There are a variety of typologies in the cryptocurrency industry. We have decentralized and centralized cryptocurrencies, with Ripples XRP being an example of the latter. Shouldn’t cryptocurrencies be born for the purpose of decentralization? Sure, but let’s look at Ripple’s purpose to understand its centralization.
What is Ripple for?
Ripple was developed in 2012 by the US technology company Ripple Blockchain Labs Inc. and is a centralized cryptocurrency that is based on a real-time gross settlement system (RTGS), a money exchange and transfer network.
Ripple’s goal is to be a financial intermediary more than anything. In other words, since its inception, the goal has been to rationalize the activities of banks and financial institutions around the world.
Or, whatever, tries to provide secure, instant, and almost free global financial transactions of any size with no transaction fees. Ripple’s XRP thus functions both as a cryptocurrency and as a digital payment network for financial transactions.
Ripple’s infrastructure is designed to make transactions faster and more convenient for banks. This makes it a more popular cryptocurrency option for larger financial institutions.
When we understand this, we understand why it is valid to be centralized. In short, Ripple is nothing more than an alternative capitalized cryptocurrency on the market that is meant to be used as a financial payment broker or some kind of bank SWIFT.
Does XRP do the job? Total
Cryptocurrencies were created to give people independence over their money, and blockchain technology to make the process more transparent. However, they are also said to facilitate large money transfers by reducing commissions and waiting times. Ripple is concentrated in the latter.
Thus, Ripple is a technological platform for profit and also a cryptocurrency (XRP) and attracts exactly many to be centralized. This is one of the reasons why many financial institutions prefer it. It must therefore be taken into account that Ripple fulfills its purpose.
As mentioned earlier, the goal is to ensure fast and unimpeded transactions, and the blockchain should make it easier to achieve that goal. An example of a company that works with Ripples XRP is Bitstamp.
Unlike many other ways to make profits digitally, Ripple is not managed using the usual mining method, but directly by maintaining the network using consensus algorithms that make the process easier by speeding up the transaction.