What is Ripple? 4 1474

ripple

Now you’re down with Bitcoin and Ethereum, if you heard about the Banco Santander announcement about a partnership with Ripple, you may be wondering – what is Ripple? Is it just another cryptocurrency like Bitcoin? And if so, does that mean that one of the world’s largest banks is now accepting payments in cryptocurrency?

No, and definitely not. What’s going on, then? Let’s take a closer look.

Rather than just a digital coin, Ripple is a remittance network, currency exchange and real-time gross settlement system (RTGS). Going back to 2012 when it came out, Ripple (unlike Bitcoin) does not actually use the blockchain system. It uses what is known as a common ledger, which is essentially a network of independent servers that validate transactions constantly.

If you’re thinking, “that sounds a lot like the blockchain,” that’s because it is. Ripple’s shared public database also uses a form of consensus. The majority of the network has to be in agreement on the validity of transactions, to prevent events like a 51% attack.

Unlike Bitcoin though, Ripple doesn’t rely on a proof-of-work (PoW) concept, or the computational power of members of the network. It also isn’t mined.

The token is XRP and its main characteristic–the raison d’etre of Ripple–is that it allows for real time exchange of currency between two parties, whether that be fiat currency, gold, or any other type of currency. Its major claim to fame is that it allows people to avoid wait times, fees, and even exchanges transactions.

How is Ripple Different From Bitcoin?

As mentioned, the technology they rely on is different. Ripple is more targeted to banks and other FSIs (as displayed through the Banco Santander partnership). While Bitcoin was built for the people, Ripple was built for enterprise. Sure, you can buy and trade it peer to peer, but that’s not what this cryptocurrency is all about. It’s to move massive sums of money around safely and practically instantly. That’s what’s getting the banks all excited.

And today, it is still the fastest cryptocurrency for transactions, settling payments in a maximum of four seconds, as compared to Ethereum, which can be a few minutes, and Bitcoin, which can take several hours. Another main difference is that this cryptocurrency is not mined, like Bitcoin, Ether, and other cryptocurrencies. They just settled on 100 billion tokens from the get-go and issued that many coins.

In theory, the 100 billion XRP tokens originally issued are meant to be the only tokens there will ever be. But there is technically nothing to stop Ripple from issuing any more. But, they probably won’t, seeing as the XRP token is completely separate from Ripple’s technology. Banks can send currency in dollars, yen, or pounds, without needing to use XRP at all, making the investment in this token somewhat less attractive. Without doubt, Ripple’s value is the network, not the Ripple coin.

Banks can use its software for fast, international payments (as is the case with Banco Santander) and can ditch the traditional SWIFT method, that is slow and cumbersome.

Is It Volatile as Well?

Yes. Like most cryptocurrencies, the markets are very sensitive to FUD and FOMO. As the price of Bitcoin exploded towards the end of last year, Ethereum doubled and Litecoin blew up, Ripple also experienced a massive price hike, with first time investors looking to purchase cryptocurrency within their price budget. Moreover, a rumor was spread that Coinbase was thinking of listing it on their exchange and that shot the price up further…

Until Coinbase quashed the rumor and the price came crashing back down.

Against an Ideology?

Bitcoin purists have criticized Ripple, because it has owners. It is a centralized network in the middle of a decentralized, idealistic ecosystem. Also, the trusted Unique Node List (UNL) that is supposed to protect Ripple from hackers and threats throws up another issue: while it protects the cryptocurrency, what’s to stop a  government or regulating body from coming in and making a change?

It is certainly an interesting technology and worth keeping on your radar. But, unless you’re working in a large financial institution, you probably don’t need it too much of it in your investment portfolio.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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There’s an Inflatable ‘Bitcoin Rat’ Staring Down the Fed 91 1426

Someone has put a giant inflatable rat outside the Federal Reserve Bank in New York.

