Among the group of cryptocurrencies classified as Alt Coins or alternatives to Bitcoin, Ripple is one of the fastest growing and most popular. It made its first appearance in 2012 and in five short years has become one of the top five cryptocurrency systems. Ripple benefits from a fast payment protocol which is even being adopted by global banks as a settlement infrastructure.

Ripple was created in 2012 as a real-time gross settlement payment protocol. Its actual origins, however, can be traced to 2004. This actually makes it a predecessor of Bitcoin in some respects. Ryan Fugger created something known as Ripplepay in 2004. What Fugger wanted to do was create a form of decentralized currency which could be used by communities to create their own money.

In 2011, Jed McCaleb joined the development team and began working on a new system to implement Ripple as a full-fledged cryptocurrency. The initial goal was to differentiate Ripple from Bitcoin and other cryptocurrencies like Ethereum by removing the element of a blockchain. Transactions under Ripple’s new system were verified by members of a network rather than the blockchain.

The goals of doing things this way was to make transactions quicker and use less electricity in the creation of the coin. The result was the creation of a payment protocol known as the Ripple Transaction Protocol or RTXP. This protocol allows two parties to engage in an instant and direct transfer of money. This also permits the exchange of different traditional currencies including the Euro, USD, and Yen. It is even possible to exchange airline miles with the RTXP.

Since 2014, Ripple and its unique protocol have begun to garner the attention of the banking industry. Many global financial institutions are adopting the protocol for facilitate transfers. Fidor Bank in Munich, Germany’s sole online-only bank became the first to partner with Ripple in 2014. This partnership was soon followed by unions with banks in the U.S. states of Kansas and New Jersey. Today, even Western Union is experimenting with the use of Ripple protocols for money transfers.

Ripple, or XRT as it is known on cryptocurrency exchanges, is an an Alt Coin that is not mined. It is a centralized system in which the owner can make as many or as few units as they like. The operators of the system are OpenCoin. A fixed number of XRT were created at the inception of the Ripple Protocol. The number was 100 billion. 20 billion of these were retained by the developers of the cryptocurrency. No more XRT will be made.

The absence of mining for this cryptocurrency is one way in which Ripple differs from Bitcoin and other crypto coins. Unlike Bitcoin, Ethereum, and other coins, Ripple is a scarce asset. It’s supply is in a perpetual state of decline.

XRP functions primarily as a bridge currency. This is useful when there is no direct exchange available between two specific currencies at a certain time. Within the Ripple network, XRP can be traded against currencies like the USD, Euro, Yen, and Bitcoin. Because of this, Ripple is conceived more as a currency exchange than as an alternative currency.

Mining of cryptocurrencies has long been recognized as a profitable way to invest in Bitcoin and other crypto varieties. The challenge is that mining can be a complicated and expensive process. It requires dedicated computer equipment and lots of electricity. A more viable solution can be to join a mining collective like Genesis Mining. In this situation, individuals lease a rig by purchasing hash power. This lets them share the expenses and profit of mining with a group of like-minded individuals.

Ripple is not actually a competitor with Bitcoin and other cryptocurrencies. Instead, it is a medium of exchange which complements the use of other coins. This means that you cannot spend Ripple in the same fashion that you would spend other cryptocurrencies.

It may be best to think of Ripple as a means of integrating Bitcoin more fully with the world of finance.  Ripple helps to speed the process of Bitcoin transactions and make them ultimately more secure. Another large benefit of this alternative currency is that it does not collect large transaction fees in the same manner as PayPal and other processors. Approximately 1/1000th of a cent in the form of Ripple is retained from every transaction. This portion of Ripple is then destroyed. The company states that this is a safeguard against the system being abused by a single individual.

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