Introduction to the Ripple Whitepaper.
The Ripple Network is a network for global financial transactions. Ripple has been created in 2012 by Ripple Labs Inc. and their mission is to enable banks to transfer money to each other in a faster and more secure way. To enable these fast transactions Ripple has created the cryptocurrency XRP, which runs on the Riiple blockchain, called thethe Ripple Consensus Protocol Ledger (XRPL). The XRPL works as a distributed economic system that not only tracks transactions and accounting information, but also offers exchange services for a large number of currency pairs. Ripple presents the XRPL as an open source distributed ledger that can process financial transactions in real time. These transactions are secured and verified by the network participants and a consensus mechanism.
Read more about Ripple White Paper in the abstract below:
While several consensus algorithms exist for the Byzantine Generals Problem, specifically as it pertains to distributed payment systems, many suffer from high latency induced by the requirement that all nodes within the network communicate synchronously.
In this work, we present a novel consensus algorithm that circumvents this requirement by utilizing collectively-trusted subnetworks within the larger network. We show that the “trust” required of these subnetworks is in fact minimal and can be further reduced with principled choice of the member nodes.
In addition, we show that minimal connectivity is required to maintain agreement throughout the whole network. The result is a low-latency consensus algorithm which still maintains robustness in the face of Byzantine failures. We present this algorithm in its embodiment in the Ripple Protocol.
ripple consensus whitepaperIn 2012, Ripple Labs, a US-based technology company, developed Ripple’s blockchain infrastructure as a response to Bitcoin technology. The result was RippleNet, a payment network designed to revolutionize cross-border transactions for banks, offering speed, cost-effectiveness, and efficiency. Serving as a real-time gross settlement system, currency exchange, and remittance network, RippleNet operates on the XRP ledger (XRPL), utilizing the XRP cryptocurrency for facilitating payments.
RippleNet serves as a viable alternative to the SWIFT network, aiming to expedite cross-border fund transfers through blockchain technology. By eliminating the multiple layers involved in SWIFT operations, RippleNet enables end-to-end transfers in a matter of minutes, ensuring transaction transparency and near-instantaneous settlement status.
Initially, RippleNet consisted of three distinct offerings:
1. xCurrent: A bank-focused payment system.
2. xRapid: A liquidity provider utilizing XRP.
3. xVia: An application programming service (API) that allows customers to integrate and utilize xCurrent and xRapid.
In late 2019, Ripple unified these offerings under the same umbrella of RippleNet, promoting the usage of XRP as a means of sending funds.
Ripple leverages the interledger standard, a blockchain protocol facilitating payments across different networks, connecting the ledgers of multiple banks while eliminating intermediaries and central control. Similar to the internet’s TCP/IP protocol, which enables communication between different computers and systems, the interledger fosters seamless communication among interconnected ledgers, reducing costs and streamlining cross-border transactions.
Participating ledgers within the RippleNet can either use financial institutions’ networks or become part of a network of trusted nodes. When initiating a payment transaction, RippleNet automatically finds the fastest route to transfer value between sender and recipient banks, calculating the payment costs. This process involves compliance assessments and account verification checks performed by each bank through existing message types like SWIFT FIN or ISO 20020, pre-validating the payment and facilitating a smooth transfer.
During the transaction process, funds are securely locked in the participating banks’ ledgers, acting as escrow accounts until the transaction is executed, or it fails if specific criteria are unmet. At that point, Ripple shares the transaction outcome with the respective bank, which updates its ledgers accordingly. The entire process ensures secure, efficient, and transparent cross-border transactions, enhancing the financial landscape and benefiting banks and their customers worldwide.