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But ripple is different. It can't be mined. It can't be used to go shopping. And it's operated by a private company. Ripple is still far smaller than bitcoin, the reigning king of cryptocurrencies, but it's had a remarkable Stop pretending like you understand cryptocurrency and take these online courses. With ripple's success — even if it's based upon shaky speculation — comes intense news coverage and the associated curiosity: What exactly is ripple, and who created it?
Ripple is a cryptocurrency, but it's not quite like some of the others you've probably heard of like bitcoin and litecoin. Ripple is what's known as a token. Whereas coins like bitcoin trade on their own value, tokens tend to be tied to something else. More on that in a bit. The currency, technically called "XRP tokens," is all created and backed by the company Ripple Labs , a global money transaction business.
This is a stark contrast with cryptocurrencies like bitcoin and litecoin, whose actual currency is owned by anyone that wants to buy it on an exchange. This makes ripple more centralized than other cryptocurrencies. There's a notable difference between digital currencies like bitcoin and ripple's XRP tokens. Bitcoin is the actual currency being traded and used, whereas XRP tokens are essentially backed by traditional currencies, as if they're dollars or yen in another form.
While bitcoin and most other cryptocurrencies like Ethereum exist for the simple purpose of existing as digital money, ripple was born as a solution to the global problem of transferring money from one country to another.
It can take days to do this. Ripple created XRP tokens to seamlessly pay transaction fees between financial institutions, allowing funds to be promptly transferred between banks that have agreed to use this service.
A transaction can happen at astonishing speed — in a few seconds. Coinbase is the largest cryptocurrency exchange in the U. The tokens could rise in value simply because there's limited supply and more demand. Accordingly, XRP tokens are subject to the capitalist whims of supply and demand — and this is amplified in today's young and volatile cryptocurrency market.
The liquidity model used is the same as correspondent banking. We're using cookies to improve your experience. Click Here to find out more. Tech Like Follow Follow. Move over ethereum and litecoin — ripple is suddenly the hot new cryptocurrency. Here's what you need to know before you buy bitcoin.