Ripple XRP, is a cryptocurrency that allows sending money globally over its network, RippleNet. Banks, payments providers, and individuals can connect and transfer money, quicker and cheaper.
It can also act as a payment platform. A unique feature that puts it ahead of some of the other major altcoins.
There are articles and discussion on the forum board, about the possibilities of the ripple network being regarded as the next generation banking system. But most of us don’t have a clear idea about the basic protocols of ripple network.
The traditional Arabic community launched a money transferring system called hawala network.
This analog protocol was a huge help for cities that didn’t have banks. The service is still available in some places and probably worthy of comparing with ripple system.
Hawala allowed users to transact money without moving the money.
The process of transferring money will be as followed:
- When a sender wants to send money to the receiver, he would need to go to the local hawala agent;
- There he will give the agent the cash and a password which is shared with the receiver.
- The agent calls the local agent of the receiver over the phone and tells him to release the fund to a person who can provide the password.
- When the receiver provides the agent with the password that he already got from the sender, the agent releases the exact amount of fund, excluding the optimum fee.
A simple money transfer system without moving the money from one place to another. Ripple works in the same process where the websites or shops are the agents and the communication is processed over the internet. The sender chooses a ripple gateway and deposits money onto it. That gateway service releases the funds to the receiver according to the instructions from the sender.
The main advantage of this network is that you can send not only cash but also other valuables, such as gold or any other valuable asset.
This can be possible through a suitable ripple gateway that accepts those types of valuables or assets.
So, in a way, you can transact any kind of valuable asset without physically moving with the help of a suitable ripple gateway. You can also convert your asset with another asset of the same value when sending something to your desired persons.
For example, the receiver agent is a flower shop, so you will be able to pay through ripple network to send the receiver flowers. Anything is possible with ripple network as long as both parties can find an intermediate gateway chain.
Ripple network has its own currency (XRP). It can be used to ensure the trust factor between the gateway chain of the sender and the gateway chain of the receiver.
In that case, the sender first has to convert his asset into an equivalent amount of XRP and send that XRP to the opposite. The opposite chain will send that XRP and provide the receiver with the equivalent amount of supported asset.
The Fun Part
Now comes the fun part of the Ripple system. Since the network is based on the blockchain platform, there’s no need to depend on the third party for the trust factor. The features of blockchain are all the insurance you can hope for. The public ledger system keeps track of all the transactions. The usual advantages, such as faster, secure, cheap etc.
All can be applied to Ripple. All the necessary features for the next generation payment network.