What are the Differences Between Bitcoin and Ripple?

By July 9, 2020August 28th, 2020No Comments
Bitcoin vs Ripple - What are the Differences

The cryptocurrency industry started with Bitcoin. Ripple came later but both are equally popular amongst cryptocurrency investors and enthusiasts.

Bitcoin, the cryptocurrency, by numbers has the largest market share. XRP (Ripple’s very own digital currency token) is not far behind and ranks on number 4, as per data from CoinMarketCap and CoinGecko.

Both cryptocurrency systems employ blockchain in their operation yet there are a few differences on some fundamental levels. To talk about those differences, we have to take into consideration their primary aspects – the protocols and the cryptocurrencies.

First, let’s discuss the protocol differences.

Bitcoin vs Ripple: Protocol Differences

The Bitcoin Protocol

Satoshi Nakamoto founded the Bitcoin protocol as a “Peer-to-Peer Electronic Cash System” in 2009.

Basically, it is a decentralized public ledger that records all bitcoin (BTC) transactions. All ledger entries are made only after the transactions are verified sufficiently, which is done by bitcoin miners. Miners solve complex mathematical algorithms to process different BTC transfers. They then add the transaction data to the blockchain.

Solving these math puzzles, verifying transactions, and consequently adding blocks to the blockchain requires considerable computing power and time. The quickest miners are rewarded for their efforts with an appropriate number of bitcoins. This is the ‘proof-of-work’ protocol that makes new BTC become a part of the Bitcoin economy.

After the latest halving event, the Bitcoin blockchain has been churning out nearly 900 bitcoins every day. For more information on bitcoin mining, check out the video below:

What is bitcoin mining?

The Ripple protocols: RippleNet and XRPL

While the Bitcoin blockchain is an open platform for people to join, and contribute in it’s growth by transacting and mining, Ripple is a fintech company based in San Francisco, California with RippleNet being it’s unique fintech offering.

With RippleNet, the company intends to form a holistic ecosystem of banks, payment processors, and other financial institutions, enabling them to conduct super fast and efficient international payments. The primary idea is to enable real-time settlement of monetary transactions with adequate transparency and security.

Take a look at the video below to understand RippleNet’s design and it’s working:

How Ripple’s RippleNet Works

RippleNet is Ripple’s financial technology facet, but there’s a decentralized aspect too. It’s the XRP Ledger or XRPL.

The XRP Ledger is a decentralized ledger secured by cryptography and powered by a network of peer-to-peer computers. XRPL’s native cryptocurrency XRP fuels all transactions on the network and together they are the primary operating force behind Ripple’s real-time financial transaction system.

It does not employ proof of work to verify transfers. Contrary to Bitcoin’s mining process, XRPL participants function as independent validating nodes and compare transaction records to ascertain the authenticity of transactions.

XRPL’s network of active validators are 153 in number and include universities, exchanges, and financial institutions.

Time and again, the company has constantly maintained that XRPL is an independent open-source platform and free from any kind of commercial association. This means that even if Ripple shuts down, the XRP Ledger will continue to operate normally.

Other Differences

Transaction Metrics

Bitcoin handles about 300,000 to 400,000 transactions per day with 7 – 15 transfers happening in a second. Confirmation times for transactions may range from several minutes to a few hours.

The XRP Ledger confirms transactions in 3-5 seconds. Data from the XRP metrics website, XRPSCAN reveals that XRPL has processed 800,000 – 1 million transactions per day in 2020.

XRP Transactions This Year, Source: XRPSCAN

BTC vs XRP: Cryptocurrency Differences

Cryptocurrency Supply and Circulation

Bitcoins have a maximum supply of 21 million tokens. No individual or centralized authority controls BTC’s circulation. One of the most distinctive features of bitcoin is that it is divisible. One BTC consists of 100 million smaller units known as satoshis.

Bitcoin Controlled Supply, Source: Bitcoin WIki

XRP has a total supply of 100 billion coins. These are indivisible. Out of these 100 billion units, millions were distributed in various stages of airdrops, preliminary sales, or private placements. Banks too received XRP for their international payment trials.

Ripple’s XRP Cryptocurrency, Source: Pixabay

Ripple ensured that token distributions didn’t affect the XRP supply. The current circulation is a little above 44 billion. There is a smart contract operated escrow system in place, that releases 1 billion coins every month in the market. It is programmed to take back all unused XRPs after the month to avoid oversupply or misuse.

Application

Since the last 11 years, bitcoin has become widely popular for being an extremely profitable investment asset, similar to gold. Most folks just buy and hold BTC for extended periods to reap exponential profits. Apart from this, bitcoin has recently seen a significant influx of institutional investors, who trade in bitcoin derivative offerings, like futures and options.

Ripple is in the business of adding an increasing number of banking and financial partners to its growing payments ecosystem. As per the website, more than 300 financial institutions in 40+ countries are already using RippleNet. XRP is at the heart of these partnerships as the digital asset makes inter financial interactions possible.

Ripple also has an additional service called On-Demand Liquidity, for its partners to conduct smooth monetary transfers using XRP. Some of Ripple’s Indian partners include IndusInd Bank, Kotak Mahindra Bank, YES Bank.

Even with their dissimilarities, Bitcoin and Ripple are interesting and promising cryptocurrency platforms and can make a world of difference to global financial systems.

In order to truly gauge the potential of these cryptocurrencies, you will have to own and use them yourself. WazirX offers seamless options for you to buy bitcoin or Ripple’s token XRP or both comfortably. For more details visit: https://wazirx.com

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