What’s Ripple?

What’s Ripple?

What’s Ripple? 

Ripple is a real-time gross settlement system, currency exchange and a currency called XRP. Ripple boasts “secure, instant and nearly free global financial transactions of any size with no chargebacks”. Currently, Ripple is the third largest cryptocurrency by market cap, after Ethereum and Bitcoin.

The feature that makes Ripple stand out is the RTGS system, which is now being used by several major banks in the world as an alternative remittance system. Ripple has been identified by large banks which predict that the public ledger technology it uses is much more beneficial for the banking system as compared to Bitcoin. Therefore, you will soon see Ripple RTGS technology being implemented in several banks in the world.

Recently, Axis Bank of India has started offering RTGS payments to customers. The technology used is boosting ripple in the right directions and hopefu, ly it will grow to much higher prices. So, it’s a pretty reliable digital currency to invest in for the long run.

But that’s not just it, Ripple is one of the catalysts in the change happening in international banking.

So, what does it do?

Ripple is a company that aims to help almost every stakeholder in banking today. Have you ever tried to send money internationally? Usually banks can take from 3-5 business days to transfer funds to other countries. That’s because there’s usually a lot of intermediaries that process your payment before it reaches the destination bank. These intermediaries bring in a lot of variables, costs and processes. Ripple is a solution that can help banks avoid intermediaries. Now, why should banks avoid intermediaries?


Due to Ripple’s innovative design, the company can help reduce costs to banks and eventually consumers. At this point in time, banks that use the old system to transfer money have to pay intermediaries. The transfer isn’t possible without these intermediaries. Thus, they charge comparatively high fees to the banks, who transfer these costs to the consumer. This puts the consumer at a disadvantage because he’s paying for the transfer as well as the costs associated with the transfer. However, with Ripple, there’s no intermediaries. Therefore, the consumer saves all of the costs associated with banking intermediaries. This eliminates the disadvantage that was present before and makes international funds transfer more affordable.


Ripple is a solution for banks to avoid intermediaries. Currently, all banks have to go through intermediaries to send funds. Along with the costs, these intermediaries can take a lot of time to process your funds transfer. What’s worse is that there’s usually not just one intermediary. Put all this processing time together and you can have serious delays to complete international funds transfer. The increased time that conventional banks take can also create issues in the real world. Imagine you want to send your kids money when they’re abroad, you need that money to be sent immediately.

However with traditional banks, this time can be dramatically well over 5 days. Ripple provides a solution that allows banks to complete funds transfer in minutes. That’s how fast Ripple works. Since Ripple eliminates intermediaries, it also eliminates the time taken by them to process your payment.


Here’s where the idea of a cryptocurrency comes in. Since Ripple has a coin called the XRP, it’s evident that it runs on a blockchain. Today, conventional banks do not reveal a lot of information in terms of how they operate. Sometimes, you just need to trust your bank that the funds have been transferred. This is unfortunate for the consumer since it’s his money and he can’t see where it is at this moment. If all banks were to use Ripple, you can access all records to make sure that your money is safe. Since it’s run on a blockchain, the consumer can also verify all the transactions that he completed. With Ripple, there’s always certainty because you can access all of the previous blocks. Ripple boasts that there hasn’t been any issues with its ledgers since the day it began.

So, you can actually trust Ripple.

How does it do all of this?

This part is quite advanced, so make sure you’re up to date with all of the terms that we might use ahead. If not, you can access WikiCrypto’s glossary for a full introduction to the jargon of the bitcoin world.

Let’s take an example that a specific bank carrying out an international funds transfer uses one intermediary bank. Ripple uses a two faceted mechanism to provide effortless international funds transfers.

Information Transfer

The Ripple solution uses RippleConnect, a messaging service that allows banks to communicate with each other when a transaction is to be done. It’s used to coordinate information exchange that is required when doing funds transfers. For example, Bob decides to send $500 to his friend John. RippleConnect will get all of the required information that the three banks need. The three banks in question here are the origin bank, the beneficiary bank and the intermediary used.

XRP calculates the fees associated with the transfer by communicating with the intermediary bank as well as the beneficiary bank. It calculates the total costs associated with it and then the validation process begins.

This process includes account verification and compliance screening. However, this process is quite irrelevant since the banks can carry this out before the funds transfer happens. Thus, we manage to skip an important step that traditional methods used.

Funds transfer

Then, the actual funds transfer takes place. Usually, the origin bank will have a nostro account in the intermediary’s bank. A nostro account is an account held by a bank in foreign currency in a foreign bank. It was used to help funds transfers traditionally.

Now, there are two transfers that will take place. The first one is from the origin bank to the intermediary, the second is the intermediary to the beneficiary. Ripple puts a hold on the funds in all three banks. The funds are encrypted using cryptographic signatures and then the funds are released at the same time.

If all three transfers are successful, the payment goes through and the transfer is received. If not, the transaction fails. After the transaction takes place, Ripple sends a notification to all parties involved regarding the transfer.

With the magic of XRP, this transaction usually takes just about a few seconds. That’s how powerful Ripple is.


If you’ve been able to reach this far in the article, you now know why Ripple is one of the best cryptocurrencies in the market today. But you might ask, “well, can I mine Ripple?”. The short answer to that is ‘no’. However, you must understand that the XRP or the Ripple Coin was launched during the ICO. An ICO is like an IPO but instead of shares, Ripple issued the XRP as a representation of a share. The coin has been gathering a lot of attention because the company has been progressing quite fast. Just like in the financial world where shares increase in value over time, the XRP will increase as well. That’s why avid investors have been describing XRP as one of the safest investments available today.

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About Article Author

Michael Serrano
Michael Serrano

Michael is an engineer and a bitcoin evangelist. He has been involved in cryptocurrencies since 2013. His biggest wish? 1 billion users of bitcoin, ether and litecoin by 2020. In the last 10 years he has worked for various early-stage start-up as a back-end developer.

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