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h1. Becoming a Ripple Gateway
An existing online financial service, such as a payment system or digital currency exchanges, can provide additional value to customers by acting as a Ripple Gateway. This provides users the ability to send cross-currency payments to users linked by other Ripple Gateways, and potentially provides a new revenue source for balances deposited, withdrawn, or transferred in Ripple.
Expanding an existing exchange system to support Ripple is a relatively simple task. This document explains the concepts necessary to set up a system, and covers the details of doing so.
h2. Ripple Gateways Explained
A Ripple Gateway is an entity that exchanges balances in the Ripple Network for balances in the Ripple Network -- in other words, performing deposits and withdrawals from Ripple. Typically, a Gateway holds money (or other assets of value) outside of Ripple, and creates issuances in the Ripple Network that represent that money and can be sent, traded, and exchanged atomically in Ripple.
h3. Prior to Ripple Integration
A digital exchange already accepts withdrawals and deposits from users using some existing system, and uses some internal accounting system to track how much balance each user has with the exchange. Such a system can be modeled simply like this:
h3. Adding Ripple Deposits
Two changes are necessary in order to become a Ripple Gateway. First, you must modify your accounting system to track money that is backing funds issued on the Ripple Network. This could be as simple as adding a record in your core accounting system for Ripple. Second, you must create and follow a process for "deposits" into Ripple, and "withdrawals" from Ripple. These are similar to, but separate from the process of depositing and withdrawing money from the exchange.
A deposit into Ripple involves the following steps:
- Alice asks to deposit €2 of her balance into Ripple
- In its internal accounting, ACME debits Alice's balance €2 and credits the Ripple-backed balance by €2.
- ACME submits a Ripple transaction, sending €2 to Alice's Ripple address. The €2 is marked in Ripple as being "issued" by ACME.
There are several prerequisites that ACME must meet in order for this to happen:
- ACME must have a Ripple account. Our best practices recommend actually having at least two accounts, so that the account creating issuances in Ripple is exposed to less risk than the account(s) performing day-to-day transactions.
- ACME needs to know Alice's Ripple address.
- Alice must create a trustline from her Ripple address to ACME.
h3. Trading on Ripple
(TODO: flesh out)
- Anyone can buy/sell EUR@ACME on Ripple
- including users who don't have ACME accounts (caveat: requireauth flag)
- Ripple users trading and sending EUR@ACME to one another requires no intervention by ACME
h3. Withdrawing from Ripple
(TODO: flesh out)
- ACME should honor its obligations
- but should do KYC first
Withdrawal process: (like a deposit in reverse!)
- Bob sends Ripple transaction of €1 to ACME
- In its internal accounting, ACME debits its Ripple-backing balance €1 and credits Bob's balance €1.