All You Need To Know About Ripple

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Ripple is a software that connects payment providers, banks, corporates and digital asset exchanges, allowing them to use the power of blockchain and send money globally to customers and various financial institutions. The platform processes their customers’ payments reliably and instantly anywhere around the globe. Ripple empowers the parties to transact instantaneously and directly. Furthermore, it helps, saves both time and cost which was otherwise needed for making cross-border transactions.

How does Ripple work?

The Ripple Network works according to the following framework-

Gateways- These entities act as a medium that allow money flow from the Ripple ledger. The Gateways operate on one of the three models for working, namely Issuing Gateway, Merchant Model, and Private Exchange. Users can choose any of these models according to their needs and preferences.

XRP- The Ripple network has introduced XRP as its native crypto currency. It can freely move between the addresses of ledger without using a gateway. The best part is that it needs no intermediary unlike the non-XRP currencies. In addition, users have to bear a certain amount of fee as charge for transacting with the non-XRP currencies. Basically, it’s an anti-spam measure that protects the network. Moreover, it prevents the instances of network flooding which could prove out to be too expensive otherwise.

Trust Lines- It represents the user’s level of willingness for exposure at a gateway. Not all the users want to deal with counterparty risk. Trust lines allow the individuals to set a ‘level of trust’ that is quantitative limit that they are comfortable sharing on their gateway. In case the value of payment goes beyond the set trust limit, the payment will not be executed.

How far is Ripple reliable?

Ripple not only facilitates the users with cross-currency transactions but also acts as a bridge currency. For example, you requested payment in Bitcoins from your client. It is not necessary for your clients to have Bitcoins to make the transaction. He can make the payment through his gateway using local fiat currency. Ripple will use the cheapest and fastest path for converting the currency into Bitcoins. The process is completed when the transaction will arrive at the receiver’s gateway.