Introduced in 2012, Ripple is a currency exchange and real-time gross settlement system.
In Ripple, the payments are settled without any waiting as opposed to traditional settlement networks, where it can take days for settlement.
How It’s Revolutionizing Cross-Border Payments
This system is considered similar to an old traditional money transfer mechanism known as Hawala.
This system works by making use of agents who take the money and a password from the sender, then contact the payee’s agent and instruct them to release funds to the person who can provide the password.
The payee then contacts the local agent, tells them the password and collects the funds.
This is just a very simple analogy; the actual protocol is rather complex but principally it is the same.
The Ripple network is composed of various nodes that can perform different functions based on their type: User nodes: These nodes use in payment transactions and can pay or receive payments.
Validator nodes: These nodes participate in the consensus mechanism.
Why This Matters for Blockchain Technology
Each server maintains a set of unique nodes, which it needs to query while achieving consensus.
Nodes in the Unique Node List (UNL) are trusted by the server involved in the consensus mechanism and will accept votes only from this list of unique nodes.
Ripple is sometimes not considered a truly decentralized network as there are network operators and regulators involved.
However, it can be considered decentralized due to the fact that anyone can become part of the network by running a validator node.
Key Points to Remember
- Ripple Introduced in 2012, Ripple is a currency exchange and real-time gross settlement system.
- In Ripple, the payments are settled without any waiting as opposed to traditional settlement networks, where it can take days for settlement.
- This system is considered similar to an old traditional money transfer mechanism known as Hawala.
- This system works by making use of agents who take the money and a password from the sender, then contact the payee’s agent and instruct them to release funds to the person who can provide the password.
Going Deeper: Advanced Concepts
Moreover, the consensus process is also decentralized because any changes proposed to make on the ledger have to be decided by following a scheme of super majority voting.
However, this is a hot topic among researchers and enthusiasts and there are arguments against and in favor of each school of thought.
There are some discussions online that readers can refer to for further exploration of these ideas.
You can find these online discussions at the following links: https://www.quora.com/Why-is-Ripple-centralized https://thenextweb.com/hardfork/2018/02/06/ripple-report-bitmex-centralized/ https://www.reddit.com/r/Ripple/comments/6c8j7b/is_ripple_centralized_and_other_related_questions/?st=jewkor7b&sh=e39bc635 Ripple maintains a globally distributed ledger of all transactions that are governed by a novel low-latency consensus algorithm called Ripple Protocol Consensus Algorithm (RPCA).
Conclusion
Ripple represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.