1. Basic Concepts
Ripple is a virtual currency issued by OpenCoin, called Ripple Credits, or "Ripple Credit", also known as XRP. Ripple is the world's first open payment network. Through this payment network, you can transfer any currency. It is simple, easy and fast. Transaction confirmation is completed within a few seconds. The transaction fee is almost zero. There is no so-called inter-bank and cross-border payment fee. Ripple is a virtual currency based on this network. When people trade through Ripple, they will consume a certain amount of Ripple, but the transaction fee is very small.
Ripple Labs (Ripple currency development team: Ripple Labs) requires that each Ripple account has at least 20 Ripple coins, and each transaction will destroy one hundred thousandth of a Ripple coin. In addition, during the circulation and exchange process, Ripple has gradually become a "bridge currency", becoming an intermediary in the exchange of various currencies.
Ripple has issued a total of 100 billion XRP. XRP is currently accurate to 6 decimal places. The smallest unit is called a drop. 1,000,000 drops equal 1 XRP, 1XRP=1,000,000dXRP. Simply put, XRP is a basic virtual currency issued by OpenCoin that circulates in the ripple network. Just like Bitcoin, it can circulate throughout the network without being limited to a circle of acquaintances. Traditional currencies are stored in different financial systems, such as VISA/MASTERCARD credit cards or Alipay. If you want to transfer money between different accounts, they will charge you a high fee, and different financial systems will have strict checks on your identity.
XRP is used to pay a very small fee in each transaction. XRP can be transferred between Ripple entry nodes and can be exchanged for any currency. The total number of XRP issued is fixed and was set at 100 billion at the beginning. No more will be issued. Ripple's transaction fee is very low, with only 1/1000 cents of transaction fee per transaction. This transaction fee is used to prevent someone from destroying the system through a large number of transactions.
2. The Origin of Ripple
Perhaps in the eyes of outsiders, Ripple is a latecomer, but in fact, the origin of the Ripple project is much earlier than Bitcoin. In 2004, Ryan Fugger launched the first implementation version of Ripple. Its goal is to build a decentralized virtual currency system that allows anyone to create their own currency. Money in the Ripple network is represented by "debt", and all transactions are expressed as changes in account balances. Its operation is similar to the clearing system of a bank: when making inter-bank remittances, the actual transfer of inter-bank funds will be postponed as much as possible until the night, when the bank calculates the balances it owes to other banks. It is possible that the funds to be transferred from a certain bank are exactly offset by the funds to be transferred to the bank, so it does not actually need to transfer out or transfer in any funds; even if they cannot be completely offset, the amount it actually transfers will generally be much less than the sum of the customer's wire transfer amounts.
The original intention of the Ripple project was to establish a distributed P2P clearing network: everyone is their own bank, which can issue and accept loans, and at the same time serve as a lending channel (for example, A wants to borrow money from B, they don’t know each other, but they happen to know C, then C can be used as a channel between A and B, C first borrows money from B, and then lends the money to A, indirectly enabling A to borrow money from B). The project was almost supported by Ryan Fugger alone and achieved certain success. However, Ripple has always had few users and is only popular in a few isolated small circles. The reason is very simple: Ripple’s design concept is based on acquaintance relationships and trust chains. If a person wants to use the Ripple network for remittances or loans, the prerequisite is that his friends already exist in the network, otherwise it is impossible to establish a trust chain between the user and other users.
