Distributed currency exchange

However, if payments are made within the network, these liabilities must be adjusted and, of course, saved. However, it is not possible for the system to enforce these liabilities. Participants must therefore indicate to what extent they have the confidence of other users that they will honour their obligations in the desired currency and the corresponding amount on request. If there is no direct trust relationship between the sender and receiver, the network determines a user path on which the corresponding trust is guaranteed in the individual intermediate stations so that the payment can be executed. All payments are cleared by the register and payments can be made by the different parties outside the system.

This Bitcoin Profit principle

In the distributed currency exchange, the IOUs of one currency can be exchanged with IOUs in Bitcoin Profit other currencies or other gateways. Here, too, the system automatically searches for a trust path if no other connection between the senders and the receivers is possible. However, the creators of the system reject a kind of central bank through which the entire currency is controlled.

This principle sounds somewhat complicated at first glance, but in practice it is quite simple: anyone planning a trip abroad does not have to worry about exchanging euros for the national currency in advance or accept expensive fees for withdrawals from their account in the destination country. Instead, they can purchase sufficient Ripple Coins before the trip and have them paid out in the respective local currency in the country of destination. Users of the Ripple network can therefore trade foreign exchange without going through banks. The fast transaction options also make Ripple extremely popular with banks.

Ripple Coins: the currency XRP

Ripple coins perform two important functions within the network: On the one hand, the currency prevents network spam, and on the other hand, the ripple coins can serve as a bridge currency for trading with other real and virtual currencies. This prevents network spam from consuming a small amount of ripple coins in all transactions, which the system then destroys.

A Ripple Mining or Cloud Mining, as it is known from the Bitcoins, is not intended. From the very beginning, the creators of Ripple had produced 100 billion Ripple Coins and transferred 80 billion to Ripple Labs. The company intends to pass on 55 billion ripple coins to the network participants. For example, a total of 200 million ripple coins were distributed in this way in 2013. By 2017, around 7.2 billion ripple coins had already been distributed to various projects. The coins are managed primarily with the online wallet developed by Ripple. There are other clients that are open source but unofficial. These make it possible to turn your own computer into a ripple hardware wallet and manage the currency on it.