In the past month, we all have seen Ripple hitting the streets with a sledge hammer, breaking down obstacles, increasing it’s USD price from $0.27 to $0.61, all without taking a breather.
Ripple grabbed the third place in market capitalization value behind Ethereum and Bitcoin, all in a matter of days. But Ripple is not a currency. Ripple is a real-time gross settlement system, exchange and remittance network. Doesn’t add up, right? The flaming hot currency we all see would be XRP, the native currency of the Ripple network.
First, let’s talk about Ripple. Ripple was released in 2012. It was co-founded by Chris Larsen and Jed McCaleb. Ripple works on an open source and peer-to-peer decentralized platform that allows a seamless transfer of money in any form, fiat or not. The transaction happens with the help of a gateway, the trust chain between two parties wanting to make a transaction. The gateway acts as the intermediary that receives and sends currencies to public addresses over the Ripple network.
XRP token is currently divisible up to 6 decimal places, and the smallest unit is called a drop. 1 million drops =1 XRP. There were originally 100 billion XRP’s created at Ripple’s inception, with no more allowed to be created according to the protocol. So, XRP is an asset with decreasing supply.
Ripple owns about 60 billion of the 100 billion XRP created, giving it a market value close to $80 billion.
An argument rises here since having one company own 60% of all the inventory clashes with the original idea of having a decentralized payment method where trust is no longer necessary. What if Ripple floods the markets with XRP, wouldn’t this devalue them down to nothing?
Ripple has worked up a solution for this scenario. Following is a statement from Ripple released on May 16, 2017:
Today we are permanently removing that uncertainty by committing to place 55 billion XRP into a cryptographically-secured escrow account by the end of 2017. By securing the lion’s share of our XRP, investors can now mathematically verify the maximum supply of XRP that can enter the market.
There’s more to this story. The escrow account has a safety contract. The coins are held in place by a smart contract which releases 1 billion XRP per month over 55 months. Any unused amount will be put to the back of the queue and so on.
Why has Ripple Lab decided to name their native cryptocurrency XPR is still a mystery. The founder probably was a fan of Ex-Rockapella, an American cappella musical group formed in 1986 that went with the acronym XPR.
But one thing is for sure, if Ripple Inc. was named after the song The Grateful Dead – Ripple, it was an excellent choice.
Ripple in still water
When there is no pebble tossed
Nor wind to blow..