Analysis

Exclusive: Academic paper shows that Ripple is disrupting the financial system

A paper authored by Adriano di Luzio, Alessandro Mei and Julinda Stefa from La Sapienza University, Italy, analyzed 500gb of data related to this technology. The paper does an in-depth study of the Ripple exchange system and its public distributed ledger. Paper does an analysis of payments, the structure of payment paths, and the role of the entities in the system such as Gateways (the equivalent of banks) and Market Makers.

Researchers consider the degree of anonymity that Ripple is able to guarantee.

Resarchers affirm that thanks to Market Makers and to exchange orders, Ripplenet is flexible and robust.

Then  continues to analyze its technology and describe that Ripple have the potential to reshape the financial world and to create entirely new scenarios.

Another fundamental difference between Ripple and traditional banking or electronic money exchange systems is that, in Ripple, transactions happen in quasi real time. This is due to the (fast) distributed agreement protocol through which transactions are validated. The protocol validates transactions within a fistful of seconds. As a consequence, paying someone on the other side of the world through Ripple takes, on average and with the current system workload, from 5 to 10 seconds. This is significantly faster than Bitcoin transactions (that take 10 minutes for the validation and about 1 hour for the actual confirmation), and extremely faster than traditional bank wire transfers that might take days or a week to go through. Ripple also defines its own crypto currency, the XRP (the ripple ). XRPs are pre-computed by the system’s creators  and are distributed either by them for research or other purposes, or can be purchased by users after they join the system. Ripple users can directly exchange XRPs or trade them with any other currency (they act as a bridge). In addition, XRPs are also used to prevent ledger spamming. A small XRP fee is indeed collected for each transaction submitted to the system. The aim is to mitigate denial of service (DoS).  At the same time, requiring XRPs for every transaction restricts the exchanges only between users that own XRPs. The fees collected during transactions are not destined to other Ripple users, or validators, like in Bitcoin or other platforms. They are destroyed after the corresponding transaction is confirmed. Nevertheless, Ripple’s designers made sure that there will be enough XRP liquidity to allow the system to last for thousands of years

Academic researchers suggest to keep a close watch on this technology is disruptive and designed with a very high level of expertise.

 

Full paper

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