Ripple is a global settlement system. It has its own unique features that distinguish Ripple from other cryptocurrencies. This is not Bitcoin's altcoin - the system has little in common with BTC. It does not use the traditional blockchain that we are used to seeing in most cryptocurrencies.

 

The principle of the system is based on agreements, the so-called consensus. For clarity, let's take such a scheme as an example. You need to give your partner in another country $ 100. It is impossible to meet in person, sending by transfer is overhead, and therefore you negotiate with your acquaintance supplier, who is located in that area, and he gives his money to your partner.

 

To this acquaintance, then third parties transfer values equivalent to one hundred dollars, and this can occur both in any currency convenient to him, or even be returned by material things. As a result, everyone gets what they want, although few of the entire chain know each other - all interaction is based on trust. In Ripple, the role of such people is played by the server nodes.

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The basis of the XRP system is a register in the form of a distributed database, where all data about user accounts and transactions are stored. It uses the RPCA protocol - Ripple Protocol consensus algorithm. The registry is updated every few seconds and the most current one at a given time is called LCL - Last Close Ledger. Copies of the registry are stored on network servers, also called nodes.

 

With the outside world, or rather with shops, exchange offices, the system interacts through the so-called "gateways". Anyone who wants to conduct a transaction must send money to the gateway using a bank card, electronic payment system. Further, money can be exchanged for any currency in the world. At the same time, the system will do it at the most favorable rate.

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When the system receives a request for a new transaction, it spreads through the network like ripples on water. Any node can be the initiator of such a request. The rest of the servers decide whether to add it to the registry or reject it. This is how sets of candidates are formed to be added. The servers are given a certain amount of time to consider them.

 

With each iteration of the test, the sets become more and more similar to each other. As soon as the difference between the two is minimized, the system is considered to have reached a consensus. Unaccepted applications remain in the sets and are sent to a new stage of consideration together with the just received transactions. Therefore, the network registry is updated every few seconds.

 

Ripple allows users to transfer funds to each other in any currency - dollars, euros, crowns, Mexican pesos, yen, rupees, and even precious metals such as platinum, gold, silver. Moreover, the translation takes a few seconds.

 

The platform also has its own internal currency, XRP. All coins were issued on the project stratum. Their number is 100 billion tokens. Moreover, only about 7 billion XRP were distributed among users during the existence of the system, more than half remained in the possession of Ripple Labs. This situation naturally raises concerns among the community, since the company has every opportunity to manipulate the course. And they are not groundless.

 

A good example occurred on the Bitstamp exchange, when Jed McCaleb tried to sell about 100 million coins of the system, which was equal to about 1 million dollars. The exchange had to freeze McCaleb's funds, otherwise the collapse of the exchange rate would have been inevitable.

 

To reduce tension among the community, Ripple Labs has blocked the remaining coins at its disposal using smart contracts. There are 55 of them in total, and each corresponds to a billion tokens. Once a month, one contract expires, and the company has the right to dispose of the released funds. Mostly she directs them to maintain the current activities of Ripple Labs and the further development of the system.

 

Since all coins were originally mined, Ripple is not mined. Therefore, you will not be able to make money using the computing power of your computer XRP. At first, the company distributed tokens for participation in various projects, but later this opportunity to receive coins was suspended.

 

The Ripple coin is subdivided into a million parts called a drop. When conducting transactions, about 0.00001 XRP is withdrawn from each participant. These are such scanty funds that it is difficult to even call them a commission. The main purpose of such a write-off is to protect against spam. If the network begins to be attacked with a large number of transactions, the size of the commission will automatically rise for those accounts that do this, and in the end the attack will drown, since it will be unprofitable.

 

The most interesting nuance with XRP is that the withdrawn commission funds are destroyed, thus the number of coins in the system is constantly decreasing.

 

Although Ripple's cryptocurrency is considered decentralized, since there are a large number of servers (nodes) on the network, it is not, however, in the full sense of the word. Anyone can create and add a server to the system. However, before being allowed to process transactions, it is necessary to pass Ripple Labs certification and receive the title of a trusted node. This requires:

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• have an excellent reputation;

• always be available online;

• have a good internet connection.

 

At the same time, there are relatively few third-party servers in the system. Most of the nodes are owned by the company itself.

 

While traditional cryptocurrencies are aimed at ordinary users and aim to become an alternative payment system, Ripple, on the contrary, is actively integrating into the banking industry. The main clients of the system are large banks and financial organizations, to which the system offers profitable ways to instantly transfer money around the world.