Month: July 2018

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Ripple

What Is Ripple?

Ripple is the fastest and most scalable digital asset, enabling real-time global payments anywhere in the world. Ripple is a cryptocurrency that allows banks and other institutions to send payments on a global scale without the usual friction of exchange rates, red tape, etc.

The Ripple cryptocurrency has a global network that’s growing by leaps and bounds every single day. It works through the technology of blockchain. Ripple aims to modernize the global payment infrastructure.

When financial institutions become a part of this burgeoning network, they stand to ease up their payment processes. 

In short, such institutions, of which banks are the most common example, can then have their customers’ payments processed just about anywhere around the globe. If the area supports Ripple as well, the processes would be much more reliable, cost-effective, and quick.

Any payment provider or banking institution can utilize Ripple (symbolized by XRP) for cost reduction and access to new markets. The Ripple offices are currently located in Luxembourg, Sydney, London, San Francisco, and New York. It’s used in around 27 countries as of now and is used by more than 75 institutions to date.

What Is the Problem That Ripple Solves?

Ripple mostly solves the main problems which usually cause friction in banking processes. These problems usually arise from the inefficient state of banking payments, especially with regards to bank infrastructure. We’ll be taking a look at the issues banking institutions face and how Ripple can handle them when applied correctly.

The state of banking payments right now is highly inefficient. It may have served the needs of transactions, both corporate and retail, in the past, but these needs have now seen great changes and have evolved to have a number of new requirements, which necessitate the use of more evolved infrastructure.

Transaction banking is quite complex, and attending to it is one of the main priorities and functions of any banking institution. Transaction banking customers now need to send high-value payments along with sending and receiving low-value payments on an international basis. They also need to send these payments in real time or as close an alternative as possible.

These payments should ideally be sent not just across the networks of banking institutions but also on the latest kinds of financial networks. These could be a mobile app, a digital wallet, or a digital payment service such as PayPal.

Unfortunately, the banking infrastructure of the past is quite limited and force financial institutions to operate through a batch infrastructure. This means that the processing costs are quite high, the settlement times become very lengthy, and the customer experience plummets downward.

All of this results in a highly inefficient system that can cost every participant quite a lot, both financially and emotionally. It’s estimated that the total cost for everyone involved could go up to around $1.6 trillion every single year. Along with incurring these costs, the current system doesn’t meet the requirements or needs of the modern banking customer.

This is where Ripple comes in with its blockchain solution for global payments.

How Does Ripple Solve the Problem?

The Ripple cryptocurrency is making waves in the world of online transactions mainly because it presents a solution to the problem outlined above. Ripple basically provides a way for banking institutions to give their transaction banking customers an efficient infrastructure for payment purposes. When used properly and efficiently, Ripple could manage to give customers the on-demand payment service they require for global and online transactions.

The software that Ripple runs on achieves this solution by connecting the siloed banking networks with a protocol that is both open and neutral. This is known as the Interledger Protocol or ILP. With this connection, a fresh aspect is brought to financial settlements that promotes efficiency and trust.

This efficiency is brought about by the enabling of real-time settlements. With such an assurance, settlement risks are significantly reduced and transaction certainty becomes the norm.

With the same Ripple software, there’s also a real-time messaging feature that is provided to all the parties involved in any kind of transaction. This messaging is data-rich and delivers a payment experience for users that is convenient and highly coveted.

What Makes Ripple Better Than Its Competitors?

Ripple is far from being the only player in the cryptocurrency market. It has a lot of competitors, of which Bitcoin is probably one of the strongest. 

However, there are several benefits involved in using Ripple and its range of software. Looking at these benefits in detail would help you realize what kind of a competitive advantage Ripple offers over other kinds of cryptocurrencies.

First off, Ripple seeks to enhance the process of customer acquisition as well as retention. It does so by assisting in the delivery of new and in-demand products and services to customers all around the globe. These could be customers in the corporate sense or the retail sense.

