As of the first week of March 2018, XRP is the third largest coin by market capitalization. The Ripple protocol enables the instant and direct transfer of money between two parties. Since 2013, the protocol has been adopted by an increasing number of financial institutions to ” an alternative remittance option” to consumers. In February 2015, Fidor Bank announced they would be using the Ripple protocol to implement a new real-time international money transfer network, and in late April 2015, it was announced that Western Union was planning to “experiment” with Ripple. On August 19, 2016, SBI Ripple Asia announced the creation of a Japanese consortium of banks in a new network that will use Ripple’s technology for payments and settlement. The consortium was officially launched on October 25, 2016 with 42 member banks.
On September 23, 2016, Ripple announced the creation of the first interbank group for global payments based on distributed financial technology. The protocol allows banks and non-bank financial services companies to incorporate the Ripple protocol into their own systems, and therefore allow their customers to use the service. For XRP-denominated transactions Ripple can make use of its internal ledger, while for payments denominated in other assets, the Ripple ledger only records the amounts owed, with assets represented as debt obligations. A gateway is any person or organization that enables users to put money into and take money out of Ripple’s liquidity pool. A gateway accepts currency deposits from users and issues balances into Ripple’s distributed ledger. Furthermore, gateways redeem ledger balances against the deposits they hold when currency is withdrawn. Ripple gateway that holds their deposit.
This manual creation of a trustline indicates to the Ripple network that the user is comfortable with the gateway’s counterparty risk. Furthermore, the user must put a quantitative limit on this trust and create a similar limit for each currency on deposit at that gateway. Similar to reasons during the Free Banking Era in the United States, the value of a currency can vary significantly depending on a gateway’s creditworthiness. Ripple relies on a common shared ledger, which is a distributed database storing information about all Ripple accounts. In early 2014, a rival company called the Stellar Foundation experienced a network crash.