Understanding How Ripple’s Interledger Protocol Works

Payment networks are now fragmented and disjointed. Transferring money within a nation or between accounts on the same system or ledger is quite simple. The same goes for transferring money between accounts on a different network or ledger. In most cases, however, transmitting data from one ledger to another is unfeasible. Even in places where connections are available, they are often manual, sluggish, or costly. Ripple’s Interledger Protocol allows the routing of payments across multiple digital asset ledgers. Meanwhile, it protects both the sender and recipient from the risk of an intermediary failing to perform its function correctly. 

Basically, it enables a worldwide web of networks for diverse forms of value. It does so by securing multi-hop payments and intelligent routing, creating a link between senders and receivers anywhere worldwide.

Ripple Labs uses Interledger to connect bank systems across borders, where the Ripple (XRP) token serves as a tool to settle payments across worldwide banks. Ripple Labs is a San Francisco-based cryptocurrency startup, which many associate with its popular crypto asset.

What Is Ripple’s Interledger Protocol?

Ripple’s Interledger Protocol provides only the functionalities necessary to send a payment from a source to a destination via a linked system of ledgers. 

Besides only the bare minimum needs for underlying ledgers, it does not feature critical public infrastructure or identity management. Also, it does not include liquidity management or other services usually present in payment protocol implementations.

The hosts in an interledger environment connect to this protocol through higher-level protocol modules. In return, they call on this protocol in a loop system. The interledger protocol modules communicate with local ledger protocols to transfer the interledger payment to a new account.

The Simple Payment Setup Protocol (SPSP) module contacts the interledger module with the address. It also includes other parameters in the interledger suite to send a payment. This way, a transfer, and the interledger packet arrive at the next connector or destination account. And it does so by the parameters the user specified in the interledger module. 

Each consecutive connection, and eventually the destination’s SPSP module, handle the transfer and interledger packet. This happens once the next host’s interledger module and each succeeding connector receive and control it.

Taking the Ripple example, the interledger module would invoke the local ledger module. This would then produce a Ripple transaction with the attached interledger packet before reaching the Ripple Consensus Ledger for confirmation.

Lastly, interledger addresses generate Ripple addresses via the local ledger interface. They correspond to the addresses of accounts in the Ripple network, which could link to other ledgers via a connector.

Implementation of This System

Ripple’s Interledger Protocol can function in two modes: atomic mode and universal mode. In atomic mode, notaries become part of the system. They are an ad-hoc group that verifies and validates transactions. 

Typically, atomic modes occur between trusted connector nodes between banks or financial service companies that might relate to each other.

The universal mode does not require notaries and can work between untrusted connectors. It uses Ripple’s internal cryptocurrency, XRP, to facilitate transfers. Time constraints accompany the transfer. The transaction becomes null if it does not occur within a specific timeframe.

The Ultimate Purpose of This Technology

With the interledger protocol, hosts may route payments over a network of interconnected ledgers, which is the protocol’s ultimate goal. The payments pass from one interledger module to another until they reach the target. 

The interledger modules belong to the hosts and connectors of the interledger system, and they continuously communicate with one another. Individual ledgers transport payments from one interledger module to another, depending on the reading of an interledger address. 

Consequently, the interledger address is a critical component of the interledger protocol’s architecture.

The protocol may leverage assets on underlying ledgers to protect senders and receivers from a failed transfer. This happens when routing payments involve substantial funds, and the selected connectors and intermediary ledgers may be untrustworthy.

Bottom Line – How Ripple’s Interledger Protocol Works

XRP live price
price change

The current Ripple network would probably not be the same without the Interledger protocol. Banks may use Ripple and this protocol to benefit from infinite scalability and total transaction secrecy. This new feature complements all of the previous advantages of Ripple’s distributed financial technology.

Stay up to date with our latest articles

More posts

SuperBots – A Case for Imminent Decentralization amid Recent CEX Failures

Crypto trading has taken the back seat in the digital economy in 2022, with the market remaining under the bears' control for most of the year. Furthermore, traders have seen their faith rocked by the consecutive failures of centralized exchanges. These intermediary marketplaces have been the powerhouse of the industry since its humble beginnings. Now, they seem to crumble under mounting allegations of scams, lawsuits, and solvency concerns. Meanwhile, they make a convincing case for the imminent decentralization of crypto…

