What is Ripple?
XRP is the digital asset that provides source liquidity to payment providers, market makers, and banks. The XRP ledger is an open-source product created by Ripple. Ripple is a privately held company that aims to create and enable a global network of financial institutions and banks. It does so by using the RippleNet blockchain software to lower the cost of international payments. Ripple calls the global network using this software the “Internet of Value”.
How does it work?
Although people commonly refer to Ripple as one platform, it actually consists of three different products: xCurrent, xVia, and xRapid. xCurrent is the platform’s primary product. When you hear about a bank partnering with Ripple, more likely than not, this is what they’re using. xCurrent does not require XRP. xVia is the project’s most recent product. It’s a payments interface and suite of APIs. Like xCurrent, xVia doesn’t use XRP. xRapid is the only product that uses XRP. Simply put, this product is a liquidity solution.
What does it aim to solve?
It was created to solve a major point of friction in international payments, pre-funding of nostro/vostro accounts. Banks can use XRP to source liquidity in real time. Payment providers can also use it to expand reach into new markets, provide faster payment settlements, and lower foreign exchange costs. Ripple is essentially taking a stand against what they call “walled gardens” of financial networks consisting of banks, credit cards, and other institutions such as PayPal. These organizations tend to restrict the flow of money with fees, currency exchange charges, and processing delays.