Book Image

Ripple Quick Start Guide

By : Febin John James
Book Image

Ripple Quick Start Guide

By: Febin John James

Overview of this book

This book starts by giving you an understanding of the basics of blockchain and the Ripple protocol. You will then get some hands-on experience of working with XRP. You will learn how to set up a Ripple wallet and see how seamlessly you can transfer money abroad. You will learn about different types of wallets through which you can store and transact XRP, along with the security precautions you need to take to keep your money safe. Since Ripple is currency agnostic, it can enable the transfer of value in USD, EUR, and any other currency. You can even transfer digital assets using Ripple. You will see how you can pay an international merchant with their own native currency and how Ripple can exchange it on the ?y. Once you understand the applications of Ripple, you will learn how to create a conditionally-held escrow using the Ripple API, and how to send and cash checks. Finally, you will also understand the common misconceptions people have about Ripple and discover the potential risks you must consider before making investment decisions. By the end of this book, you will have a solid foundation for working with Ripple's blockchain. Using it, you will be able to solve problems caused by traditional systems in your respective industry.
Table of Contents (7 chapters)

The need for decentralization

Few diamond firms found it unusual when Punjab National Bank demanded 100% cash margins for issuing LOUs (letters of undertaking), which is a form of bank guarantee under which its customers can raise money from any other Indian bank's foreign branch in the form of short-term credit.

However, the firms argued that this requirement was not enforced for the LOUs they received since 2010. This raised alarms and PNB called for an investigation. They found out a few employees had been issuing fake LOUs through the SWIFT system (a messaging system between banks). Unfortunately, the software that PNB used to facilitate SWIFT didn't record its transactions. This allowed the fraud to go undetected. A month later, PNB found out that the scam cost them $1.8 billion.

We have been using centralized systems to build internet applications for a long time. Here, business logic and data lies in one or more central servers. Client applications communicate with these servers to process information. Bank employees use software, which interfaces with the bank's central system, to facilitate transactions. Another example is your bank's application: when you tap to send money, the request is sent to the bank's centralized system for processing.

What happens if that central system is compromised? What happens when someone makes a transaction and deletes its traces? How do we prevent such fraudulent activities?

To solve these problems, we need to satisfy the following requirements:

  • A system shouldn't have a central point of attack
  • Transactions or data in the system must be tamper-proof

These are the key concepts behind distributed ledger systems or blockchain-based systems. Technically, these concepts are known as decentralization and immutability.