Let’s examine more closely what sets XRP different from Bitcoin and other popular digital tokens. First let’ s give a brief introduction about Bitcoin and Ripple.
Bitcoin is a digital currency used to enable payments for goods and services that runs on a public blockchain record. The blockchain is a public database of confirmed transactions and record keeping, and it forms the foundation of the bitcoin network.
Transactions are continuously added to the Bitcoin blockchain after being verified by miners. Miners are compensated with Bitcoin (BTC) for successfully verifying transactions in return for their time and the computational power required to validate the ledger in this manner.
The native cryptocurrency for Ripple Labs’ products is called XRP. Its products are utilized in remittance systems that function more like SWIFT, a service for international money and security transfers used by a network of banks and financial intermediaries, for payment settlement, asset exchange, and remittance systems. Compared to Bitcoin, XRP is pre-mined and employs a simpler mining process.
XRP and Ripple are often used interchangeably in news articles. Actually, both are distinct. The organization and network that powers the XRP cryptocurrency go by the moniker of Ripple.
The business was started as a social media-enabled peer-to-peer trust network. Bypassing banks, users inside a network might create credit lines and make loans to one another. However, the network was never able to take off.
Ripple altered course and became OpenCoin, a network for money transfers where big enterprises and financial services organizations participated as counterparties to transactions, in 2012, three years after Bitcoin launched the cryptocurrency era.
Its cryptocurrency, XRP, was released the same year, with 20 billion tokens going to each of the business’s co-founders and 80 billion tokens going to the company. XRP was created with the intention of acting as a middleman for transactions involving two different currencies or networks. In September 2013, Ripple Labs replaced OpenCoin.
Identifying itself as a worldwide payments network, Ripple has well-known banks and financial institutions among its clients. To enable speedy currency conversion between multiple currencies, XRP is employed in its products.
The following are the key distinctions between Bitcoin and XRP:
Both Use Various Techniques to Validate Transactions
The Ripple network employs a special distributed consensus process to validate transactions instead of the blockchain mining idea. Participating nodes conduct a poll to confirm the legitimacy of a transaction. This makes confirmations nearly immediately possible without a centralized authority.
As a consequence, XRP continues to be decentralized and is quicker and more dependable than many of its rivals. It also implies that compared to Bitcoin, which is regarded as an energy hog, the XRP consensus method uses very less energy.
XRP is more affordable and quick than Bitcoin.
The lengthy confirmation times and high transaction fees associated with Bitcoin transactions are caused by the intricate and labor-intensive structure of the cryptocurrency’s mining process. Transactions using XRP are often relatively cheap and are verified in a matter of seconds.
XRP transactions have a processing fee, much as bitcoin transactions. A tiny amount of XRP is charged to the user each time a transaction is made on the Ripple network (individual or organization).
In the Market, XRP Has More Coins
At the start of the project, one billion XRP were pre-mined and have been progressively released into the market by its major investors.
In contrast, there will only ever be 21 million Bitcoin in existence since the supply is limited to that number.
Investors are becoming more interested in BTC due to its fictitious scarcity and potential as a store of money.
Bitcoin and XRP Have Distinct Circulation Mechanisms
As soon as miners discover new bitcoins, they are made available and added to the network. They don’t follow a set release timetable, and the amount available is mostly influenced by network speeds and the complexity of the algorithm used to generate coins.
The XRP release is controlled by a smart contract. According to a built-in smart contract, Ripple intended to issue a maximum of 1 billion XRP tokens every month; nonetheless, there are already 55 billion in circulation.
Any XRP that is left over at the end of a month will be sent back to an escrow account. This process makes sure that there won’t be any chance of abuse since there won’t be an abundance of XRP cryptocoins accessible right away; it will take several years before all the cryptocoins are released.