Ripples chief cryptographer,David Schwartz, explains it like this:
OpenCoin recently picked up a round of fundingfrom Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures and the Bitcoin Opportunity Fund.
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According to isOpenCoin, the company behind ripple, the currency addresses the need to keep money flowing freely. A company blog post titledRipple and the Purpose of Moneygives a brief history of money and its transportability, and points to the frustration of having banks and other institutions impede the transfer of funds with transaction fees and processing delays. The goal of Ripple, it says, is to build on the decentralized digital currency approach set by bitcoin and do for money what the internet did for all other forms of information.
Rippleis the name for both a digital currency (XRP) and an open payment network within which that currency is transferred. It is a distributed, open-source payments system thats still in beta. The goal of the ripple system, according to its website, is to enable people to break free of the walled gardens of financial networks ie, credit cards, banks, PayPal and other institutions that restrict access with fees, charges for currency exchanges and processing delays.
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In many ways, yes. Like Bitcoin, Ripples XRP unit is a digital form of currency based on mathematical formulae and has a limited number of units that can ultimately be mined. Both forms of currency can be transferred from account to account (peer-to-peer, or P2P) without the need for any intervening third party. And both provide digital security to guard against the possibility of counterfeit coins.
Payment systems today are where email was in the early 80s. Every provider built their own system for their customers and if people used different systems they couldnt easily interact with each other. Ripple is designed to connect different payment systems together.
The company plans toultimately create 100 billion ripples. Half of those are to be released for circulation, while the company plans to retain the other half.
Schwartz also anticipates the possibility of seeing big companies lose their control over the flow of other peoples money just as theyve lost control over the flow of information.
(Note: OpenCoin is not to be confused , which is developing an open-source version of an electronic cash system developed byDavid Chaum.)
Ripple positions itself as a complement to, rather than a competitor with, Bitcoin. In fact, the site has a page dedicated toRipple for bitcoiners.
The company building the Ripple protocol,OpenCoin, was co-founded by CEO Chris Larsen and CTO Jed McCaleb. McCaleb is well-grounded in digital currency, coming fromMt. Gox,which currently handles the majority of the worlds bitcoin trades. Larsen previously co-founded and led the online financial companyE-LOAN. Other developers on Ripples team also have a bitcoin background.
Ripple doesnt collect transaction fees the way PayPal, banks and credit cards do. However, it does take a small portion of a ripple (equivalent to ~1/1000th of a cent) from each transaction. That amount is destroyed rather than retained. The deduction is meant as to safeguard against the system being swamped by any one individual who might try to put through millions of transactions at once.
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Another advantage of using peer-to-peer is the absence of a central target or point of failure in the system, Ripples backers note.
According toBitcoin Charts, ripples were trading at around 115 per $1 (US) on May 17, 2013. (In early April, the price wasabout 1,000 per $1, so the currency has appreciated.)
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Ripple will open up many more gateways for bitcoin users and easier ways to bridge bitcoin with the mainstream world of finance, saysStephen Thomas, a senior developer for the ripple protocol and a bitcoin advocate.
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May 17, 2013 at 11:00 UTC Updated Oct 18, 2013 at 18:33 UTC
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The Ripple network is designed to allow the seamless transfer of any form of currency, whether dollars, euros, pounds, yen or bitcoins.
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10 things you need to know about Ripple
What is a Decentralized Application?
In addition to giving Bitcoin more ways to connect with those using other forms of currency, Ripple promises expedited transactions and increased stability. As a distributed network, Ripple does not depend on a single company to manage and secure the transaction database. Consequently, there is no waiting on block confirmations, and transaction confirmations can go through the network quickly.