Finweek English Edition - - BUSINESS -

avoids the ACH, banks or credit-card net­works, it has none of the as­so­ci­ated costs. Did I men­tion that it’s also not for profit and open-source? Any­one can use it and any­one can build on top of it. Un­like Bit­coin, there is no money to be made from min­ing for new bitcoins, but there is a fi­nite num­ber that has been made.

Rip­ple is a peer-to-peer (think Nap­ster) net­work where the in­ter­con­nected servers run a shared copy of the ledger. No one owns it. The ledger is kept up to date by a tech­ni­cal process called con­sen­sus, whereby all servers in the net­work ver­ify and agree on the cor­rect view of the data­base in the pro­cess­ing, al­low­ing only le­git­i­mate trans­ac­tions. The ledger tracks ac­count bal­ances not peo­ple, so it’s su­per easy to move money from one ac­count to an­other. Money moves across the world in the time it takes to up­date the ledger – lit­er­ally a few sec­onds. Rip­ple has its own net­work cur­rency called Rip­ples ( XRP) – es­sen­tially the first app built on top of the core tech­nol­ogy. Since Rip­ple works off ac­counts not peo­ple, it means your wallet has to be treated l i ke cash. Of course, Rip­ple as a sys­tem has to work within the over­all banki ng sys­tem via gate­ways: th­ese al low t he entr y and ex­is­tence of fiat money. Any­one can build a gate­way as long as he/she com­plies with lo­cal laws, and gate­ways will charge a fee that will prob­a­bly be close to what they cur­rently charge.

A 100bn rip­ples have been made and no more will ever be. The min­i­mal trans­ac­tion cost for each trans­ac­tion doesn’t go to any­one, it’s just de­stroyed within the net­work – the ef­fect of which is to dis­trib­ute them evenly to all ac­count hold­ers in pro­por­tion to their net­work. Un­like to­day’s sys­tem where the trans­ac­tion costs go to make prof­its for the banks, the Rip­ple costs are there purely to pre­vent some­one send­ing mil­lions of trans­ac­tions and swamp­ing the sys­tem.

You can send Rip­ples to any other Rip­ple ac­count with no counter-party risk, but to send any cur­rency, in­clud­ing Bitcoins to some­one else, you need to ex­tend “trust” to that per­son or gate­way. The amount of trust you ex­tended is set per trans­ac­tion or busi­ness and is tracked by Rip­ple. Your trusted ac­counts send you an IOU no larger than the amount of trust you’ve ex­tended to t hem. By e x t en­sion, Rip­ple trans­ac­tions are safe and ir­re­versible – this gets around the prob­lem with many in­ter­na­tional trans­ac­tions where the cus­tomer dis­putes the trans­ac­tion af­ter goods have been de­liv­ered and charge-backs oc­cur. Sim­i­lar to a Pub­lic Key In­fra­struc­ture, Wallet IDs are pub­lic to re­ceive money (mine is rDXx3WXLHJJM4YqJm­nCZftzb­bgTDa5ErBr), but only you know the Pri­vate key to ac­cess the wallet and make pay­ments.

For a busi­ness trad­ing in­ter­na­tion­ally, Rip­ple re­moves many is­sues: it re­duces costs, makes trans­fers in­stant and ir­rev­o­ca­ble, and au­to­mat­i­cally f inds the best price when con­vert­ing cur­ren­cies in or out of the net­work. If you’re do­ing any busi­ness in­ter­na­tion­ally, it’s some­thing you should con­sider, se­ri­ously. Visit Rip­ for more, its early days but this stuff will change the world and your life.

If you’d like to test the sys­tem, send me a few XRP, and I’ll send them back to you. Less t rans­ac­tion fees of $ 0.0001 of course…

If you have a ques­tion/is­sue you’ d like to dis­cuss with us, then send an email to f in­week@val­u­a­

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