Cryptocurrency is blowing up beyond everyone’s expectations, which means that bitcoin isn’t the only king of the jungle anymore.
Even though bitcoin is the most popular cryptocurrency out there, due to its market capitalization and adoption rates, Ripple (XRP) is fourth on the crypto list.
Ripple is actually the name of the company that owns and operates the network XRP. Looking at XRP vs bitcoin, there are many significant differences to note.
The main one being that there are 21 million units of bitcoin that will be mined gradually. But there are 100 billion units of XRP that are already mined and will be released gradually.
Ripple plans to release 1 billion XRP units every month, and any unused units will be transferred back to an escrow account.
Read on to see some other differences between bitcoin and Ripple (XRP) to see which cryptocurrency suits your investing needs better.
Both Are Decentralized, but One Is Run by a Company
The fascinating thing about Ripple (XRP) is that it is owned and operated by Ripple, which is the name of the company. Whereas Bitcoin isn’t run by any central entity, government, or individual.
Ripple, the company, minted the entire supply of XRP when the network was launched. Bit by bit XRP is released into the market from an escrow and sold on the open market.
Whereas, bitcoin (BTC) is mined and based on the blockchain concept. Miners verify transactions regularly. And add them into the blockchain ledger, which delineates all the activity on the network.
In exchange for their time and all those computing resources, miners receive BTC after they verify a certain number of ledger transactions.
Keep in mind that Bitcoin is the name of the network, and the cryptocurrency bitcoin is labeled BTC.
Ripple (XRP) is mined and maintained by a committee of validators. These validators reach consensus every 3-5 seconds. Every time they reach consensus they publish a new ledger with all updated transactions.
Anyone can be an XRP validator, but currently, there are only 35, out of which 6 are actually run by Ripple, the company. To be an XRP validator, you have to be trusted by others on the network.
XRP vs Bitcoin Has Lower Transaction Charges and Processing Times
One of the biggest advantages of Ripple (XRP) is that it can process transactions in a matter of seconds, whereas it would take minutes to process a bitcoin transaction.
Basically, XRP sacrificed decentralization for speed. Ripple doesn’t have the same proof-of-work system as bitcoin does, which means that it is less secure, but it does mean that the transaction fees are lower and the processing times faster.
XRP can conduct transactions faster because there is no mining involved in the process. The validators (35 of them) do not receive any rewards for validating transactions.
Miners compete with each other for bitcoin, but the validators for XRP do not do that. Unfortunately, because all validators have to be approved by Ripple, it is definitely less permissionless and censorship-resistant.
Both bitcoin and Ripple charge processing fees to the user for any transactions on the network, but the transaction fees with XRP (Ripple) are much lower than bitcoin.
Virtual Currency vs. Used by Banks
Bitcoin has gained popularity as a virtual currency and a payment system adopted by many early adopters. 50 cent, a popular American rapper, agreed to take bitcoin as payment for his 2014 album, Animal Ambition, which is worth over $7 million now.
Many early adopters around the world take donations on their websites in the form of bitcoin or send one another bitcoin instead of cash transactions.
XRP (Ripple) is more popular among banks. In fact, many banks from Santander to PNC have used Ripple’s banking focused blockchain for cross border swapping of currencies.
It currently functions on 6 continents and has settled more than half a billion worth of transactions. It’s fascinating because using Ripple you can transfer currency across banks in a matter of seconds, with low transaction fees.
For example, if you have Australian dollars (AUD) and you wish to transfer it to a bank in the United States and into USD, you would check the Ripple price AUD and then use the Ripple network to transfer Ripple from one bank to another.
This is assuming that both banks are on the Ripple network, which is a high possibility as Ripple supports 55 countries and 120 currency pairs.
Bitcoin Is More Widespread and More Accepted Than XRP (for Now)
Bitcoin has been around for much longer than XRP, January 2009 vs. 2012 for XRP (Ripple). This means that it’s more trusted, and it’s also more well-known.
This doesn’t mean that XRP can’t catch up with or even overtake bitcoin in the future, but for now, there is a world of difference between them, not only in pricing but also in the number of transactions conducted daily.
Bitcoin at the time of writing this article is around $23,000 per coin, whereas, Ripple (XRP) is at $0.53.
This could also be attributed to the difference in the number of coins capable of being mined (21 million vs 100 billion).
Finally, due to the processing power that’s needed by bitcoin, it is also extremely energy-hungry, which is something to consider as energy costs increase and the concern for the environment grows rapidly.
Ripple (XRP) uses negligible power as it doesn’t need any mining.
As seen above, there are many differences between the bitcoin and Ripple cryptocurrency. Each coin is going to be suitable for a particular kind of person and particular transactions.
It’s the Difference Between an Economy and a Company
The main difference between bitcoin and Ripple (XRP) is the difference between a huge, decentralized economy of mining. Versus a company that issues coins at a predetermined rate and is processed by pre-approved stakeholders.
There is a large difference between the two and thus, the way each coin is going to be used is going to be markedly different as well.
If you are interested in learning more about cryptocurrency, please do check out the other articles on our website.