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What’s the Difference Between Bitcoin and Ripple?

An Overview of Bitcoin vs. Ripple

The cryptocurrency investing world appears to be limited to bitcoin from the outside. Bitcoin, as the most well-known cryptocurrency, is the market leader in terms of market capitalization and investor interest.

There are, however, various additional possibilities for people looking to diversify their portfolio and try out cryptocurrencies that take a different approach to the concept of digital currency. One of them is Ripple’s XRP. The cryptocurrency was ranked sixth in terms of total market capitalization in July 2021. Let’s look at what sets XRP apart from Bitcoin and other popular digital tokens.


The firm behind the cryptocurrency XRP is Ripple.
Bitcoin transaction confirmations can take many minutes and cost a lot of money, but XRP transactions are completed in seconds and cost very little.
XRP is a cryptocurrency that is most recognized for its digital payment mechanism and network.
The XRP payment mechanism is used by many large banks.
Bitcoin is a digital currency that is supported by a public blockchain record. It is used to make payments for products and services. The blockchain concept, which is a public ledger of verifiable transactions and record keeping, underpins the bitcoin network.

Miners continuously verify transactions and add them to the Bitcoin blockchain. Miners are compensated with BTC when transactions are successfully validated in exchange for their time and the computational power required to validate the ledger in this way.

Ripple XRP is the native cryptocurrency for Ripple Labs’s products. Its solutions are used for payment settlement, asset exchange, and remittance systems that are similar to SWIFT, an international money and security transfer service provided by a network of banks and financial intermediaries. 3 In comparison to Bitcoin, XRP is pre-mined and uses a simpler mining mechanism.

XRP and Ripple are frequently used interchangeably in news headlines. Both are, in fact, distinct. The firm and network behind the XRP cryptocurrency is known as Ripple.
The company started out as a social media-enabled peer-to-peer trust network. Users in a network could make loans and start credit lines without going through banks. However, the network was unable to gain traction.

Ripple changed its name to OpenCoin in 2012, three years after Bitcoin ushered in the cryptocurrency age. It was a network for money transfers where significant enterprises and financial services firms functioned as counterparties to transactions.

Its cryptocurrency, XRP, was introduced the same year, with the firm receiving 80 billion tokens and the co-founders receiving 20 billion. The goal of XRP was to act as a bridge currency or network between two different currencies or networks. In September 2013, OpenCoin changed its name to Ripple Labs. 5

Ripple bills itself as a global payments network with customers including large banks and financial institutions. XRP is employed in the company’s products to allow for rapid currency conversion.

Important distinctions
The following are the primary differences between Bitcoin and XRP:

Transactions are validated in different ways by both of them.
Instead than using the blockchain mining idea to authenticate transactions, the Ripple network employs a unique distributed consensus process in which participating nodes poll each other to verify the transaction’s legitimacy. This allows for near-instant confirmations without the need for a central authority.

As a result, XRP stays decentralized and outperforms many of its competitors in terms of speed and reliability. It also means that, in comparison to Bitcoin, which is regarded an energy hog, the XRP consensus method uses very little energy.

XRP is a cryptocurrency that is both cheaper and faster than Bitcoin.

Bitcoin transaction confirmations can take several minutes and are associated with significant transaction charges due to the intricate and expensive nature of mining utilized in the cryptocurrency. XRP transactions are confirmed in seconds and have very cheap transaction fees.

XRP transactions are charged in the same way as bitcoin transactions are. A tiny amount of XRP is charged to the user each time a transaction is completed on the Ripple network (individual or organization).

There are More XRP Coins on the Market

At the time of debut, about 1 billion XRP were pre-mined and progressively released into the market by the company’s major investors. Bitcoin, on the other hand, has a supply limit of 21 million coins, which means there will only ever be 21 million Bitcoin in existence. The artificial scarcity of BTC has sparked investor interest in the currency’s potential as a store of value.

The Circulation Mechanisms of XRP and Bitcoin are Distinct.

When miners discover bitcoins, they are released and added to the network. They have no set release date, and their supply is largely determined by network speeds and the difficulty of the algorithm used to create coins.

The release of XRP is controlled by a smart contract. According to an in-built smart contract, Ripple expected to distribute a maximum of 1 billion XRP tokens every month; the current circulation is over 50 billion.

Any XRP that is not spent in a given month will be returned to an escrow account. This system assures that an overstock of XRP cryptocoins will not lead to misuse, and it will take several years before all of the cryptocoins are available.

Overall, XRP outperforms bitcoin in terms of transaction processing times and transaction fees.

7 Example of Bitcoin vs. Ripple

Here are some analogies to help you grasp both with real-world examples.

Peter, who lives in the United States, goes to Walmart and pays in US dollars. He can also use his US dollars to buy other currencies for trading and investment, such as GBP or JPY, and then sell them for profit or loss at a later date.

Bitcoin is a digital money that functions similarly to real-world US dollars, for example.

Peter can buy something with bitcoins and pay for it with bitcoins, or he can buy bitcoins for trading and investing and then sell them for profit or loss at a later date, just like any other fiat currency like the GBP or JPY.

If Peter in the United States wants to transmit $100 to Paul in Italy, he can do so by asking his American bank to do so. Following the appropriate charges, Peter’s American bank will send instructions to Paul’s Italian bank, using the current SWIFT system, to credit Paul’s account with the equal euros (or USD). This process may entail substantial costs on both sides and can take several days to complete.

Ripple is a payment and settlement network with its own currency, the XRP.

For asset transfers on the Ripple network, Ripple’s payment system employs XRP tokens.

Peter may quickly convert the same $100 into comparable XRP tokens, which can then be transferred to Paul’s account via the Ripple network.

Paul will receive the XRP tokens once the transaction has been verified and authenticated by the decentralized Ripple network. He’ll have the option of converting it back to USD or any other currency he wants, or keeping it as XRP tokens. The verification process is much faster than bitcoin and other traditional money transfer mechanisms. 8

Final Thoughts

While Ripple’s workings are a little more intricate, the example above demonstrates the basics. Because of its faster processing speeds and reduced transaction fees, the Ripple system outperforms the bitcoin network. 87 BTC, on the other hand, is more widely used and recognized than XRP, providing it an advantage in other respects. 12

Bitcoin is still a completely open system that is not controlled by any single person, organization, or government.

9 Although decentralized, the Ripple network is owned and maintained by a private firm of the same name. 13 Despite the fact that they both have their own cryptocurrency tokens, the two prominent virtual platforms are designed for different purposes.

What do you think?

Written by Trevanna Gordon

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