Ripple (monetary system)
Ripple is a protocol for a payment network. In its developed form, the Ripple network is intended to be a peer-to-peer distributed social network service with a monetary honour system based on trust that already exists between people in real-world social networks; this form is financial capital backed completely by social capital. However, it is currently not substantially implemented and is currently closed source and centralized.[1]
Ripple uses the Ripple currency, XRP (sometimes called ripples), which also acts to stop network spam (a small amount of XRP must be used in each transaction, and this XRP is destroyed after use). The creators of ripple created the network with 100 billion XRP, and gifted a for-profit company, Opencoin, with 80 billion XRP. Opencoin intends to distribute 50 billion XRP to users of the network, and will keep the rest, in the hope that this XRP will grow in value over time.[2]
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Explanation [edit]
Most modern monetary systems work on trust, for example, cash and bonds are government obligations, Ripple attempts to apply this idea of trust to an online currency by using consensus, where the amount of money a particular ripple user has is determined by the amount which the others in the system agree on.
To try to avoid the problems associated with having a central bank (which acts as a single point of failure and a single point from which someone could control the entire currency), Ripple plans to use a decentralized system.
See also [edit]
- Alternative currency
- Bitcoin
- Friend-to-friend
- Hawala
- Local exchange trading system
- Peer-to-peer lending
- Ven (currency)
References [edit]
- ^ WOT for WAT: Spinning the web of trust for peer-to-peer barter relationships, K Saito – IEICE Transactions on Communications, 2005 – IEICE
- ^ Introduction to Ripple for Bitcoiners, 12-05-2013
