Ripple is one cryptocurrency that has seen a tremendous surge in value in the last year alone. Starting out at $0.0065 at the beginning of the year, its value increased by 37000 percent and was valued at $2.47 at the end of the year.
With the increase in value and it being adopted by world banks, everyone is looking for ways to make Ripple XRP. One of the most natural questions that arise is: how to mine ripple and if it can be mined at all. While it may seem that, like other cryptocurrencies, mining Ripple is also possible, this is not the case!
This article will debunk the myth of ripple mining and how all the websites that claim to mine ripple are basically scams.
Read on to know more about:
- What is Ripple?
- Is Ripple Mining Possible?
- Why Can’t You Mine Ripple?
- Working of the Ripple Blockchain
- How To Obtain Ripple XRP
- Ripple’s Future in the Banking Sector
WHAT IS RIPPLE?
When we talk about Ripple, we could be referring to one of two things:
Ripple is the payment and exchange platform created by Ripple Labs to facilitate fast and inexpensive transactions of fiat and cryptocurrencies particularly between banks and other financial institutions. Ripple is based on a third-generation blockchain technology and makes use of a decentralized consensus ledger for its operation.
Ripple XRP, on the other hand, is the cryptocurrency that was also created by Ripple Labs. It is the digital asset owned by Ripple. However, it functions independently of Ripple.
IS MINING RIPPLE POSSIBLE?
Cryptocurrency mining is the process involved in verifying transactions for various cryptocurrency and adding them to the blockchain. This verification is done by an individual called a miner by solving a series of complex mathematical problems with the hash function associated with a block.
In return for this authentication, a miner earns a small amount of cryptocurrency which is the incentive to carry out more verifications. Mining is only possible with currencies such as Bitcoin, Ethereum, Monero, etc. From its inception in 2012, only 100 billion XRP were created. Out of these 100 billion, Ripple owns 61 billion while 39 billion is in circulation.
Since a lot of investors were wary of investing in XRP since it there is always the chance of Ripple flooding the market with its own coins. However, recently, the creators of Ripple have placed 55 billion of their XRP holdings into escrow for a period of 55 months. 1 billion of this amount is released to Ripple each month which can be used by them.
The bottom line is that all the Ripple XRP in existence has already been created and no further XRP can be mined by using any mining software or hardware.
WHY CAN’T YOU MINE RIPPLE?
Digital Currency Controlled by a Single Company
Unlike Bitcoin, which is a decentralized currency, not controlled by any one bank or network. Anyone with a CPU/GPU can mine it since it is not under the control of any single individual or corporation. Anyone can verify transactions on the public shared blockchain.
In contrast, Ripple is under the regulatory control of the Ripple enterprise. This has brought in criticism since this means that Ripple is not a decentralized currency which goes against the ideals of cryptocurrencies. However, what we need to understand is that Ripple was not created to be the next Bitcoin, i.e., to assist in secure and private transactions among individuals.
Rather, Ripple XRP has always been an enterprise solution cryptocurrency. It is a way to facilitate transactions of large sums of money or commodities between world reputed banks over large distances and at a minimal cost and fastest possible speed.
In this regard, XRP was the currency or digital asset used by Ripple to make these transactions easier and reduce costs during conversions. The fact that Ripple is owned and managed by a single organization helps to build the trust of the banks and other investors; furthering its own goal of becoming a single unified currency for banks.
Limited Total Supply
Around 100 billion of XRP are in existence out of which 39 billion are in circulation, and 55 billion of the 61 owned by Ripple are placed in an escrow account for a period of 55 months. This number cannot increase or decrease. It is fixed and therefore, it is just not possible to mine XRP and introduce more XRP into the market.
Bitcoin is based on a shared public blockchain of transactions taking place around the world. Miners validate these transactions and add them to the blockchain for which they are paid a small reward in the form of Bitcoin. On the other hand, Ripple relies on a shared public consensus ledger. This is a distributed database which contains information about all Ripple transactions.
Unlike Bitcoin, the network is validated and managed by a group of independent validating servers that constantly compare their transaction records. It is not possible for individuals to validate any transactions negating the entire concept of XRP mining.
The consensus ledger is further explained below.
WORKING OF THE RIPPLE BLOCKCHAIN
What sets Ripple apart from Bitcoin and other cryptocurrencies is the working of its consensus ledger.
As stated above, Ripple functions on the basis of a commonly shared ledger which holds information about the state of its contents including:
- Settings for each account
- Balances between accounts
- Offers in the distributed exchange
- network settings, such as transaction costs and reserve amounts
- a time stamp
The ledger is continually being updated with whatever transactions are being carried out through a consensus process. The last-closed ledger is the most recent ledger that has been approved by the consensus process while the open ledger is the operating status of a node. After a transaction becomes final (by passing through the consensus process), it becomes the last-closed ledger.
Unique Node List (UNL)
The transactions carried out can be verified only by a network of independent servers or validator nodes. These servers can belong to anyone, including banks and market makers. Each of these servers run the Ripple Client software.
Each of these servers has a UNL which is a list of the other servers that can validate transactions, add them to the ledger and change its state.
Chosen validators are a subset of validator nodes which are trusted not to cooperate to distort validations.
