Ripple stands out among all other cryptocurrencies as a payment network that allows transactions not only in cryptocurrencies, but also in fiat currencies as well as user defined currencies. Its distinctive capability to permit cross-currency transactions via credit paths for a negligible fee, in a matter of a few seconds, via publicly verifiable means, opens the door to financial institutions to reduce the costs of the services they offer to the public by billions of dollars each year.
A recently published paper performed a thorough analysis of Ripple’s network since its launch in 2012, to formulate a deep understanding of its structure, development and vulnerabilities to malicious attacks. Throughout this article, we will review some of the interesting results presented via this paper.
An Overview of the Study:
To the best of my knowledge, this study represents the first extensive analysis of Ripple’s network since its launch, highlighting the current implementation, development, and security of Ripple’s payment network. The study included analysis of data obtained from Ripple’s network during the period between January, 2013 and December, 2016. This included a total of 99,413 wallets, 27,406,877 transactions and 246,672 credit links.
The study characterized the framework of Ripple’s network, the motifs, or the subgraphs, that describe the graphs ideally, the development of supporting communities and the network’s mixing time. The researchers found out that Ripple’s network is comprised of “gateways” that acts as key players. Gateways represent bootstrapping wallets that are highly connected to the network, and trusted to create links to new users. Moreover, Ripple’s network is obviously structured into a group of communities allocated to specific geographical regions, and each community is recognized, on average, by a pair of gateway wallets. It was found out that in the beginning, Ripple’s network was mostly comprised of communities located in Europe and Asia, yet now, Ripple is steadily expanding to communities in new regions such as Israel.
Moreover, the authors of the paper discovered that the number of newly formed credit links across Ripple’s network is growing linearly, along with the number of wallets, and thus, the density of the network is declining. The network can be described as slow mixing, disassortative and unclustered.
Assessing the “Health” of Ripple’s Network:
The study assessed the network’s “health” via examining the network liquidity, undesirable credit redistribution and resilience to malicious, or disruptive, wallets, for example, which do not permit transactions through them. The researchers found out that the network’s core, which is comprised of approximately 10,000 wallets, provides high levels of liquidity and resilience to malicious, or disruptive wallets. Nevertheless, a considerably large user base (approximately 50,000) are susceptible to disruption by a small number of highly connected wallets (10 wallets), and their credit, i.e. wallet funds, which is estimated by around $14 million, is at risk of being disconnected from the network’s main component.
On the other hand, the researchers also observed that around 22% of wallets across Ripple’s network are susceptible to undesirable credit redistribution, i.e. rippling, among their credit links which are associated with an overall credit of around $30 million.
The study concluded that the ripple community can boost the network’s health via enlightening users about improving their connectivity to the network and setting their credit links’ upper limits at levels that are well below the default value.