Altcoins News
By Steven Anderson
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Max Maher points to how Ripple Net uses two currencies. IOUs and XRP. The IOU basically is a debt certificate, which you issue to someone when you owe them.
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The IOU certificates can be traded, but they are not interchangeable. To understand, learners can think of it as a personal check.
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Further on this, it can be used to transact any asset (USD, Gold, BTC, or Chuck-e-Cheese tokens and it is all again through the honor system. This is kind of like a personal check.
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It is very much understandable. Let us assume someone should be paid $100. However, you wanted to make sure that it is actually $100 a week from now.
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So, the less volatile that XRP gets over time, the more likely banks will use these more and more for these transfers. Now, banks can use XRPs for the transfers.
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In this case, XRP is used as a link between different currencies or different banks, or different types of assets. It is the linkage between.
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With XRP, they are transacting the actual asset, because XRP is actually worth something. And, IOU is just a debt certificate not actually worth anything.
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And, XRP cannot be mined because of the consensus mechanism that XRP uses.
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