Once you are able to comprehend the functions of Ripple (the digital currency and the open network through which the money is distributed), you will actually end up realizing that it’s no short of a revolution that the financial world is slowly waking up to! Today, in the course of the post, we delve into the merits of this particular digital currency (even its advantages when compared to the bitcoins) but not really before finding out how exactly it works
What is Ripple?
Ripple has been introduced by a company named OpenCoin. The very purpose of Ripple is to help us make the most of the decentralized economy so ably promoted by bitcoins – by doing away with the typical impediments that banks or financial institutions impose on us—when it comes to the transfer of funds. Today every provider has got its own payment system in place for their customers and it has often been found that people utilizing different systems are faced with difficulties while interacting with each other. Ripple aims to bring various payment systems together thereby doing away with issues related to transfer of funds and processing delays. Yes! It connects banks and other payment systems together. The merits of this payment system have been documented below.
A Relatively Safer Investment Option
Now, the fact that Ripple (XRP) has been adopted by banks – attaches an invaluable attribute to it. Investors are immediately drawn to it by the fact that it has been adopted by banks. Though it doesn’t eliminate the risk of investment entirely (because every form of investment entails some form of risk at the end of the day), it is still relatively safer since it has been embraced by banks. Banks for one are less likely to adopt a plan and abandon the same after a year – unless and until something more impressive doesn’t come along. A higher number of financial institutions are likely to embrace Ripple quite simply because its association with the banks renders them less volatile in the eyes of investors. What more? With more and more financial institutions trying to bank on the conversion from fiat to XRP, they will start valuing stability over volatility for sure.
Better than Bitcoin?
Now, it would be unfair to pit XRP dead against bitcoins or other cryptocurrencies—quite frankly because both these forms of currencies have set out to achieve different objectives. Ripple clearly does not want to compete with bitcoins or other cryptocurrencies. Someone has pointed out very efficiently that the underlying purpose of using XRP is to trade debt. For instance, some party may owe you 50 USD. You can trade that 50 USD of debt for a completely different debt of 50 USD worth the Bitcoin. When you are passing on the bitcoin to someone, there is no third party involved. Ripple, on the other hand is used more as a payment system which facilitates the transactions of credits and debits. As currencies, Ripple will go on to enjoy a little more advantage than Bitcoins quite simply because it has been adopted by banks
In a way Ripple seeks to complement bitcoin trading rather than competing with the same.
Easier Entry Point
Ripple also provides easier access to investors. Now, it has presently been predicted that with the advent of time, the value of Bitcoins will only go on to increase. Keeping the over-the-years gains in view more and more investors will eventually be drawn towards it. However, one also needs to keep in view the fact that with the rise in the value of bitcoins, the amateur investors will be confounded with the difficulties of converting something like 1000 USD to 0.10 or less BTC (bitcoins). On the other hand, the value of XRP is way cheaper. For 10 USD, for instance, you can just own 0.0012987 BTC or 44.27 XRP. So, it can well be imagined that even if bitcoins continue to attract attention, investors are will still have their eyes on the cheaper altcoins.