This article was originally published in Medium. It is reposted here with permission from the author.

Ripple Overview

Ripple is a cryptocurrency platform for payment systems, which focusses on transactions without chargebacks to proceed payments directly, secure and very fast. The protocol supports cryptocurrencies, tokens and many other objects (for example points, frequent flyers miles and minutes of mobile communications).

The cryptocurrency of the Ripple network is XRP and one of the main features of Ripple is the Consensus ledger, more about this can be found in the whitepaper.

Ripple’s Founders

Exchange network and payment protocol have been created by Ripple Labs, the US company based in San Francisco and the CEO is Brad Garlinghouse.

The Solution

The fundamental difference between Ripple and Bitcoin is that, while Bitcoin was created as an alternative payment system between users without the need of a third party, Ripple was founded as an alternative way of payment for the banking system, (although to be fair it is still possible for users to use XRP currency for payments too).


Advantages of Ripple compared to BTC and ETH — include Ripple’s transaction time, being only 4 seconds. The times for ETH and BTC are usually 2 minutes and 1 hour.

Another advantage, or better to say another difference, is that Ripple is not using the standard blockchain, instead, transactions are confirmed by the consensus of network participants, which is a big plus for many banks and payment networks in terms of confidence.

Next good thing is that payments using Ripple can be made in arbitrary asset (fiat currency, cryptocurrency, token, commodity, Amex points, etc.).

Potentially Ripple can create a network of banks and financial institutions ( = “the Internet of value”), which could dramatically lower the costs of payments and decrease the time of payment settlements from current 3–5 days (banks) to seconds.

Next big advantage is that Ripple — compared to Bitcoin — is willing to cooperate with traditional finance, and hence is generally better accepted by global financial institutions.

Finally, Ripple has already a working platform, which reflects in its valuation.

In terms of speed, BTC handles around 7 tps, ETH — 15 tps, and XRP — up to 1500 tps (transactions per second).


Disadvantages of Ripple compared to Monero and Zcash is the fact that Ripple is not anonymous.

Compared to Ethereum and similar platforms, Ripple does not support smart contracts.

There are already XRP 100 billion (there is no mining), and currently, we have approximately 40 billion in circulation. Supply of XRP is largely controlled by Ripple (a single company), which can release up to XRP 1 billion a month, which seems to me as a not very “decentralised” solution at all.

Another subtle point is the commission model and the deflationary model of XRP (which is not a disadvantage by itself; it depends on your point of view).

“To protect the XRP Ledger from being disrupted by spam and denial-of-service attacks, each transaction must destroy a small amount of XRP. This transaction cost is designed to increase along with the load on the network, making it very expensive to deliberately or inadvertently overload the network. … The current minimum transaction cost required by the network for a standard transaction is 0.00001 XRP (10 drops). It sometimes increases due to higher than usual load.”

So, for each transaction user usually pays XRP 0.00001 what is not really a commission in my view, but more an anti-spam measure for the system payments are burnt after, leading to a decrease of total coins. In such a way the model is deflationary (total amount of coins will decrease over time, meaning the price of a coin will increase). Also, it is a sort of anti-attack measure, as loads of transactions during an attack will cost a lot.

Finally, I see a slight disconnection between the interests of the parties: Ripple as a company wants probably higher XRP price, but users and software developers would appreciate lower price!

Funds Raised

Ripple can get money by unlocking XPR it holds (currently XRP 60 billion). The most important event happened in 2016, when Ripple raised $55 million from very solid organisations, including Google.

Price Impact

The price of XRP was volatile in both BTC and USD in the last year, and it is currently (13:30 UTC 18/11/18) worth $0.510072 or BTC 0.00009126 (=1/10958) with a market cap of just over $20 billion and circulation supply of approximately XRP 40 billion, which places XRP as the 2nd biggest crypto as of today, the 18th of November 2018. Three days ago, on Nov, 15th of 2018, XRP has overtaken ETH by market cap, which is now the 3rd largest crypto.

There are many potential ways to value Ripple, both as a company and as XRP currency itself.

One alternative for the company valuation, is similar to, for example to the valuation of Facebook to project the future annual revenue by geography/type using Ripple revenue build (most of them would be payments for software for banks), then using inputs (costs, margins) from the historical and projected financial statements, value them, discount and add to the residual value.

Another way is to take an amount of XRP, that Ripple holds and estimate it based on market value. In this case, we are coming at around $28 billion as of 11:30 UTC November, 19th 2018.

There are many ways in-between, but, in my opinion, we would need to use several valuation techniques when working with blockchain companies, and the traditional methods of valuation should be adjusted. The exact methodology of crypto valuation is out of the scope of this article.

Finally, the crypto market is heavily connected with behavioural finance, and we need to take into consideration behaviour (and behavioural biases), both when actively trading and passively investing in cryptocurrencies and in digital assets in general.

The Competition

Ripple has no direct competitors in crypto space, as it is fundamentally different from the most cryptocurrencies: it’s more centralised, totally currency agnostic and uses probabilistic voting (and not PoW) to confirm transactions. Interestingly, SWIFT could be considered a competitor.

Ripple Alternatives

There are no direct options, but investors, that consider investment in XRP, might pay attention to BTC.

XRP is, in my opinion, a solid long-term HODL investment. XRP is generally less risky than the majority of cryptocurrencies, as it is backed by real projects and strong ties in the traditional world banking system.

On the other hand, XRP is not a “classical” cryptocurrency, it has not a fully decentralised nature and it’s created with a different philosophy than most cryptos.

Finally, after the recent run, it might be technically overbought.

In my (HODL) view, XRP is a good investment to add to other crypto assets, as XRP covers a totally different angle and has different drivers of returns, hence adding XRP to a portfolio of traditional, alternative and crypto investments can be a good idea also in terms of diversification.

Information about Demetrios Zamboglou

Demetrios is a multi-award winning executive and academic financial market specialist, holding a Fellow Charter Membership from the Chartered Institute of Securities and Investments (CISI) and he is the recipient of the European Commission (2017), Microsoft Research Grant (2016), the Amazon Web Services Award (2014) and the 30 under 30 prize by Square Mile Magazine in 2011. Dr Zamboglou obtained his MEng in Computer Systems Engineering with concentration in Formula Engines from Lancaster University, and his MSc from CASS Business School, where he specialised in IPOs and financial markets. Dr Zamboglou holds a PhD from King’s College London in Behavioural Finance. Demetrios Zamboglou is the Chief Business Developer Officer of Lykke AG, a financial technology company, responsible for the Firm’s International Business. Dr. Zamboglou joined the Firm in November 2016 from FXTM, where he led the firm’s UK operations. Prior to that, he held progressively senior roles as a corporate executive, risk manager, and quantitative analyst. Before Lykke, Dr. Zamboglou held Executive leadership roles at FXTM, zebrafx and FOREX CLUB specialising in issues including business development, strategy, risk management, market-making, and compliance.