Ripple does this by making on-demand, traceable, rapid, and cost-efficient global payments possible. Whether the channels are assisted or not, Ripple can work toward making them a more integrated and useful part of the global market.

With the ease of such transactions, Ripple is giving vendors all over the world a chance to retain and re-engage their existing customers as well as attract new ones. Plus, the payment experience provided by xCurrent (one of the tools provided by Ripple) is free of friction, meaning that non-bank payment providers and online payment providers are less likely to face disintermediation.

With such solutions on the table, Ripple has quite an edge over its competitors and has several advantages to offer its customers.

Another solution that Ripple provides is efficiency of information exchange. This could be information about rates, senders, fees, payment statuses, receivers, and delivery estimates.

When banks have access to the bidirectional messaging provided by xCurrent, they can stand to control their costs of operation. Since the costs of international payment processing are quite high, lowering them could mean a lot of saving to any banking institution as well as the customer.

These costs are significantly reduced due to the ability of xCurrent to lower or do away with SWIFT fees and increase STP rates at the same time. It also manages to decrease the cost of treasury operations by lowering liquidity costs, compliance costs, counterparty risks, and in-flight requirement for capital. 

Another cost reduced is that of reconciliation since xCurrent provides real-time monitoring of liquidity and the option of immediate confirmation.

How Can Ripple Be Categorized?

Ripple can be categorized in two ways. One category is that of network members, while the other is that of network users. Looking at each category separately would help determine its roles and definitions.

Network Members or RippleNet Enablers

These network members are mostly banking institutions looking for solutions to payment processes for their customers. Some banks may also provide liquidity for other institutions and process payments for them as well. Such institutions can make use of RippleNet to improve their existing services as well as enhance their drive acquisition.

These are also payment providers that want to expand the payout reach for banks as well as supply liquidity to them. This would enhance their payment volumes.

Network Users or RippleNet Originators

The network users of RippleNet are usually platform businesses seeking a solution for sending high-volume, low-value disbursements to their global customers. The latter would include merchants, suppliers, employees, etc.

Another example of such users is the treasury departments in corporations that want to send out large disbursements along their global supply network. This would help them enhance their visibility, control over payments, and capital efficiency.

RippleNet also caters to payment providers and banks that are just looking for payment transactions, not for processing purposes. Ripple helps such institutions rescue their previously high costs and make their correspondent baking more efficient.

The final category of RippleNet network users are those consumers who want to send out global payments through a payment provider or their own bank. This would provide them with a real-time, cost-effective, and traceable manner of conducting such payments.

What Is Ripple’s Vision for Security?

The Ripple network is very much concerned with privacy and security for its customers and the transactions they need to make. To this end, the people behind this cryptocurrency have implemented certain procedures that would help enhance the security system of Ripple transactions and payment processes.

Payment Data Separation

The payment system provided by xCurrent offers a separate and secure layer between the data required for payment and settlement data needed for ILP transactions. The validator would also only have access to cryptographic cases that it can utilize to verify condition fulfillment in a mathematical manner.

These two concepts would mean that data is bounced around banks less than before. The payment data would be encrypted if shared and is guaranteed to only be shared between institutions when absolutely necessary for transactions. Hence, the data will usually only be read by those it is meant for.

Certain kinds of payment data are maintained and updated within internal databases that only their respective banks can access. This data includes:

  •       Identifiers for beneficiaries and originators
  •       PII/CIP information that’s required for both originators and beneficiaries
  •       Invoice numbers or any other payment information that’s required
  •       Any other required metadata

Secure Communication

The internal systems of banking institutions use secure HTTP connections to communicate with the xCurrent software. They also utilize OAuth 2.0 in other to maintain authentication.

xCurrent also has ILP components that use HTTPS for securing the communications between themselves and Messenger. They use CA certificates to assure each other of their authentication. The use of HTTPS is prevalent in the following aspects:

  •       Communication before transactions between Messenger instances within corresponding partner institutions
  •       Any kind of communication between FX Connector, ILP Ledger, or Messenger

Examples of Ripple’s Use Cases/Applications

Messenger

This is a messaging module based on the API system. It ensures that RippleNet banks would have bidirectional communication. It would also connect to exchange risk information, KYC, FX rates, and applicable fees along with the expected delivery of funds and any other payment details required. This information is packaged and presented with the cost structure to the originator bank.

