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Introduction to Ripple for Bitcoiners

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Target Feature Set

This page describes Ripple target feature set for after beta.

Ripple is a Payment System

Like Bitcoin:

  • Ripple is an open source, distributed peer-to-peer payment network
  • Ripple transactions are irreversible, sent over the Internet, and counterfeit proof
  • Ripple uses the same underlying cryptography as Bitcoin
  • Ripple has multi-signature support
  • Ripple has low to no transaction fees
  • Ripple servers can be run by anyone

Unlike Bitcoin:

  • Ripple can send any currency
  • Ripple can automatically exchange currencies
  • Ripple transactions are fully confirmed in seconds
  • Ripple allows nicknames and gravatar icons for accounts
  • Ripple's reference client is a Firefox and Chrome add on
  • Ripple has no block chain download, clients are ready in seconds
  • Ripple has no mining or direct monetary reward for running a server
  • Ripple has no currency risk as people can hold whatever fiat they want
  • Ripple solves the double spending problem with consensus instead of proof-of-work

Ripple's Target Audience

Unlike Bitcoin, Ripple is not trying to convince people to switch currencies. Ripple is targeting people wanting to send fiat:

  • Cheaply
    Transactions are free-ish. Other fiat payment systems charge a few percent plus a transaction fee. Ripple transactions of any amount cost less than $0.01.
  • Privately
    Ripple provides privacy for consumers by removing the need to provide the merchant an e-mail, a name, or any other information.
  • Securely
    Using Ripple is just like sending cash. After a transaction is over, the receiver can't rack up additional charges. With credit card and check payments the payer must give out personal information, which can in turn lead to fraud.
  • Reliably
    Since Ripple transactions are irreversible, merchants have the security they need to conduct business with anyone.
  • Internationally
    Borderless payments at the best cross-currency rate make Ripple payments great for merchants and consumers.

Bitcoin and Ripple Work Great Together

  • Ripple's built in exchange allows you to easily buy and sell Bitcoin using any other currency on the Ripple network.
  • Cross-currency payments allow you to pay merchants with Bitcoin and have them receive the currency they desire.
  • Outbound Bitcoin bridges in Ripple allow you to instantly pay in the currency of your choice to send bitcoins to any Bitcoin address.
  • Your Ripple wallet automatically converts currencies whenever your payment destination is a Bitcoin address.

Ripple's Currency

Ripple has its own internal currency called XRP, also known as "ripples". XRP can be sent from any Ripple account to any other Ripple account.

Ripples protect the network

Ripples are used to protect the network from abuse. Using network resources like having an account, an open offer, or an open trust line requires having XRP on reserve. All transaction fees are paid in XRP which is subsequently destroyed.


The Ripple founders created the initial Ripple ledger with 100 billion XRP. The founders gifted a for profit company called Ripple Labs 80 billion XRP. Ripple Labs intends to give away over 50 billion XRP. The remainder will be used to fund Ripple Labs operations, which include contributing code to the open source network and promoting the network.

Even if Ripple Labs should close, the Ripple network will continue. Because Ripple is a P2P network, it is not operated by Ripple Labs but by the combined efforts of all computers running the Ripple server software. The Ripple network cannot be shut down without shutting down the entire Internet.

More Ripple Features

  • No mining:
    • No 51% attack vulnerability
    • No one transaction blocks
    • No six confirmation delay
    • No miners, mining pools, mining equipment, or mining equipment manufacturers
  • Micro proof
    • Ripple can verify the state of any account or the validity of any transaction in very few bytes. This obviates the need to download a block chain.
  • Deterministic wallets
    • Ripple accounts can have master and regular pass phrases.
      Use the regular pass phrase for day-to-day transactions. If it is ever compromised, use the master pass phrase to change the regular pass phrase.
    • Wallet contacts and transaction annotations are stored in encrypted form in the Ripple network.
    • Disintermediate the need for 3rd party online wallet providers.

Fiat Currencies

For fiat currencies, Ripple allows parties to have balances and trust limits between them. To make this easy to conceptualize, Ripple uses the IOU metaphor.

The IOU metaphor:

  • Anyone can create their own IOUs.
    You can't create someone else's IOUs as you can't forge their signature.
  • You can choose which IOUs you accept and in what amount.
    No one can force you to take their IOUs.
  • The issuer of an IOU has no obligation to settle with you if you don't have a settlement agreement.
    Only accept IOUs you believe will have future value.
  • If you hold someone else's IOUs and they default, you are out that amount of value.
    Even the most trustworthy people may default due to death, family emergency, or other circumstances beyond their control.
  • You can pay anyone in IOUs that they accept.
  • You must accept your own IOUs as payment.
    An IOU is not a loan but a record of the current balance due. Ripple manages balances and limits.


Loans between family, friends, and strangers can lead to trouble. It is recommended to only extend trust for IOUs to trustworthy businesses like a Bank or Gateway.

A Gateway is a business that professionally issues IOUs, and a bridge between the Ripple network and the traditional financial system. Gateways typically allow customers to wire, ACH, and SEPA funds to and from the Gateway into and out of the Ripple network. We expect all major Bitcoin exchanges to also operate as Ripple Gateways.

All Gateway IOUs are backed by cash as Gateways do not extend credit. Gateways require a cash deposit first in order to issue an equivalent IOU. It is possible for a Gateway to operate as a fractional reserve. To avoid this, check the Gateway's terms of service before opening an account.


Anonymity is not a design goal for Ripple. However, Ripple has features to provide privacy.

No association

Like Bitcoin, if you do not tell anyone your address, people will not know that the address is associated with you. People can choose to have a public address for sending and receiving payments and a private address for anonymously holding funds.

Proxied payments

Payment can be proxied via a Gateway. This means that when someone wants to pay an address, the payment is proxied to the Gateway, which credits the payee's Gateway account. This effectively anonymises the payment to the other party. If authorities need access to transaction records, they can subpoena the Gateway.

Learn More

This has been a brief introduction to Ripple.

Try the Ripple client at:

Learn more about Ripple at: