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<html>
<head>
<title>How Ripple Works</title>
<meta charset="utf-8">
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</head>
<body>
<h1>How Ripple Works</h1>
<p>
First, let's consider how an internet payment works today.
</p>
<ul>
<li>
Here is Bob. Bob gives some money to PayPal. In exchange, PayPal gives him a
<strong>balance in their system</strong> over that amount.
<img src="old1.png">
<li>
Alice is also a PayPal customer. Bob wants to pay Alice. PayPal takes some money
from his balance and <strong>credits it to Alice's account</strong>.
<img src="old2.png">
<li>
Bob also wants to pay Carol. Carol is French. PayPal will <strong>take USD</strong> from Bob
and <strong>add EUR</strong> to Carol's account, applying <strong>PayPal's exchange rate</strong>.
<img src="old3.png">
<li>
Brent is a Google Wallet user; he <strong>cannot exchange money</strong> with Bob, Alice or Carol.
<img src="old4.png">
</ul>
<h2>Ripple</h2>
<p>
Ripple has a key distinction: it moves the balances to a decentralized network of computers, controlled not by any single institution, but by an open protocol - like the web.
</p>
<section>
<img src="ripple1.png">
<p>
Bob is now using Ripple. He choses a payment provider that operates on the Ripple network: Bitstamp.
Bob gives money to Bitstamp. In exchange, they give him a balance over that amount.
</p>
<p>
This time, his balance is <strong>stored on the Ripple network</strong>, decentralized and
cryptographically secured. The network ensures that balances are safe and can only be modified
by their owners. Even Bitstamp cannot access Bob's balance.
</p>
</section>
<section>
<img src="ripple2.png">
<p>
Bob can now send money to Alice. Note that Alice <strong>never signed up with
Bitstamp</strong>, and has no business relationship with them. She nevertheless can choose to receive
Bob's money, and the Ripple network will credit her with a Bitstamp balance. Bitstamp cannot
oppose this transaction; Bob and Alice may spend their balances as they wish.
</p>
</section>
<section>
<img src="ripple3.png">
<p>
There are many <strong>other payment providers</strong> on the Ripple network.</p>
<p>
Brent is a customer of Justcoin, and his Justcoin balance is
stored on the Ripple network alongside the Bitstamp balances of Alice
and Bob.
</p>
<p>
Brent also wants to buy from Alice. However, Alice <strong>does not accept</strong>
his Justcoin balance. She does not want to sign up with Justcoin to withdraw her money.
</p>
</section>
<section>
<img src="ripple4.png">
<p>
Bob does a lot of business with other Justcoin customers, and so he wouldn't mind a
Justcoin balance. Because Bob agreed to this, the network will automatically transfer some
of Bob's Bitstamp balance to Alice, in exchange for an equivalent Justcoin balance from Brent.
</p>
<p>Bob acted as an intermediary and <strong>facilitated a payment</strong> between Brent
and Alice, and two <strong>different payment providers</strong>. He can choose to charge
a small fee for this service.
</p>
<p>
Because customers from different providers constantly want to send money between each
other, there are many people like Bob on the network, and the market will keep the exchange
fee low.
</p>
</section>
<section>
<img src="ripple5.png">
<p>
Bob again needs to pay Carol in Euros. The network will convert his USD balance into a EUR balance
using the <strong>best exchange rate available</strong> on the market.
</p>
<p>
Bob could even pay with Bitcoin, his frequent flyer miles, or gift certificates. As long as
someone on the network is willing to accept his currency, he'll be able to have them exchanged,
automatically during the payment, for the Euros that Carol is asking for.
</p>
</section>
<h2>Links</h2>
<ul>
<a href="http://ripple.com">ripple.com</a>
</ul>
<div class="sidebar">
Other languages:
<ul>
<li><a href="http://wasistripple.de">Deutsch</a>
</ul>
</div>
<a href="https://github.com/miracle2k/whatisripple.info"><img style="position: absolute; top: 0; right: 0; border: 0;" src="https://s3.amazonaws.com/github/ribbons/forkme_right_darkblue_121621.png" alt="Fork me on GitHub"></a>
<div class="license">
<a rel="license" href="http://creativecommons.org/licenses/by/4.0/"><img alt="Creative Commons License" style="border-width:0" src="http://i.creativecommons.org/l/by/4.0/88x31.png" /></a><br />This <span xmlns:dct="http://purl.org/dc/terms/" href="http://purl.org/dc/dcmitype/Text" rel="dct:type">work</span> is licensed under a <a rel="license" href="http://creativecommons.org/licenses/by/4.0/">Creative Commons Attribution 4.0 International License</a>.
</div>
</body>
<html>