Max Keiser and Tucker Carlson Talk FTX and the Future of Bitcoin

Economic journalist Max Keiser recently joined Fox News host Tucker Carlson to discuss how FTX went bankrupt. The two personalities discussed how Bitcoin can fix corruption within the financial system, including at FTX and on Wall Street.  Crypto and Financial Corruption In an interview released on Monday, Tucker began by suggesting that FTX’s collapse may be used as an excuse to regulate the crypto. However, Max Keiser argued that Bitcoin is “designed” to be attacked, and only grows more resilient…

Crypto Community Confronts SBF for First Time Since FTX Collapse

After nearly three weeks in the dark from the media, former FTX chief Sam Bankman-Fried is finally making public appearances. On Thursday, he partook in a live Twitter space to take questions directly from the crypto community. Here are the highlights from his interview and questioning. Sam Bankman-Fried said he is making media appearances in the name of transparency. He believes the community deserves answers. SBF claimed that he had little relationship with Alameda Research, over worries about conflicts of interest.…

Coinbase Wallet Delists XRP and 3 Others, Cites Low Usage

According to an update on the crypto platform’s help page, Coinbase wallet will no longer support payment network Ripple’s XRP token. The digital asset is not the only cryptocurrency Coinbase has delisted as Bitcoin Cash, Ethereum Classic, and Stellar will also be unavailable. Coinbase Halts Wallet Support for XRP, BCH, ETC, and XLM The delisting will take effect from January next year and Coinbase’s wallet application will drop support for the aforementioned tokens. Coinbase Wallet like MetaMask and similar providers…

Nexo Makes the Case for Why it Won’t Go Down Like BlockFi

The crypto borrowing and lending platform Nexo recently provided transparency into exactly how its business makes money. Its lengthy breakdown follows the collapse of numerous high-profile crypto lending firms that were overexposed to defunct projects and businesses.  Nexo’s Business Model As Nexo explained in a Twitter thread on Monday, Nexo’s primary business strategy is to facilitate collateralized credit. Its core services include crypto collateralized loans, interest-bearing crypto accounts, and spot, futures, and options trading.  Through its Earn product (crypto interest…

Crypto Lender BlockFi Files for Bankruptcy

According to a recent press release, crypto lending firm BlockFi has filed for chapter 11 bankruptcy protection. The company predictably began to battle liquidity issues in the wake of FTX’s monumental crash. BlockFi Hopes to Restructure The lender submitted its application for bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey alongside 8 affiliated companies. BlockFi's goal is reportedly to bring operations back to steady ground. Chapter 11 of the Bankruptcy Code typically allows for…

Vave Casino and Betting – Comfortable Crypto Gaming in Complete Anonymity

Vave, a modern crypto casino and sports betting brand, has officially launched, allowing players to gamble with crypto and fiat on numerous casino games and sports events. The platform also offers live casino experiences and exclusive VIP services in a comfortable and anonymous setting. Vave aims to become the powerhouse of anonymous crypto gambling on a global scale. To this end, it focuses on attracting a worldwide audience of crypto enthusiasts seeking top-quality entertainment in a secure and engaging environment.…

WMA: Most Assets Record Minor Gains but Bitcoin Stagnates

Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $842 billion. Bitcoin is trading at around the same value as last week, $16,500. Ethereum gained more than 3% over the past seven days. XRP increased by nearly 8% this past week. Almost all altcoins and Metaverse projects are trading in the green. The DeFi sector decreased the total value protocols (TVL) to around…

Binance Releases its Proof of Reserves — But is it Enough?

Binance released its highly anticipated proof of reserves (PoR) on Friday, providing blockchain-based evidence for the Bitcoin on its books.  However, many in the crypto community question Binance’s approach. Also, they aren’t fully sure they have the transparency they’re looking for. The Move to Proof of Reserves As Binance explained in its announcement, the exchange’s transparency system will add multiple tokens and networks within the next two weeks. For now, it solely validates its Bitcoin holdings.  The company’s initial audit…

Elon Musk Blasts Legacy Media’s ‘Gingerly’ SBF Coverage

While busy managing Twitter, Elon Musk has still been keeping up with the drama surrounding FTX and its former CEO, Sam Bankman-Fried (SBF). The billionaire has written numerous tweets this week signaling his distaste for SBF and media outlets covering him uncritically.  Musk began by ripping into the Wall Street Journal on Monday. The outlet published an opinion piece claiming that FTX ultimately failed “because Sam Bankman-Fried’s supporters lost confidence in him.” “Yeah umm … that is definitely not the…