It’s covered in Bitcoin code, printed in rainbow colors, and is apparently a piece of installation art aimed at subverting the federal institution that controls the US dollar. Or is it pale, puffed-up pariah a commentary on Bitcoin bros themselves? Or does it have something to do with Warren Buffett, who earlier this year called Bitcoin “rat poison squared”? According to CoinDesk, who first reported on the inflatable rat, the meaning is intentionally ambiguous.

The artist behind the puzzling prank is Nelson Saiers. He describes his own work as “mystifying” and “singularly original”, notwithstanding the long history of rats being inflated as protests or used as economic and political icons in art and entertainment around the world.

“It’s art, so I hope they’re entertained by it,” he said, apparently implying that art is entertainment. “It’s informative, I hope people will learn [and] I’m hoping it’ll at least help people understand bitcoin better and be kind of faithful to what Satoshi would have wanted,” he added, citing the mysterious pseudonym of Bitcoin’s founder with a touch of reverence.

A $50 Million Artist

Saiers, a phD in theoretical mathematics, was a hedge fund manager who did that thing where you give up all the money to chase your dream of being an artist.

His financial experience includes a stint as managing director at Deutsche Bank’s prop trading desk, before becoming CIO of Saiers Capital, the hedge fund that bears his name. His creative career gives credence to the theory that working as an artist is more and more a privilege of the very wealthy.

CNBC estimated Saiers’s wealth to be around $50 million at the time of he departed from the financial industry to pick up his paintbrushes.

The Rat Joins a Tradition of Sculpture-as-Commentary in FiDi

The Bitcoin rat, which stands on Maiden Lane, isn’t the first pop up sculpture to grace Manhattan’s financial district. Last year, Kristen Visbal’s 50 inch bronze ‘Fearless Girl’ statue made waves by staring down the famous ‘Charging Bull’, to the outrage of ‘Charging Bull’ sculptor Arturo Di Modica. The 3.5 ton ‘Charging Bull’ itself was left on Wall Street in the middle of the night when Di Modica originally created it, obstructing traffic and drawing the curiosity of passers by.

When Saiers placed the Bitcoin rat, he initially set it up on private property and was promptly ushered off by security guards, who he says were good natured about the situation. He expects the sculpture to be more temporary than the aforementioned Wall Street bronzes, and will probably only be around for a few days.

A Critique of the 2008 Bailouts

The placement of the rat on Maiden Lane seems to be no accident, but rather a reference to the Maiden Lane Transactions, more commonly known as that time when the Fed bailed out the big banks after they all caused the 2008 market crash. The Bitcoin crowd’s antipathy towards the Fed and the big banks is palpable in Sairs’s rat sculpture, and while a more specific meaning eludes, perhaps the success of the piece depends upon its ability to start conversations about the state of finance.

We’ll leave it to the viewers to decide who’s the rat—the Federal Reserve, or Bitcoin itself—and what that means for the future of currencies.

DApp Frameworks Will Improve the Blockchain — Here’s How 379 1350

Scalability has always been a problem for blockchains, and it’s the main reason blockchain technology hasn’t reached mainstream adoption. Whether in blockchain fintech—where comparisons of the Bitcoin blockchain’s 10 TPS to Visa’s 24,000 TPS abound—or in other sectors blockchain has touched, this is holding many otherwise promising companies back from delivering new, innovative kinds of value to the public. While larger and better-resourced companies have managed to overcome this problem through sidechaining and/or sharding, there is no substitute for the real thing. DApp scaling frameworks may be a foundation to build widespread solutions to this problem.

What are DApps?

DApps (decentralized apps) use blockchain technology to deliver peer-to-peer value through product offerings, services, or new forms of value. Built on blockchain technology, dApps use its decentralized, trustless, peer-to-peer structure to let users transact between each other without a centralized authority through an encrypted medium (such as NASGO’s platform that we’ve reported on previously).

