Ripple

Ripple is a payment system and a digital currency which evolved completely independently of Bitcoin. Although Ripple holds the second highest market cap after Bitcoin, there are surprisingly no studies which analyze the provisions of Ripple. In this paper, we study the current deployment of the Ripple payment system. For that purpose, we overview the Ripple protocol and outline its security and privacy provisions in relation to the Bitcoin system. We also discuss the consensus protocol of Ripple. Contrary to the statement of the Ripple designers, we show that the current choice of parameters does not prevent the occurrence of forks in the system. To remedy this problem, we give a necessary and sufficient condition to prevent any fork in the system. Finally, we analyze the current usage patterns and trade dynamics in Ripple by extracting information from the Ripple global ledger. As far as we are aware, this is the first contribution which sheds light on the current deployment of the Ripple system.

xCurrent Ripple’s software that provides API-based messaging and transaction settlement based on an open, neutral protocol of value transfer between different ledgers and networks.

Solution Components

Messenger: – Messenger is an API-based messaging module that enables bidirectional communication between connected RippleNet banks. It connects to the beneficiary bank’s instance of Messenger to exchange KYC and risk information, fees, FX rates (if applicable), payment details and expected time of funds delivery. It packages this information and presents the entire cost structure to the originating bank, providing unprecedented visibility into the total cost of the transaction. If information is incorrect or missing, transacting parties will find out before initiating the transaction, drastically increasing straight through processing (STP) rates. Once the sender approves the transaction, Messenger employs ILP to settle funds and notifies all parties of the transaction confirmation.

Validator: – Validator is a component that cryptographically confirms the success or failure of a payment. It coordinates the funds movement across the ledgers of transacting parties in a way that removes all settlement risk and minimizes delays in settlement. Validator provides the single source of truth for the transacting counterparties regarding the success or failure of a payment.

FX Ticker: – FX Ticker is the component of xCurrent that facilitates the exchange between ledgers by enabling liquidity providers to post FX rates. This component provides the exchange rate between any pair of ledgers that it is configured with. Additionally, it keeps track of the account, currency and authentication credentials for each configured ILP Ledger. During the transaction, it coordinates transfers on ILP Ledgers for settlement, ensures the validity of an FX quote and transfers the payment amount to the beneficiary bank’s ILP Ledger.

ILP Ledger: – ILP Ledger is a sub ledger of each transacting bank’s general ledger. This component of xCurrent is utilized to the track the credits, debits and liquidity across the transacting parties. ILP Ledger enables transacting parties to settle funds atomically, which means the entire transaction settles instantly or not at all — no matter how many parties are involved. The ability to atomically settle enables new, low-value offerings through the ability to send real-time payments as the settlement of funds happens in milliseconds. Further, the settlement risk is eliminated because the payment processes entirely or fails upfront. ILP Ledger is designed to provide transacting banks with 24/7, on-demand availability. The combination of these capabilities allows banks to profitably offer low-value, on-demand international payments products and services.

Key Benefits

 Enhance Customer Acquisition and Retention

By delivering new products and services to retail and corporate customers — featuring high-speed, on-demand, cost-effective and traceable global payments — in both assisted and unassisted channels, it provides an opportunity re-engage and retain existing customers. xCurrent’s frictionless payment experience mitigates disintermediation from online, non-bank payment providers. The solution is a key competitive advantage and promotion-worthy offering to drive customer acquisition. Enhance Customer Acquisition and Retention

Lower Operational Costs

With xCurrent’s bidirectional messaging, banks can more efficiently exchange information regarding the sender, receiver, fees, rates, and delivery estimate and payment status to lower their operational cost of processing international payments. Payment processing costs are significantly reduced through xCurrent’s ability to increase STP rates and eliminate SWIFT fees. Treasury operations costs are decreased by lowering in-flight capital requirements, liquidity costs, counter party risk and compliance costs. Reconciliation costs are reduced due to xCurrent’s ability to provide instant confirmation and real-time liquidity monitoring.