This gives a previously impossible level of visibility to the transaction cost. Any incorrect or missing information would be communicated before the transaction is initiated, increasing STP (straight-through processing rates). Once transaction approval goes through, Messenger would use ILP to settle any funds and notify all parties involved in the transaction.

Validator

This confirms whether the payment was a success or a failure. It would coordinate fund movement along the relevant ledgers to do away with settlement risk and avoid delays.

FX Ticker

This is an xCurrent component that makes the exchanges among ledgers easier by facilitating the FX rate provision by liquidity providers. This means that the exchange rate is configured between the ledgers and the authentication credentials, currencies, and accounts are tracked for every ILP ledger.

The ticker also coordinates IPL ledger transfers for settlements, transfers the payment to the beneficiary’s ledger, and ensures that the FX quotes are valid.

ILP Ledger

This is a subledger that compiles the general ledgers of transacting banks. It’s used to track credits, liquidity, and debits for all transacting parties. This allows such parties to settle their funds atomically, meaning that the transaction would either settle instantly or be rejected instantly.

Fund settlements of millions can, hence, be settled in a manner of milliseconds. Low-value offerings can also be enabled in real time.

Furthermore, settlement risk becomes a thing of the past when all the payment processes are conducted instantly. The transacting banks would have on-demand, round-the-clock availability in this manner. They would, hence, be able to offer on-demand, low-value payments for goods and services.

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Dash

What is Dash?

Dash is one of the leading cryptocurrencies created off the Litecoin and Bitcoin core codes. It was forked from Litecoin, and Litecoin had previously been forked from Bitcoin. However, the founder, Evan Duffield introduced crucial changes to address the core problems that have become stumbling blocks to the growth of different cryptocurrency networks and blockchain technology.

Therefore, he created Dash to help make digital currencies more acceptable and usable in everyday events.

Initially, it was introduced as Xcoin on January 18th, 2014. Then it was changed to Darkcoin ten days later on January 28th before taking the current name Dash on March 2015.

Duffield came up with recommendations that he believed would help to propel Bitcoin to the next level but decided to go it alone after the Bitcoin’s developers refused to address it. That is how the idea of Dash was born.

Dash has grown progressively to emerge among the top 20 cryptocurrencies based on market capitalization. Between 2014 and mid-2018, the price of Dash grew from $0.5 to $270; this is approximately 49,000% jump. At one point, in December 2017, the Dash price shot to $1,500, the highest mark in its history.

What is the problem that Dash Solves?

Taking a closer look at cryptocurrencies and their applications reveals that they face some major challenges. These are the setbacks that have stood in the way of mass adoption of digital currencies at the corporate, government, and individual levels. Dash was created to address these issues which include;

  • Poor privacy.
  • Transaction speed.
  • Governance.

At Bitcoin, the network can only handle 7 transactions per second. Even Bitcoin’s closest rival, Ethereum, can only handle 20 transactions every second. If you compare these rates with other top money services such as Visa and PayPal that can handle 24,000 and 193 transactions respectively every second, it implies there is a serious problem.

Many people have become increasingly worried after realizing that their networks are not as anonymous as they are marketed to be. In many cases, user transactions leave signatures that can be used to follow and unmask them. With advanced software cropping up every other day, pulling out your details from a blockchain network is becoming even simpler.

