Understanding Interledger Protocol (ILP)

The interledger protocol (ILP) is an open source protocol that facilitates payments across different payment networks. It was developed in 2015 as a way to solve the issue of connecting different financial networks which don’t naturally connect, and to make it easier for individuals and businesses to quickly transfer money between different payment networks regardless of the locale or currency type.

What makes ILP unique?

ILP is a unique payment protocol due to its ability to enable payments between so many different payment networks without costly integration processes. It is also an open source protocol, allowing anyone to inspect and modify its source code if necessary.

How Does Interledger Protocol Work?

ILP leverages the concept of “routing” payments from one payment network to another. When a payment is sent from one side of a payment network, it is sent through a so-called “routing node” which is responsible for transferring the payment to the correct place on the other side. It helps to think of a routing node as a kind of “payment switch” which can route payments between different payment networks and currencies.

Benefits of Interledger Protocol

The interledger protocol offers a great deal of benefits when compared to other payment methods. For businesses, it allows for smoother and easier payments to and from customers and suppliers regardless of the currency or country they’re in. For individuals, it makes it easier to send money across different countries without the need for expensive international money transfers.

Overall, ILP is a revolutionary technology that is allowing the world to become more connected in the financial sphere. It’s allowing businesses and individuals to transfer money more quickly, easily, and with lower fees. It’s truly revolutionizing the way the world views money transfers.