The concept of Ripple

Ripple is a privately held company that builds a payment and transaction network (RippleNet) on top of a distributed ledger database (XRP ledger) Enterprise, formerly known as OpenCoin. Ripple's main goal is to connect banks, payment service providers, and digital asset exchanges to enable faster and more economical global payments.

Ripple’s development history

Ripple’s first ideal This was done by Ryan Fugger, who also developed Ripple’s first prototype, the decentralized digital payment system RipplePay. The system was put into use in 2005 and its purpose is to provide secure payment solutions for the global network.

In 2012, Fugger handed over the project to Jed McCaleb and Chris Larsen, and co-founded the American technology company OpenCoin with them. At this point, Ripple began its development as an open source payment protocol focusing on payment solutions for banks and other financial institutions. In 2013, OpenCoin changed its name to Ripple Labs, and again in 2015 to Ripple.

Ripple Ledger (XRPL)

Based on Fugger’s work and inspired by Bitcoin, Ripple launched it in 2012 The Ripple Consensus Ledger (RCL) was developed and its native cryptocurrency XRP (XRP) was launched. Later, the Ripple consensus ledger was renamed the XRP ledger.

XRPL, which operates as a distributed economic system, will not only store all financial information of network participants, but will also provide trading services across multiple currency pairs. And XRPL launched by Ripple will also serve as an open source distributed ledger that enables real-time financial transactions. There is also a consensus mechanism to guarantee and verify transactions.

Unlike Bitcoin, the XRP ledger is not based on the PoW consensus algorithm, so it does not rely on the mining process to verify transactions. Instead, the network achieves consensus by using its own consensus algorithm, known as the Ripple Consensus Algorithm (RPCA).

XRPL is managed by a network of independent verification nodes that continuously verify transaction records. Anyone can set up and run a Ripple validator node, and can also choose a validator node. However, Ripple recommends that its customers select nodes from an authenticated trusted list to verify their transactions. And these trusted node lists are called unique node lists (UNL).

UNL nodes exchange transaction data with each other until they agree on the current ledger status. In other words, transactions approved by the vast majority of UNL nodes are considered valid transactions, and when all nodes apply the same transaction to the ledger, a consensus is reached.

According to Ripple’s official website: Ripple is a private company that developed the open source distributed ledger XRPL. An open-source ledger means that anyone can contribute nodes, and XRPL will continue to operate even if Ripple ceases to exist.

RippleNet

Unlike XRPL, RippleNet is built on On top of XRPL, Ripple's exclusive payment and transaction network.

RippleNet currently provides three payment solution systems for banks and financial institutions, namely xRapid, xCurrent and xVia.

xRapid

Simply put, xRapid is a On-demand liquidity solution using XRP (Ripple) to build a global currency bridge. Both XRP and xRapid rely on the XRP ledger, which allows transactions to be completed faster and with lower fees.

Give a simple example. Bob from Australia wants to send $100 to Alice in India through the financial institution FIN. To execute the transaction, financial institution FIN used the xRapid solution to create a connection between the source and destination countries. In this way, the FIN institution can convert Bob’s $100 into XRP, which provides the necessary liquidity for the final payment. Finally, within seconds, XRP can be converted into Indian rupees, and Alice can withdraw the funds from an asset exchange in India.

xCurrent

xCurrent is a RippleNet users' cross-border payments provide instant settlement and tracking solutions. Unlike xRapid, the xCurrent solution is not based on the XRP ledger and does not use the XRP cryptocurrency by default. xCurrent is built on the Interledger Protocol (ILP), a protocol designed by Ripple to connect different ledgers or payment networks.

The four basic components of xCurrent are:

1. Messenger - xCurrent Messenger will be implemented between connected RippleNet financial institutions Information exchange. This includes information such as risk and compliance, fees, exchange rates, payment details, and when funds will be delivered.
2. Validator (validator) - Validator confirms the success or failure of a transaction in an encrypted manner and coordinates the flow of funds across the ledger. Financial institutions can run their own validators or rely on third-party validators.
3. ILP Ledger (IPL Ledger) - When ILP is implemented in the existing bank ledger, an ILP ledger is formed. The ILP ledger serves as a sub-ledger and will be used to track credits, debits and liquidity of all parties to a transaction. And the ILP ledger enables transaction parties to settle funds atomically, which means transactions must either be settled promptly or terminated immediately.
4. FX Ticker - FX Ticker is used to define the exchange rate between trading parties. It will also track every ILP ledger that has been set up.

Although xCurrent is primarily designed for fiat currency transactions, it can also support cryptocurrency transactions.

xVia

xVia is an interface based on API standardization. It will allow banks and other financial service providers to interact within the same structure without relying on multi-payment network integration. xVia will allow payments to be created between banks and other partner banks that are connected to RippleNet, and will allow banks to attach invoices or other information to transactions.

Summary

When Bitcoin is hailed as the first encryption currency, and while Ethereum is also recognized as the creator of smart contracts, we can think of the Ripple network as a currency exchange system focused on global payment solutions.

RippleNet can be implemented on banks' existing infrastructure to supplement and improve traditional payment systems. xCurrent will enable cost-effective and real-time payments across financial institutions, xRapid will use the borderless currency XRP as an on-demand liquidity pool, and finally xVia will facilitate integration and communication between RippleNet participants.