Bitcoin vs Ripple: A True Global Payment System
bitcoin vs ripple In previous articles, I compared and contrasted Bitcoins with Litecoins and Ethereum. Here, I would like to introduce you to another crypto currency called Ripple. bitcoin vs ripple
Both Bitcoins and Ripples are digital currencies with different purposes and audience in mind. We will be exploring the key differences between the two in subsequent paragraphs.
Ripple was launched in 2012 by a private company named Ripple labs. The crypto was originally named Opencoin, until it was renamed to Ripple in 2015. The Current Market Value of 1 Ripple (XRP) = $1.61
Ripple is the fourth largest crypto currency, in terms of Market Cap. The Market Capitalization of Ripple stands at 6% of the total $769 billion. Of which %47 market is held by bitcoins, and 19% is held by Ethereum.
The Ripple is energy efficient. Its energy cost is negligible, in contrast to Bitcoin’s Energy cost per transaction of 250kwh.
Global Payment System
Bitcoin launched by promising to be one true global currency of the world. However, it is facing tough time from other crypto currencies in this sphere. Ripple is one such currency, which is specifically geared towards providing cross border payment facilitation. The reason for ripple success is lower transaction time and transaction fee associated with cross border bank to bank transfers.
A traditional banking takes about 5 working days to settle cross border payments. While, bitcoins takes minutes to hours—ripples takes 5 seconds.
This is ripples huge advantage over bitcoins. As bitcoins transaction time is very slow and is also very costly. One transaction of bitcoin on average costs $27.
80 Banks all over the world has adopted the ripples financial system. While, several others are experimenting with it. The Ripple is backed by banks and other financial institution, their motto is to make money transfer as simple as sending data.
Comparison with Traditional Banking
Traditional banking is structured much different than ripples or bitcoins. It has a lot of intermediaries including correspondent and receiving central and retail banks. Bitcoins has trader at both ends of the border, whereas, ripples has group of traders in central location between both banks. See above picture for illustration
Pre-mined vs. Mined
There is no concept of mining in Ripples. All 100 billion ripples are pre-mined. Currently, 38 billion ripples are in circulation. The remaining ripples are scheduled for release in market regularly. 1 billion ripples would be released over the course of 55 months. These ripples are held in escrow and enforced by smart contract. This is done to reduce fear of people, that XRP would flood the crypto currency market prematurely.
The other point here to note is that transaction fee in XRP is burned instead of awarding it to miners (like bitcoin). This increases the value of ripples already in circulation.
In contrast, there are 21 million maximum bitcoin limit. Out of which, 16 million are already mined. It is estimated that in the year 2140 bitcoin will reach its maximum upper limit. Beyond which no bitcoins can mined.
Drawbacks of Ripple
Ripple is frequently criticized for not living up to main ethos of crypto currency. It is a centralized digital currency which is in contrast to decentralized philosophy of crypto. The centralization gives the control to the private company which owns ripple. The ledger is internal and not readily available to the public. However, banks can use it to get more information about the transaction like customer name, address etc.
The proponents of decentralization want the control to be in the hands of miners and not any governments or private institution. They are fearful that the transparency of the system would be compromised if it is owned by any organization.
however Ripple is facing competition both from major cryptocurrencies like bitcoins, ethereum; as well as its direct substitutes like Stellar.
The reason is that if Bitcoin emerges as one true global currency of the world. Then the very tenant of ripple i.e. cross border settlement would not be useful anymore.
Secondly, Stellar is a crypto currency used for cross border payments. However, instead of relying on banks, it depends on peer to peer system. The proponents who think global currency should be above governments or private institution ownership, are inclining towards Stellar instead of Ripples.
Where to buy
There are dozens of places to buy Ripples and Bitcoins. Noteworthy sites are: coinbase, bitquick, hitbtc, cexio, coinmama, xcoins
So these are the differences between bitcoin vs ripple
Content Written: Waqas Khan
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