While this is an otherwise revolutionary solution to the problem of over-centralization, it comes with its own set of baggage. Imagine if every transaction or purchase you made had to be confirmed by a network of other people before completing. This, the consensus protocol—on which Bitcoin, Ethereum, and other leading blockchains are built—is one of blockchain’s greatest strengths, but also one of its greatest weaknesses. For any  blockchain to work as intended, every node participating in it has to confirm every transaction that happens on it.

On the positive side, this massively increases transaction immutability, verifiability and transparency. Unfortunately, it also makes transaction per second (TPS) speed very low. Slow processes usually don’t scale. And without scalability, blockchain technology cannot reach mainstream usage. Right now, only about 8 million people globally use any form of cryptocurrency. To reach mainstream usage, 800 million people must consistently use it.

It sounds like a chicken-and-egg problem, but the blockchain space is already developing resources to overcome this issue. DApp scaling frameworks are one way. They are bundles of code inside blockchain protocols that let distributed apps distribute themselves in a semi-scaled way, letting a blockchain scale improve its TPS and allow more transactions than ever before. Unfortunately, not many developers have access to these, and the few that do have only built the earliest versions of this technology, which brings up the question: is this really a workable solution right now?

What We Have Now

DApps are hard interact with. They’re slow, confusing, and rely on 3rd-party software which only the most sophisticated consumers can readily use. Yet the chief issue here is speed—the key performance measurement of all distributed systems is scalability, and without it, dApps have no real business case or value proposition, let alone any realistic user acquisition strategy. Yet there are fixes for this problem, but little implementation and even less progress on their collective maturation. They exist in five categories, below:

1. Low-Level Optimizations

2. Parallel Blockchains (“sharding”)

3. Homogenous Vertical Scaling

4. Heterogeneous Vertical Scaling

5. Heterogeneous Interconnected Multichains

6. Multilayered dApp development toolboxes

There’s not much to be said for the solutions in the first category. Most of them—consensus algorithms, PoS migrations, parallel processing on transactions and code optimizations in the Ethereum Virtual Machine—are low-level and impermanent band-aids to the deeper problem.

The best of the solutions in the second, third, and fourth categories are at this stage still in the proof-of-concept phase, being built almost exclusively by and for Ethereum and Bitcoin, such as projects like Plasma and the Lightning Network. These are getting the most traction here only because they’re developing out of Bitcoin and Ethereum, but are nontheless still are very early-stage.

The idea behind Plasma is to take smart contracts, give them self-governing alongside self-execution properties to let the Ethereum root chain essentially create buds or “shards”—tiny sidechains each monitoring one aspect of a transaction instead of putting that combined pressure on the root chain—to distribute consensus, letting blockchains dramatically scale their TPS. Lightning Network deals more exclusively with payments—it’s a second-layer payment protocol next to the root blockchain, using a peer-to-peer system to let users make cryptocurrency micro-payments. Both platforms are examples of how some blockchain companies are using secondary and tertiary parallel blockchains to scale their TPS.

Concepts like Polkadot—scalable heterogeneous multichains—provide foundations for later functionality in the area of relay-chains, where the goal is to build validatable, globally connected, frequently-changing data structures on top of these frameworks.

Companies like MenloOne—multilayered dApp development toolboxes—create and deploy digital tools for dApp developers to use when they’re building. They include:

  • A layer for communication.
  • A layer for governance (given lack of server admins to ban malicious users in a decentralized network).
  • A local wallet for smooth transactions (no more MetaMask popups).
  • A core layer, a network of content nodes which cache mirror versions of blockchain data.

These incorporate fragmented systems to make dApp development easier for professionals.

Together, solutions in these categories are working to help top blockchains scale TPS to thousands per second.To become adopted by the mainstream public, these frameworks will need to use a variety of different tools to make transactions effortless for blockchains to process.


What do you think about the scalability of blockchains today? Is it a problem for you or are you unaffected? And, what do you most want to see happen in this area of blockchain technology in the near future? Post in the comments below to let us know!

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