In the first chapter, we learned why the global payment system was inefficient. Let's get into the following to understand how Ripple overcomes its inefficiencies:

• Present global payment systems don't work as a system. They lack effective inter-connectivity.
• Lack of effective inter-connectivity leads to costly transaction fees and delays.
• Most data in these systems is hidden and can be easily manipulated. Hence, there's no transparency in the system.
• Lack of transparency in the system increases the chances of fraud.
• High transaction costs limits banks ability to address a large market.
• Since there's no standardization across networks, it's unreliable for people to send sensitive information with their transaction.

Ripple solves the above inefficiencies through RippleNet. It uses blockchain technologies for reliable, efficient, and secure payments. Banks can integrate RippleNet into their system to make global payments efficient. Following are the reasons why RippleNet is efficient when compared with traditional payments:

• The transactions on RippleNet are atomic. They either happen or don't happen at all. There's no partial transaction success unlike in the traditional systems. This drastically eliminates failed transactions.
• Ripple uses blockchain technology to ensure fast and real-time settlements.
• Since the entities in the Ripple blockchain are effectively interconnected, it can find cost optimized payment paths to drastically reduce transaction cost.
• The transactions on a public blockchain are visible to everyone. Hence, the system is transparent.
• Sensitive information can be encrypted and sent along with transactions. Hence, users in the system can exchange messages securely.
• It brings standardization in APIs, rules, and governance. This increases the flexibility of the system. Hence, it makes it easier to build futuristic applications that meet the rising demands of consumers.