Ripple is a technology that acts as both a cryptocurrency and a digital payment network for financial transactions. It was first released in 2012 and was co-founded by Chris Larsen and Jed McCaleb. Ripple's main process is a payment settlement asset exchange and remittance system, similar to the SWIFT system for international money and security transfers, which is used by banks and financial middlemen dealing across currencies.
Ripple operates on an open-source and peer-to-peer decentralized platform that allows for a seamless transfer of money in any form, whether it's dollars, yen, euros, or cryptocurrencies, like litecoin or bitcoin. Ripple is a global payments network and counts major banks and financial services amongst its customers. XRP is used in its products to facilitate quick conversion between different currencies.
To understand how the system works, consider a money transfer structure where the two parties on either end of the transaction use their preferred middlemen to receive the money. In effect, Ripple functions as a digital hawala service. Hawala is an informal method of transferring money, usually across borders, without any physical money actually moving.
The Ripple network does not run with a proof-of-work (PoW) system like bitcoin or a proof-of-stake (PoS) system like Nxt. Instead, transactions rely on a consensus protocol in order to validate account balances and transactions on the system. The consensus works to improve the integrity of the system by preventing double-spending.
Ripple improves on some of the drawbacks attributed to traditional banks. Transactions are settled within seconds on the Ripple network (even though the platform handles millions of transactions frequently). The value of Ripple is highly fluctuating, since late 2017, it has fluctuated from $0.0028 USD to over $3.84 USD.