Ripple is a for-profit company that serves the banking system which is the perfect way to start out this video we want to remind you that we aren't here to have opinions or spread rumors we know you watch these videos because we get straight to the facts and then hopefully you can decide for yourself what to think that's exactly what we're going to do in this video Welcome to whiteboard crypto the number one YouTube channel for crypto education and here we explain topics of the cryptocurrency world using analogies stories and examples so that you can easily
understand understand them in this video we are going to explain what Ripple Labs does how xrp actually works why the SEC is up their butts and finally we will explain their tokenomics first off let's get into the difference between Ripple and xrp ripple Labs is the company behind xrp which is the cryptocurrency kind of like how Apple made their iPhones xrp is the product while Ripple Labs is the company that created it in short Ripple Labs aims for banks and payment providers to send money internationally quickly and cheaply now you may not know this but
there's a big problem when you want to send money from one country to another country sometimes it takes days it is usually very expensive and in some countries you even have to do illegal things to make it happen so immediately Ripple Labs is trying to solve a big common problem right now most International transfers use Swift which is a protocol that makes up half of all International wires and moves around $6 trillion each day but like I said it's very slow and takes a lot of work and the fees are pretty high now those fees
are collected either from transferring through multiple Banks or through currency conversions because currency conversions is a big one too not all banks will be able to quickly cheaply and reliably convert the money that you're sending to the desired currency so how does Ripple Labs do this well their first product is something called ripplet also now known as xcurrent technically they're the same thing ripplet is the network behind the xcurrent product xcurrent is a decentralized system using a consensus model called the unique node list in short this is one of the products of Ripple Labs that
is supposed to fix the slow bank issue if you want to transfer your money you go to Ripple net and have them help you it's supposed to be quicker and cheaper than Swift along with that they plan to be anti-money laundering compliance and even include fraud detection in fact they have fixed this problem so well that there are already a bunch of big institutions with them American Express being one of them but there's also like 50 other big banks that have joined them so already you can kind of see how this stuff is kind of
complicated and not for everyday transactions right well kind of Ripple Labs also started a cryptocurrency called Ripple that follows the ticker xrp this cryptocurrency is powered by a blockchain similar to many other cryptocurrencies but with a few key differences first the transactions are confirmed in less than 5 seconds and the cost of each transaction is like 2 10,000 of a pinion secondly the blockchain can handle around 1,500 transactions per second which is a lot compared to the other blockchains out there and they do claim to be able to reach Visa speeds but I personally couldn't
find any technical explanation to this so you might be wondering how does this relate to the grand scheme of things well xrp as a cryptocurrency can run without needing Ripple Labs but Ripple Labs needs xrp to be able to sell their excurrent system also one big difference in the xrp crypto a blockchain is that they don't use proof of work or proof of stake which are two of the main methods that blockchains usually use to agree on what transactions should be verified and which ones should be blocked instead Ripple uses a method called a unique
node list and I'm going to try to explain this as plainly as possible but it's pretty much centralized basically Ripple Labs sets up a list of a bunch of people that they trust and then pretty much the majority decides what gets added to the blockchain or not they don't use work or a staking feature but instead majority rule from their list of trusted sources now I could go on and explain this a little bit more but then this would be a video about how unique node lists work and not xrp or Ripple so if you're
interested in that you'll definitely have to hit the Subscribe button if you want to watch our video on that plus it does reward our hard work creating this video also it should be noted that xrp can be divided up into six decimal places and they call the smallest amount a drop which is 0.000000001 xrp so back to the blockchain there's also no reward for running your validator which is important because I can't understand why someone would want to do it without a reward unless you wanted to team up and make fake transactions and there are
a lot of people out there who claim that xrp is too centralized and they say exactly this speaking of centralization let's talk about how all of this is related to centralization basically one of the biggest benefits of cryptocurrencies is decentralization where we basically get away from Banks being able to control all of our money but if xrp is centralized why would we use it from what I understand Ripple Labs has no control of the network after publishing their initial RTX protocol which runs the xrp currency but Ripple Labs can maintain it in the same way
the nodes of Bitcoin and the ethereum foundation can maintain their blockchains and suggest updates to reiterate this in short xrp can run without Ripple lab's help but some of the other products that Ripple Labs offer cannot run without xrp one of the biggest risks of xrp is the fact that a bunch of validators or those people on the unique node list could come together collude and then make fake transactions spending your money without you agreeing to it like I said there's no reward for validators they get no mining fee or validating staking reward and they're
just on the list just because anyways moving on let's talk about their SEC issues so the SEC which is some agency in the United States is arguing that xrp is actually a security not a currency this is actually a pretty big lawsuit because it sets precedence for future similar cryptocurrencies the SEC says that Ripple co-founders are treating xrp as a security kind of like a stock or a bond and if they are the regulations around it should change now this actually says more about the United States government than Ripple labs in short the United States
government is unhappy that xrp may be similar to a stock but these SEC issues are definitely related to most of the centralization issues finally let's get into the tokenomics first off xrp is used as what it takes to spend xrp so natural demand will rise as the coin is used more and more secondly xrp has a fixed supply of 100 billion coins and supposedly there can't be any more created around 20 billion of those went to the founders 7 billion went to Ripple labs and 40 billion were initially sold to companies and individual investors the
rest are given to Ripple Labs each month at a rate of around 1 billion Ripple per month for a total of 33 months although I've heard that they have an interesting vesting schedule this technically means xrp is slightly deflationary since the fees are burned and naturally people will lose or forget their wallet keys I do want to share one of my thoughts with this and I do not know why stable coins are not better than xrp for solving this bank-to-bank issue stable coins solve the cross border problem and if you use a layer two scaling
solution it also solves the a speed and affordability problem plus stable coins are somewhat a little more decentralized at least depending on which one you use nevertheless we're here to educate you so take that for what you will one last thing the official xrp Discord is the first one where I've actually seen people against the coin actively attacking it which to me is interesting because I usually go to discords after my initial research to fill in some questions that I have one particularly feisty member asked are you too lazy to do your own research when
I was asking some initial questions and then later described xrp as Western Union coin to the Moon sarcastically meaning that it is too centralized by the way for those who wondering how I do my research for these coins joining the official Discord and asking questions is one of the best ways to learn because if you're correct sometimes other people will learn and if you're wrong many people will immediately give you the correct information as we end this video you should know that we started a newsletter of weekly crypto updates and big stuff that we're learning
over here at whiteboard crypto whenever you join you also get access ACC to our defi for beginners guide and to join all you need to do is visit whiteboard crypto.com to check it out we think you'll be impressed thank you guys for watching we hope you enjoyed this video we really hope that you've learned something and most of all we hope to see you in our next videos