The problem of governance is what irked Duffield more to come up with a new network. Many networks such as Bitcoin and Ethereum operate as ecosystems where miners, developers, and users interact in building distributed and trustless consensus.

However, the networks have become captives of own politics and the unpredictability of human behavior. In most of the cases, each faction, from miners to developers, is interested in optimizing own incentives. This results in disagreements yielding to forks and stalling of networks’ growth.

How does Dash solve the problem?

The Dash core code, design, and features were designed with the goal of addressing the problems in the cryptocurrency industry and promoting uptake of cryptographic products in the community. Here are the main methods used to solve the problems.

  • Masternodes help to facilitate instant sending of funds

One of the primary features at Dash is InstantSend. As indicated earlier, Dash targets to become reliable digital cash that can be used in the stores, groceries, and other points of purchase. Though the network has a block time of 2.5 minutes which is significantly better than that of Bitcoin, the transaction timeframe is still too long. To make transactions instant, Dash introduced masternodes.

What exactly is a masternode?

Masternodes in the Dash network provides a second tier network under the Dash’s system’s proof of service algorithm. The second tier model pools synergies of the two main consensus protocols used at Dash; proof of service and proof of work.

To run as a masternode, one is required to invest at least 1000 DASH in the network. The masternodes are responsible for specific services such as InstantSend PrivateSend.

When sending funds using the Dash system, the transactions are indeed picked by masternodes. Then, the masternode locks the funds to avoid double spend and notifies the transaction initiator and recipient. At this point, the transaction still gets included in the public ledger and it is guaranteed to get paid because the funds are locked. InstantSend makes it possible to get payment verification in seconds and articulately resolves the problem of long confirmation timeframes.

  • In-built coin mixing (PrivateSend) to enhance Dash anonymity

If you look back at Bitcoin, one notable thing is that default transactions can be publicly traceable. Besides, a person can tie a user’s identity to his public address to monitor both outgoing and incoming transactions. This creates a serious problem of fungibility.

Dash addressed the problem in 2014, along with Monero to become completely private coins. This anonymity is achieved via in-built coin mixing model that makes tracing transactions almost impossible.

The in-built coin mixing model at Dash is referred to as PrivateSend. When you release a transaction and it gets picked by a masternode, it is broadcasted and mixed with others transactions taking place at that moment. The process advances to another masternode where further coin mixing takes place to obfuscate the trail completely.

While the masternodes are not capable of learning the essential details of a user’s transactions, the coin mixing model requires those sending value on the network to trust the system. On anonymity and traceability, Dash ranks above other private networks such as Zcash and Monero.

  • Dash decentralized its governance to all participants

In many networks, disagreements have become the primary factor resulting in forks being reported today. Such disagreements have seen major networks such as Ethereum forking into Ethereum and Ethereum Classic, while Bitcoin fragments dozens of blockchains such as Bitcoin Gold, Litecoin and Bitcoin Diamond. To address the issue, Dash adopted a decentralized governance system.

Under this system of governance and voting, any person on the network can bring forth a proposition for new features and changes aimed at improving the network. Then, every proposal is voted by the masternodes. The voting is simplified into a ‘yes’ and ‘no’ voting system. For a proposal to go through, the ‘yes’ votes have to outnumber the ‘no’ votes by more than ten. Then, it gets funding from the block reward.

Note that Dash allows the community to vote out a masternode when the direction taken by such a node goes against the community expectation.

One might ask; where do the funds for such a project come from? When transactions are confirmed in the Dash system, the masternodes get 45% of the block rewards, miners get 45%, while the remaining 10% is retained for network improvement. This 10% is what the Dash network uses to fund proposals from users.

What makes Dash better than its competitors?

Since when the first blockchain network was launched, it has been a race. Every new network comes to help solve the issues identified in the earlier networks. The great thing with Dash that makes it stand taller in comparison to other networks is its commitment to progressive improvements. The main things that make Dash better than other networks include the following.

