Understanding Ripple and Cryptocurrency Protocols

Now, some newer protocols like the Ripple

protocol actually allow multiple

currencies to be accounted for in their ledger.

Indeed, there's nothing stopping you from keeping

track of dollar

balances, airline miles, or a cur-- another c-currency that you

make up on these ledgers, and the Ripple protocol allows many

such currencies to be tracked.

But the, the native currency is sort of fundamentally different.

The ledger might say that I have a United States dollar,

but there has to be some financial institution or individual who maintains a

balance sheet and promises to pay me that dollar if I ask for it.

So the ledger can track my claim, but it can't enforce it.

In contrast, if the Bitcoin ledger says I have a

Bitcoin, the Ripple ledger

says I have an XRP, the protocol itself specifies

that I, as the owner of the address, can move it from me to someone

else. So there's no third party, there's no counterparty risk

involved with the native currency of the ledger, and that's what

m-me-- requires you to have this, uh, this sort of third,

uh, this new currency rather than just have

everything be denominated

in US dollars. Of course, there's always a risk

that something goes wrong with the

protocol itself, but within the, within the normal operation of the

protocol,

there's no counterparty risk.