Bitcoin vs. Ripple (XRP): The similarities and differences
For any amateur, cryptocurrencies like Bitcoin, Ripple (XRP) and others may seem to be the same, with differences in value just like how different fiat currencies have different values. However, this is far from the truth. Each cryptocurrency has been designed differently. In this post, let us compare Bitcoin against Ripple (XRP), two of the most famous currencies traded on online Bitcoin Exchange.
Similarities between them
Cashing Out – if you want to cash out your Bitcoin or Ripple (XRP), you need to do so from the dedicated cryptocurrency gateway. You have the flexibility to convert your Bitcoin or Ripple (XRP) in many accepted world fiat currencies.
Open source code – Both Bitcoin and Ripple (XRP) have open source codes even though Ripple hasn’t released its currencies’ code yet.
Anonymity – Both Bitcoin and Ripple (XRP) allow you to do free and anonymous transactions online.
Similar algorithmic principles – Both Bitcoin and Ripple (XRP) work on the same algorithm- if a person does a transaction x on the network, other entities on the network too have to agree that the same transaction x will take place.
Aims of each currency
Bitcoin was created as a digital currency for paying for goods and services. It was like a replacement for fiat currency. On the other hand, Ripple (XRP) is a currency which was created for payment networks and banks to perform currency exchange, payment settlement and money transfer system. The idea was that Ripple (XRP) could be a system for direct asset transfers in real time which is much more transparent, secure and cheaper than existing SWIFT payment methods, besides others.
Origin and Ownership
Bitcoin was created by the pseudonymous Satoshi Nakamoto. This is a decentralized currency which was founded in 2009. On the other hand, Ripple, a currency created in 2012, is a centralized currency managed by the Ripple Company who controls its flow. Unlike Bitcoin, Ripple (XRP) cannot be mined. Ripple ‘creates’ its XRP currency. Ripple has already created 100 billion XRP in the market of which 55 billion is distributed to strategic partners, users and NGOs.
Bitcoin was created to be an alternative to fiat currency. Many people believe that it will one day be a substitute for fiat currencies. It is an anonymous and decentralised currency which has a limited supply to ensure that inflation is taken care of.
Ripple (XRP) on the other hand, has been designed to work with fiat currencies. With Ripple (XRP), you can get money from one person in US$, convert it to XRP and then send it to someone in another country in cash in the local currency. Ripple (XRP) is a way to digitize all kinds of monetary transactions within the banking system.
Bitcoins are mined everyday by hundreds of thousands of computers. Every ten minutes these
computers collect pending bitcoin transactions into a block and turn them into a maths puzzle. Those who solve this puzzle are rewarded 12.5 Bitcoins. This is how the bitcoin supply grows every ten minutes until the last Bitcoin is mined in 2140.
On the other hand, Ripple (XRP) cannot be mined, but are issued. The Ripple Company still owns around 60% of the XRP currency. They currently sell about Ripple (XRP) per month, which they want to take to 1 Billion Ripple (XRP) per month soon.
Transaction times and fees
For Bitcoin, the transaction time depends on how busy the network is. If there are a few miners and a limited number of blocks then the transactions can take an hour. If the network is busy, it can even take up to a few days. The fee or mining is set by the user. The higher the fee, the faster the transaction can be validated.
With Ripple (XRP), any transaction takes just a few seconds. The current minimum transaction rate is 0.00001XRP (less than 1 cent), irrespective of the size of the transaction. There are currently no transaction fees collected by anyone for Ripple (XRP).
With Bitcoin, there isn’t much privacy as all transactions are recorded on the blockchain which are then open to the public. If you know anyone’s wallet address, you can see the balance as well as all the incoming and outgoing transactions. Many people change the public key after the transaction automatically, but the history still remains the same.
Ripple (XRP), on the other hand, doesn’t make your private information public, but stores all the data for you to view whenever necessary, just like a bank does.
ADDITIONAL READING – What is Ripple (XRP)