What is Ripple and why might you want to pay attention to it?

There is a lot of controversy surrounding Ripple. Some people believe that Ripple is simply a scam “altcoin” that was created by Ripple Labs out of thin air, and has no value. What they fail to realize, is that Ripple has immense value for a reason that separates it from Bitcoin and bitcoin-based protocols.

What makes it different?

Ripple was coded from the ground up with the ability to use any currency within the Ripple system and trade them with or without XRP. Whereas with Bitcoin-based cryptocurrencies each and every coin has its own network.

This allows Ripple to act as a defacto exchange for currency trading — and you can trade whatever currencies/assets you want, as long as you can prove that you are worthy of being trusted and that there is a market for your currency/asset.

Using the Got JED initiative as an example

Some great people from created the Got JED? initiative on Ripple in order to crowdfund XRP for new users to open Ripple accounts. In order to activate a Ripple account, it has to be funded with 20 XRP. In order to set up a trust line, you will need an additional XRP.

The Got JED initiative, therefore, will send any new Ripple account 25 XRP if requested through the forums , and the wallet balance is public information. Right now there is plenty of XRP in there to fund anyone who wants to open a Ripple wallet. The interesting thing is the way in which this was done.


Jed McCaleb, who the Got JED? initiative was named after.

The Got JED intitative essentially sold JED coins for people to buy with XRP. The XRP is then given to new members. Someone could easily have just created an XRP wallet for the donation address, but by creating the Got JED? Initiative (named after a real person named Jed), the community was able to make the process fun and more than just a donation drive.

That’s one example, but basically anybody can create a currency that represents a commodity/asset/charity fund and trade it. In the stock market world, this would be referred to as an ETF; an exchange-traded fund.

So it’s not just a currency?

Ripple is not only a currency and a network like Bitcoin, but it is also an exchange. Anyone can convert/buy/sell currencies right in the Ripple system without having to set up a whole new network or reinvent the wheel.

So why do we need XRP if we have the Ripple network? XRP essentially is the reserve currency of the system, it is the only real true asset that a person owns on the network, and everything else is an exchange traded fund that represents those assets through a gateway. So if you have USD in your Ripple wallet, what you actually have is a gateway/bank that is extending you a trust line of USD in order to trade XRP or other currencies on the network.

By having the one reserve currency of XRP, there is safety in the fact a person can immediately convert their BTC/USD/whatever into XRP if they like and trade that for anything else at a later date. Or, if they completely trust their gateways, they can leave the funds there as their currency of choice.

If your USD gateway was JP Morgan Chase, you can probably rest assured knowing that your money is safe. But if your USD gateway is the ice cream man, you might want to convert your USD to XRP right away before they are no longer exchangeable. If you were going to buy into an ETF, wouldn’t you want one that is insured, audited and transparent? The Ripple network really does reward the most transparent, professional and honest companies — and in turn gives power to the consumer.

A consumer can easily become an investor with Ripple. The system allows an individual to have just as much access to currency exchange as a large corporation, and they can issue their own funds/currencies and people will accept them as long as they can prove that they are trustworthy.

This is great news for those who wish for more honesty and integrity in our financial system.

Chris Larsen, the CEO of Ripple Labs, has described Ripple as “SWIFT 2.0”, which means that it is directly competing with credit card companies and payment processors that are not transparent and make their money off the large fees of  an inefficient financial system. VISA, Mastercard, American Express, the Bank of International Settlements, Federal Reserve, and the mega-banks have all made their profits by controlling the way money flows, alongside the interest rates on credit and debt. They are guaranteed income because they maintain a monopoly on a system that is inefficient and proprietary.

Ripple is open-source. Anyone can see the code and use it to build their own network. But the beauty of Ripple is that you don’t need to build your own network, because you can just join their network and develop your own asset-traded currencies without having to rebuild Rome all over again.

Ripple is truly a game-changer in my opinion, and will ultimately complement regular currencies and other cryptocurrencies like Bitcoin — it increases the speed and efficiency of trading all of these currencies, wherever you might be on the planet.