  • The network’s development team comprises of highly aggressive and tech individuals. For them, the desire to make Dash a better network overrides monetary gains. This is why the team has sustained the progressive development of the network with no sign of stopping since 2014.
  • The transaction fee at Dash is relatively low compared to other networks. The average transaction fee for using Dash network ranges between $0.1 and $0.3. This is very low compared to other networks such as Bitcoin that charges $1 to $5. Other networks such as Ethereum and Bitcoin Cash are more expensive to use compared to Dash.
  • Dash has a self-funding and self-governing model. This implies that the network will always have ample funds to drive development. It is a huge advantage for investors targeting networks that can deliver high ROI over time.
  • Dash has lived to its original goal of making its native coin easily penetrate the conventional market through the use of Dash cards. This is a unique feature that many networks out there do not have. With the card, purchasing from merchants that accept FIAT via popular payment networks is easy and direct.
  • Dash usability has recently been enhanced more than other networks with the launch of the Dash App and API. The new development going by the name Dash Evolution is aimed at helping to take Dash to people’s mobile phones. You can now use the apps to make payment on many online stores and pay with DASH. This is a milestone that many networks including those being released today might take time to craft.

How can Dash be categorized?

Dash can be categorized as a truly anonymous and secure crypto network with great potential to emerge the top system in the industry. For many people with a target of joining cryptocurrencies, the focus is getting a platform that guarantees high anonymity, security, and ease of use. These attributes are the bottom line of the Dash network. Its architecture is unique and has prompted some cryptocurrency experts to refer to it as the “next Bitcoin.”

The notion of anonymity has become a critical pillar in defining the direction a network takes. As administrations work on targeting those who operate in the blockchain networks without paying taxes, Dash is no doubt a great hideout from third-party seizures. This is one of the top reasons driving the fast-growing demand for Dash.

What’s Dash’s vision on Security?

The Dash’s vision on security is to become a fortress network that people can rely on for daily transactions without worrying of attacks. This vision is considered very crucial because it determines the nature of trust that users will have in the network. But how does Dash plan to achieve this?

Immediately after Dash was created, a whale attack took place in 48 hours resulting in the mining of about 2 million coins. This was a huge percentage of the coins taking into consideration that only a total of 18.9 million coins will ever exist in the network. The development team had to reevaluate the architecture of the network to keep the network, users’ assets, and information security. Here are some of the top methods used to keep the vision alive.

  • Progressive review of emerging threats.
  • Regular update of the Dash network.
  • Advanced features that factor better security for the system.
  • Application of a truly decentralized governance.
  • Advanced encryption at all levels of the network operation.

Examples of Dash’s use cases/applications.

Are there real cases of Dash being used in the real world? The answer is a resounding yes. Dash was created to help take cryptocurrencies to all. This can be seen through partnerships and outlets that accept payment in Dash.

  1. Dash signed a partnership with the Betting website FarnDuel for the CryptoCup, a basketball league. Under the partnership, those who win the league get paid in DASH. This is meant to draw more people to the field and demonstrate that cryptocurrencies can be used in real activities.
  2. In 2017, the Blockchain Research Laboratory of the Arizona State University requested for funding of $350,000 from Dash to create blockchain scholarship. The funding was provided in December 2017. Note that Arizona is one of the top pro-blockchain states. In April 2018, Arizona passed HB 1091 that allows citizens to pay their taxes in cryptocurrencies.
  3. Alt Thirty-Six, a platform on legal cannabis in the US was funded by $496,000 Dash.
  4. You can also use Dash at Overstock. This is an America online retailer that has won the hearts of many for accepting most cryptocurrencies including Dash. Whether you want to buy the latest fashion clothing or office supplies with Dash, this is one great outlet to go to.
  5. The greatest score for Dash in getting accepted for direct payments was probably the addition as a payment gateway by WooCommerce online store. Those with DASH now have the opportunity to access and buy thousands of items from this fast-growing online store.