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Cryptocurrency Bitcoin vs. Ripple: What's the Difference?

Sonia

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Bitcoin vs. XRP​

Bitcoin operates on a public blockchain ledger that supports a digital currency used to facilitate payments for goods and services. The bitcoin network is based on the blockchain concept, a public ledger of verified transactions and record keeping. Miners verify transactions on an ongoing basis and add them to the Bitcoin blockchain. In exchange for their time and the computing power necessary to validate the ledger in this way, miners are rewarded with BTC upon successfully validating transactions3.


XRP is the native cryptocurrency for products developed by Ripple Labs. Its products are used for payment settlement, asset exchange, and remittance systems that work more like SWIFT, a service for international money and security transfers used by a network of banks and financial intermediaries4. XRP is pre-mined and uses a less complicated method of mining as compared to Bitcoin.



What are the main differences between Bitcoin and XRP?​

The main differences between Bitcoin and XRP are as follows:


Both have different methods to validate transactions​

Instead of using the blockchain mining concept, the Ripple network uses a unique distributed consensus mechanism to validate transactions in which participating nodes verify the authenticity of a transaction by conducting a poll. This enables almost instant confirmations without a central authority. The end result is that XRP remains decentralized and is faster and more reliable than many of its competitors. It also means that the XRP consensus system consumes negligible amounts of energy as compared to Bitcoin, which is considered an energy hog.


XRP is cheaper and faster than Bitcoin​

Due to the complicated and intensive nature of mining used in the cryptocurrency, Bitcoin transaction confirmations may take many minutes and are associated with high transaction costs. XRP transactions are confirmed within seconds and generally occur at very low costs.


Similar to the bitcoin transaction processing fee, XRP transactions are charged. Each time a transaction is performed on the Ripple network, a small amount of XRP is charged to the user (individual or organization)5


XRP has more coins in the market​

About 1 billion XRP were pre-mined at launch and have been released gradually into the market by its main investors. In contrast, Bitcoin’s supply is capped at 21 million, meaning there will only ever be 21 million Bitcoin in existence. BTC’s artificial scarcity has helped generate investor interest in its potential as a store of value.


XRP and Bitcoin Have Different Circulation Mechanisms​

Bitcoins are released and added to the network as and when miners find them. They do not adhere to a release schedule and their supply depends mostly on network speeds and difficulty of the algorithm used to mine coins.


A smart contract controls the release of XRP. Ripple planned to release a maximum of 1 billion XRP tokens each month as governed by an in-built smart contract; the current circulation is over 50 billion.


Any unused portion of the XRP in a particular month will be shifted back to an escrow account. This mechanism ensures that there will be no possibility of misuse due to an oversupply of XRP cryptocoins, and it will take many years before all the cryptocoins will be available.

The Bottom Line
While Ripple works in a bit more complicated way, the above example explains its basic workings. The Ripple system scores better than the bitcoin network for its lower processing times and lower transaction charges.6 7 On the other hand, BTC is generally more widespread and better known than XRP, giving it the advantage in other ways.11

Bitcoin remains a truly public system that is not owned by any single individual, authority, or government.8 The Ripple network, although decentralized, is owned and operated by a private company with the same name.12 Despite both having their unique cryptocurrency tokens, the two popular virtual systems cater to different uses.
 

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