Ripple can be described as a technology which is both a cryptocurrency as well as a digital payment platform for financial transactions. Ripple is more famous as a digital payment protocol than its cryptocurrency XRP. It operates on an open source and peer-to-peer platform which enables individuals and businesses to seamlessly transfer money in both fiat and cryptocurrency form.
Ripple was released to the market in 2012 after a series of developments and improvements that date back to 2004. In 2004, Ryan Fugger who was a web developer based in Vancouver, Canada, came up with Ripplepay. At the moment Fugger worked in an exchange trading system based in Vancouver and his development was meant to create a monetary system which was decentralized and allowed people and communities to develop their own money. RipplePay was launched in 2005 as a financial service offering a secure payment option to the online community. In 2012, Jed McCaleb joined Chris Larsen to develop a new system that was different from Bitcoin in terms of mining and processing of transactions. The two approached Fugger with the digital currency idea and after lengthy discussions, Fugger bequeathed the reins to the two. The two developers came up with the XRP cryptocurrency and developed the Ripple protocol which allows for instant and direct transfer of money among two parties in 2012. The two developers called their company Ripple Labs Inc where Larsen is the chief executive.
A Focus on Banks and Financial Institutions
From 2013, Ripple has been adopted by various financial institutions to provide alternative remittance option to the clients. Ripple makes it possible for cross-border payments for retail customers, companies as well as other banks. Larsen has on various occasions said that the Ripple protocol eases the exchange process by the creation of a point-to-point and open transfers where banks can bypass the payment of the corresponding bank fees. Fidor Bank in Munich was the first one to use the Ripple protocol in 2014 and was followed by Cross River Bank in New Jersey and CBW Bank in Kansas. Today some of the major banks using the Ripple protocol include Bank of America, Commonwealth Bank of Australia, Canadian Imperial Bank of Commerce, Mitsubishi UFJ Financial Group, Royal Bank of Canada, Santander, Standard Chartered, UniCredit and Westpac Banking Corporation.
When talking about the Ripple cryptocurrency it is commonly referred to as XRP. It is the native digital currency in the Ripple network. There are 100 billion XRP tokens that were issued by the Ripple company during the inception stages and no more are allowed to be issued as per the protocol rules. The system was developed in such a way that XRP is an asset where supply keeps on decreasing. Of the 100 billion XRP, 20 billion were retained by the developers. The numerous partnership between Ripple and various banks saw the value of XRP increase by about 200% in December 2014 which made it surpass Litecoin to become the second largest cryptocurrency with a market capitalization of USD 500 billion. During the crypto peak in December 2017, Ripple had a market capitalization of USD 73 billion.