highly centralized.
How does XRP work?
Quite the contrary of Bitcoin and other cryptocurrencies, Ripple does not operate under blockchain technology as such. Instead, it uses DLT (Distributed Ledger) technology along with its own consensus protocol. This helps them to validate the transactions that are carried out within the RippleNet system. The name of this protocol is Ripple Protocol Consensus Algorithm (RPCA). In this way, RippleNet has special servers in charge of validating transactions and XRP tokens.
These servers do not offer a reward like the case of Bitcoin, but rather it is a network managed by independent servers. This type of structure is what makes Ripple highly centralized. And is that most of the nodes of XRP are owned by the same banks that make use of the system and by the company Ripple Labs. Furthermore, it is estimated that more than 60% of its tokens are in the hands of their own developers..
On the other hand, since its launch, Ripple has had a “pre-sale” for a total of 100 billion XRP tokens. Although if necessary, many more tokens can be created or issued. The most curious thing about this "pre-mine" is that XRP is not mined, and its emission is controlled entirely by Ripple Labs. Currently, Ripple developers can release up to 1.000 billion XRP tokens each month, thanks to a smart contract system (CFD). This system also ensures that unused XRPs are returned to the security deposit.
With all this system, Ripple Labs guarantees full control over XRP, its issue and market value at all times. All of these are facts that the crypto community sees as a clear distortion of the basic principles of cryptocurrencies.
Knowing the Ripple Protocol Consensus Algorithm (RPCA)
El consensus protocol which makes XRP work, is known as the Ripple Protocol Consensus Algorithm, or RPCA. The RPCA was a protocol designed by David Schwartz, Noah Youngs, and Arthur Britto 2014 . The role of RPCA is to offer the RippleNet network and XRP a protocol with a certain capacity of Byzantine Fault Tolerance (BFT). To achieve this, RPCA works in a series of rounds that we will describe:
Initially, each server takes all transactions as valid before beginning the consensus process.
Next, each server gathers a series of candidate transactions from all the servers and votes on their veracity.
Transactions that receive more than the minimum percentage of “YES” votes carry over to the next item. While the transactions that do not receive enough votes are discarded or will be included in the pool of candidates for the beginning of the consensus process in the next round.
The consensus round requires a minimum percentage of 80% of the agreement of the servers on a transaction. All transactions that meet this requirement apply to the ledger.
However, the highest cost was for the planet. Only one of these wee wee pads takes approximately XNUMX years to decompose. Putting ourselves in the best of cases, a dog uses XNUMX pad daily for only XNUMX years of his life, so when he is a puppy and when he is elder he would use XNUMX soakers in total. If we take into account that only in Spain there are XNUMX million dogs, mostly of mini race, with greater tendency to use wee wee pads and assuming that at least XNUMX% use them, we are talking about a figure of XNUMX wee wee pads that are used daily. Tons and tons of waste are thrown daily to the planet so that our dog does not spoil our house. This protocol is not as secure as, for example, the Work Test, the Participation Test and even the Delegate Participation Test. This is due to the high level of network centralization and the greater possibility of altering the result of the network consensus.
RippleLabs partnership with banks
RippleLabs has entered into alliances with several of the world's leading major banks. Among them are BBVA, Santander, Axis Bank, Yes Bank, Westpac, Union Credit, NBAD, UBS e Itaú. We can also review the association it has with the Federal Bank of India, which is one of the largest in this Asian country, and also an important financial center. All of these banks have decided to use Ripple's technology to make cross-border payments. Where they can relate to the remittance market they manage.
Another important Ripple alliance is with the SBI Financial Group from Japan, with which it has implemented a payment application called MoneyTap. Which is already licensed by Japanese financial regulators for use. In the same way, the network of banks of Reisebank from Germany, started testing the RippleNet network application. With which transfers can be made between banks in the network itself and others located abroad. These tests have generated a fairly reasonable degree of acceptance, since they allow transfers to be made in a fairly short average time.
On the other hand, the XRP cryptocurrency is the only one, for now, compatible within the universal payment network Corda Settler, Developed by the company R3. In turn, this network is the same one that is being explored by the company SWIFT, the same system that banks currently use to make cross-border shipments. So, we can realize the acceptance in the financial market that this cryptocurrency and its multiple applications have had.
Is XRP a scam?
Many people in the cryptocurrency ecosystem have raised their voices denouncing that XRP is a scam. But at this point it is good to ask what elements exist for such an accusation? Well, let's examine some widely known elements about XRP that can clarify this:
XRP uses an aggressive pump & dump scheme with which it seeks to manipulate the price of XRP.
XRP issuance is controlled by Ripple Labs at will, which enables the manipulation of tokens.
The founders of RippleLabs say that: "XRP is open source and was not created by our company, so it existed as an open source technology". However, It is they who control 60% of all cryptocurrency tokens and can create more if they wish.
XRP is constantly manipulating public opinion making itself seen as a decentralized system and with more and more clients. In fact, the majority of its “customers” are actually “partners” that XRP pays for such an association. This fact occurs in the midst of RippleNet Accelerator Program, which offers a unique reward for financial institutions to be part of RippleNet.
How XRP works is more like value than cryptocurrency. However, this fact tries to be manipulated by Ripple Labs. First of all, XRP is not decentralized, since the currency is manipulated by Ripple Labs. Second, Ripple Labs is the one who manages its development and not an open community. And finally, XRP has properties that make them look like a Ripple Labs action. These three elements are enough for XRP to be seen more as a value than as a cryptocurrency.
With these elements then we can say that; XRP is in the scam category, just like fiat money is. It is a system that through manipulation tries to show itself as a better option, while enriching a small group that manages the entire system.
Ripple (XRP) Features
Ripple's original design allows it to operate as a efficient and safe daily payment system. So your transactions are done much faster and cheaper compared to Bitcoin.
It is for institutional and business use.
XRP operations can be processed and validated approximately every 4 seconds.
Owns better Scalability than some cryptocurrencies. It can process around 1500 transactions per second. This thanks to its very high centralization and that its consensus technology is not based on blockchain technology.
RippleLabs does not want to displace the traditional financial system, so is accepted and used by banks. Thus, this currency is not subject to as many controls and regulations, as it happens with many others.
The XRP coin has the ability to be exchanged to any cryptocurrency, fiat currency or value, like gold, with a unified minimum commission. So Ripple operates as a mechanism that will unite the different currencies in use globally.
Todas, XRP coins were created from the start and they already exist. So Ripple mining is something that cannot be done. If necessary, Ripple Labs can increase the issuance of tokens at its will.
The more banks use the Ripple protocol, the higher the value of the XRP will be. So if all the banks decided to use the platform, those people who invested in the cryptocurrency would possibly make a fortune. Unless RippleLabs reissues, remember that they control the issue and banks are looking for a non-volatility currency with which to trade.
The project is highly centralized. Let's remember that the idea with which cryptocurrencies arose is to avoid that a few have control and mastery of the issuance of money. But in the case of XRP, since their coins were created from the start, developers will be able to decide how much and when to release them or whether to generate new ones. Therefore, it is basically like investing in national currencies such as the euro, the dollar or other currencies.
In addition to centralization, RippleLabs owns more than 60% of the coins currently existing.