Many investors look at altcoins to diversify their portfolios or in search of higher returns, and Ripple grew even faster than Bitcoin last years. Today, when cryptocurrencies have become popular, it is very important to understand how the token in which you invest works.
Ripple cryptocurrency doesn’t really exist
Ripple is the network, designed to process payments by financial institutions. The token released by Ripple Labs and operating on the Ripple network is formally called XRP. However, since the word it is easier to pronounce than the abbreviation of the three consonants, this name is likely to remain popular.
Ripple without XRP
There are systems that cannot be used without owning the corresponding token, but this does not apply to Ripple. By simply becoming part of the network, a financial institution is able to make instant, reliable and cheap payments for customers. The company explains that using XRP helps companies lower costs and also gain access to new markets. Global real-time transfers allow you to avoid the long wait that is typical of existing transfer systems, and payment providers can use XRP to facilitate transfers.
Ripple Labs owns over half of all XRPs
Currently, Ripple Labs owns about 60 billion XRP of the 100 billion. Some people believe that in this connection, control over XRP in the Ripple network can be considered centralized. The company notes that even in the absence of centralized control, the presence of large players in the Bitcoin network and other networks leads to actual oligopoly. Moreover, the company believes that its XRP controlled emission plan gives it an advantage.
Every month more and more XRPs enter the market
At the end of 2017, the platform placed 55 billion XRPs on escrow deposits, creating 55 separate contracts. Over the next 55 months, these contracts should expire one per month, throwing out another billion XRP. If does not use the entire billion, the remainder will return to the escrow with a new date and “stand at the tail of the line”.
In the beginning, the company website allowed everyone to buy, sell and store XRP. Users were able to use RippleTrade.com as a digital wallet for XRP transactions. In early 2016, Labs decided to close this service. The company agreed with the third-party company GateHub to transfer accounts with RippleTrade. Labs decided to focus on the development of international financial instruments. Therefore, users can now choose from several third-party services.