Ripple is a completely new type of cryptocurrency.
Rather than exchanging Ripple directly for services and goods, just like a conventional currency, the Ripple money is a medium for converting any money instantly into any other person, without relying on a central exchange. Due to this special architecture, there are no retailers that directly take XRP, but Ripple does have the capacity to permit for more trade in several existing monies.
As opposed to relying on proof-of- work or proof-of- stake to confirm transactions, Ripple employs a special consensus system. In a consensus system, regardless of what the vast majority of computers on the network see happen is exactly what gets listed in the ledger. This system isn’t perfectly reliable as it can be compromised by system lag or malicious users, but if an unreliable outcome is reported, the machine was made to reject it and start again, maintaining the safety of the system in the price of a small delay in service.
Ripple’s most striking feature;
Ripple supports token representations of virtually every currency, such as fiat monies, like dollars and Yen, and cryptocurrencies, like Bitcoins, and technical currencies such as air miles and reward points. As these tokens are basically electronic IOUs, but this system requires that consumers trust each other to really pay the money they owe.
Users can define who they trust on the community and exactly how much of each kind of money they trust them to deal with. When a user attempts a trade, Ripple then works to discover a route between the parties where every step is a connection between two people who trust each other.
To find non-Ripple currencies on the Ripple network, users trust their real-world funds to particular users called Gateways. Gateways work quite similarly to PayPal: you give U.S. dollars to PayPal, and then the provider acts as an intermediary to permit you to send your cash on the net. The difference is that PayPal is a centralized broker, charges a substantial commission and is much less flexible in terms of what monies you may trade in.
Ripple has already gained a substantial following. Due to its design, Ripple will not fully replace analog monies, but the payment system that supports it has the capability to alter the way business is done worldwide.