While it’s been obvious for some time that one would be able to use Ripple to process the transaction between the two major payment networks, how can it be implemented in a cost effective manner? Well there are many reasons to go in this direction. One of these reasons is that there is no capital requirements. So you are able to move large amounts of money very quickly.
The second reason is that the Ripple protocol is able to perform settlement based on changes in the exchange rate between two major currencies. So if you have American dollars and Canadian dollars then the Ripple payment network will automatically adjust the rate based on a given currency pair. The way that this is accomplished is to compute the rate of exchange for the two currencies to come up with a new value that is a weighted average of these currencies.
As you may not know, a distributed ledger is the backbone of a company’s payment system. This ledger is used to store all the information that is relevant to a particular financial transaction and allow anyone to review and see if any unauthorized alteration was made to the financial information. Of course, these distributed ledgers also make it easy to compare the whole ledger to see where there are any discrepancies.
Of course this can also be applied to the exchange of a company’s payment information between the two major currencies and then providing a mechanism to clear the same on a global basis. The end result is that anyone involved in the transaction will have an accurate sense of what has been transferred and in what amount. Quickex.io
In order to help individuals move and transact money, the two major payment networks have developed a method that lets them transfer funds very quickly without needing a third party like a financial institution. The only requirement is that the Ripple network must be working.
It is important to note that not everyone is willing to use the Bitcoin network as their source of new investment funds. For those who are, they are able to take advantage of the greater liquidity and low-cost method of paying for goods and services. They are also able to use the Bitcoin network to transfer money between banks without having to pay a higher fee than the other major networks charge.
This allows the independent players in the market place to continue functioning as they have. They are able to trade at a more profitable price and they do not have to worry about holding up the pace of transactions because the transactions happen as quickly as possible.
This is a better alternative than using the Bitcoin protocol, which slows down the process of transferring money from one party to another. These problems could cause delays. Thus, the two networks are complementing each other in order to speed up the flow of money across the world.
As far as practicality is concerned, the Ripple protocol will perform like any other software program that you use in your day to day life. You just download it onto your computer and it automatically starts working. Because it is open source it has nothing to hide and nobody has to look over your shoulder while you conduct a transaction.
The most common examples are to allow merchants to accept payments in US dollars, Canadian dollars or even Australian dollars. But they are also able to go a step further and offer their customers the ability to pay in any currency that they choose. Quickex.io
How is this different from a currency exchange that has different rules based on the country you are operating in? Basically, the Ripple network is a series of links that link one account to another. When a payment is made, the person who initiated the transaction needs to pay a small fee for the process.
Then the money is sent from the recipient’s account to the receiving account, which in turn pays the merchant’s account. In this way the processing fee is spread out across the various participants in the payment process. Therefore, Ripple offers both Bitcoin and Ripple transactions at the same time.