What Is Ripple (XRP)? And How Does It Work?

Quick Read

  • It is not a type of digital currency like Bitcoin.
  • Ripple is a reliable network of cryptocurrency with its own coin called XRP.
  • Ripple’s payment protocol operates on an open source, peer to peer decentralized platform.
  • Ripple will use different secure nodes as the third party in money transfers to ensure the transactions is secure.
  • The network will use consensus protocol to validate any transactions and account balances.
  • Ripple transactions only take seconds but go through a structured process.
  • The entire history of Ripple’s financial transactions are available on the public ledger.

Ripple Is Not Like Bitcoin 

Out of many digital currencies out there, ripple coins or XRP are the ones people don’t get a grip of easily. It is important for an interested individual to remember that ripple itself is not a type of digital currency like Bitcoin, because there is a widespread misconception about that. It is a reliable network of cryptocurrency with its own coin called XRP.
Ripple’s digital payment protocol operates on an open source, peer-to-peer decentralized platform where a smooth transfer of money can be made in whether conventional or fiat currency.

Ripple’s Transaction Process

Ripple’s transaction concept is based on the basic principle of transferring money. The Ripple network works in the same way as transferring money from one country to another without physically moving the currency. In this type of transactions, the third party is involved in which both sender and receiver put their faith on to make a successful transfer.

Secure Money Transfers

To provide users the sense of secure transaction deals, Ripple uses different secure nodes as the third party in money transfers. Unique and verified nodes are used to transfer ripple coins from one account to another. Instead of using a validation system similar to Bitcoin and other cryptocurrencies, Ripple uses consensus protocol to validate transactions and account balances.

How Ripple Validate The Transactions?

For any transaction to get fully completed, it is necessary to send valid transactions to the Ripple coin ledger with the help of consensus protocol. Money transferred to different nodes by the users is pushed forward in the form of a set of transactions to all other nodes. If the transactions get 50 percent approval ratings from other nodes, they are pushed further to garner higher approval ratings.
Transaction becomes legitimate and is written on the ledger as soon as 80 percent of the nodes approve the transactions. In explaining the process, it seems as if the transaction takes ages in the Ripple but in actual it is done within seconds. Unlike mining and the underlying extensive efforts in establishing proof-of-work of Bitcoin, consensus speeds up the transaction process.
Ripple platform is a decentralized financial dealing because there is no central entity to authorize node formations and confirmations. The decentralized approach provides flexibility to traders to operate with ease.

Partial Privacy

Ripple transactions are of partial privacy in nature because the entire history of financial transactions is available on the public ledger. But this data is not linked to any ID or account of individuals and businesses despite the fact that record of all dealings is part of the blockchain.


Many of the digital currencies don’t serve any clear purpose at all. They might be used for investment, buying commodities or for making payments. Ripple coins and protocol are intentionally built for payment providers and financial institutes for the transfer of monetary value.
A conduit for different forms of currencies in today’s world, financial transactions are made through different types of currencies. Ripple transaction protocol can act as a bridge between different shapes and forms of currencies. Even a mix of digital and physical currency can be exchanged with the help of Ripple transactions making it a perfect fit for cross-border and overseas business deals.

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