Ripple is the name of both a cryptocurrency (XRP) and the network used to transfer this cryptocurrency. The network is a real-time gross settlement system and currency exchange. Among other things, it has become popular as a low-cost way of transferring money from one country to another.
Ripple is built upon a distributed open source protocol and supports tokens representing traditional currency, XRP and commodities. Even tokens representing assets like mobile minutes or frequent flyer miles can be transferred through the network.
After its launch back in 2012, Ripple has become a popular choice among cryptocurrency day traders and investors. This includes both crypto-to-noncrypto traders and crypto-to-crypto traders.
Cost of transfer
Ripple is commonly used to transfer money internationally, e.g. when people work in one country and need to send money back to their family living in another country. Using traditional methods such as Western Union (News - Alert) or bank transfer can be costly, especially if a substantial fixed-fee is added on a fairly small transaction.
Ripple is not free to use, but the fee is small and it is percentage-based instead of fixed-fee.
Coin creation
Ripple coins can not be mined.
The total number of Ripple coins are fixed at 100 billion, according to the Ripple team. Half of them are being made available to users, while the other half is retained by Ripple – at least for now.
Legal issues
In December 2020, Ripple Labs and two of its executives were sued by the U.S Securities and Exchange Commission (SEC (News - Alert)). According to SEC, XRP tokens are unregistered securities rather than commodities.
The large digital currency exchange Coinbase delisted XRP on December 28, 2020.
Trading XRP
Just like most other cryptocurrencies, Ripple is a highly volatile currency. This creates some very interesting opportunities for day traders trading Ripple.
Many day traders are especially active around news releases regarding Ripple, since news tend to create a lot of movements that can be exploited for profits.
One interesting element of Ripple is that unlike many other cryptocurrency teams, they do not shun banks. Instead, Ripple actively seek out partnerships with banks and are currently working together with an impressive selection of well-known financial institutions, especially within the field of remittance transfers.
Can I trade XRP using leverage?
Yes, there are trading platforms available online where you can get exposure to XRP using leverage. One example is AVA trading.
Leverage means that you borrow money from the broker to complete a trade. This is of course risky, since you can end up losing more money that you have in your trading account.
Important: Within the European Union, there are rules that limit the size of leverage for cryptocurrency consumer traders.
Understanding XRP & Ripple
Ripple was created by Ripple Labs Inc. Ripple Labs Inc was founded in 2012. Back then, it was known as Opencoin. It changed its name to Ripple Labs in 2015. The company is based in San Francisco, California, USA.
In order to understand the XRP market and how it is influenced, it is a good idea to learn about about the Ripple network and the company behind it – Ripple Lab. Ripple is different from many other cryptocurrency networks, and this has – and will continue to – impact the price fluctuations of XRP. For instance, news that Ripple Lab is entering into a partnership with a major financial institution tends to cause a lot of activity on the XRP market. This is not really something that is likely to happen for a cryptocurrency such as Monero, who tend to separate itself from the traditional banking world.
Background
In the mid-00s, Ryan Fugger – who was then working on a local exchange trading system in Vancouver – began building a decentralized monetary system and called it RipplePay.com. His vision was to create a system that could empower individuals and communities to create their own money.
In 2011, Jed McCaleb started working on developing his own digital currency system, one in which transactions would be verified by consensus. He did not want his currency to use the concept of coin mining utilized by cryptocurrencies such as Bitcoin.
In 2012, McCaleb joined forces with Chris Larsen and together they approached Fugger, who eventually gave them the reins for RipplePay. The corporation OpenCoin was formed later that year, and work commenced on the development of the ripple protocol (RTXP) and the Ripple payment and exchange network.