Ripple Protocol Consensus Algorithm (RPCA)
This is the algorithm that is applied by all nodes every few seconds to ensure the correctness of the ledger.
The process takes place in the following steps:
- When a new transaction arrives at a node, it is first checked against the ledger to make sure that it is a candidate for validation. This means testing whether the account requesting the transaction can fund it.
- The node then broadcasts this transaction to all the peers to suggest that it needs to be validated.
- If the transaction is agreed by a “supermajority” of peers, it is considered validated. This means that 80% of the chosen validators must decide to include the transaction in the ledger.
- If a supermajority is not achieved, the validation enters the next consensus round. This usually happens when there are delays in the network, or there were too many transactions to be validated.
- With each round, the disagreement or difference between nodes reduces and one of two outcomes is achieved: Either the conflicted transactions are discarded or accepted.
- Each node then calculates a hash signature for the updated ledger which is communicated to the network. This decides the order and appearance of the final state of the ledger.
- Once the ledger is updated, a new cycle is started working on the newly received transactions.
This entire process takes around 4 seconds compared to the average mining transaction time of Bitcoin which is more than an hour. The transaction costs 0.00001 XRP. Ripple has the capability of carrying out around 1500 transactions per second.
Also Read : What Is Ripple. Everything You Need To Know
HOW TO OBTAIN RIPPLE XRP
Since mining Ripple is completely out of the question, the only way to obtain Ripple is buying it from a cryptocurrency exchange. Buying Ripple is not as straightforward as other currencies such as Bitcoin or Ethereum. Not a lot of crypto exchanges support Ripple XRP, the most notable among these being Coinbase.
Using such exchanges, you can buy other cryptocurrencies and then exchange them on XRP supporting exchanges for Ripple. Some of the support online exchanges for Ripple as mentioned on the official Ripple website are Bitstamp, Kraken, Coinone, Bitso, Coincheck, Korbit, Qryptos, Bitbank, Bitsane, BTC Markets, LiteBit, Bitcoin Co. Ltd., Gatehub, Bitcoin.co.id, CEX, BitOasis, SBI Virtual Currencies.
Binance is another highly recommended online exchange for Ripple.
Before you buy Ripple from an exchange, you should have a Ripple wallet since holding any currency on an online exchange is highly dangerous. Some Ripple wallets that are highly recommended all over the world are:
- Ledger Nano S
- Toast Wallet
RIPPLE’S FUTURE IN THE BANKING SECTOR
Considering Ripple was invented to accelerate monetary transactions in the banking sector, it has taken huge leaps in that direction.
Ripple’s blockchain system called RippleNet offers a number of technologies that can promote cross-border transactions between banks and other financial services.
- xCurrent: It is a payments processing system which allows end-to-end tracking, i.e., banks can confirm payment details before commencing the transaction and also confirm delivery once the transaction is settled. This can be implemented using any currency or commodity for exchange.
- xRapid: It is a way for banks and other payment providers to bring down liquidity costs by bringing down capital requirements for the same. This is done by using XRP which is an efficient, scalable and reliable liquidity option.
- xVia: It is a standard payments interface for corporates and bans without the need for installation of any specialized software. Payments can be sent globally across any network using RippleNet.
This is many steps ahead of the current technology, SWIFT, that is being used by banks for global transactions.
Right now, banks need to wait for at least 3-5 days before funds can be transferred to banks abroad using SWIFT. Moreover, the transaction costs are very high especially if a significant amount is being transferred. With Ripple, not just digital currency, but fiat and other commodities such as gold or even flyer miles can be exchanged by using the Ripple protocol.
Ripple aims to create a secure pathway for the which when used correctly, could save financial institutions a lot of money, up to 30%, and time in the transfer of data and money.
If banks take up Ripple transfer protocol along with the XRP currency, they can save up to 60% in transfer costs compared to the 30% they would save if they take up XRP alone. This is enough incentive for banks to start using Ripple technology.
Ripple technology is on its way to be adopted by nearly 80 banks around the world with major international banks, such as the National Bank of Abu Dhabi and Netherland’s Central Bank, already vouching for Ripple. It would not be an exaggeration to say that Ripple is on its way to transforming the entire financial sector at a scale that has never been seen before.
Ripple has already been adopted by 100 mainstream clients (banks and financial services) including:
- Mitsubishi UFJ Financial Group, Japan
- Banco Bilbao Vizcaya Argentaria, Spain
- Skandinaviska Enskilda Banken AB, Sweden
- Akbank, Turkey
- RAKBANK, UAE
- Cambridge Global Payments
- Star One Credit Union
Notable exchanges, around 60 in numbers, such as the Bithum in South Korea as well as funds transfer companies such as Moneygram and Western Union. There is also a growing pipeline of businesses that are interested in using Ripple.
Also Read: Ripple’s General Counsel Exits Startup
Ripple is well and truly on its way to replacing the current system of large-scale monetary exchanges used by banks, i.e., SWIFT and make transactions faster and cheaper on a global scale. The fact that it has begun to be widely accepted by esteemed banks and financial institutions shows that it is a reliable resource worth investing in.
With that said, Ripple XRP can only be purchased from online currency exchanges. It is highly advisable to stay wary and away from such platforms as far as possible.
Any website or platform that claims to be able to mine XRP is a scam.