You must have heard the names of Bitcoin and Ripple. This article will help you learn more about these two virtual currencies with examples of their real-world applications.
Bitcoin vs. Ripple: An Overview
From the outside, it seems like bitcoin is the only cryptocurrency worth investing in. Bitcoin leads in market capitalization and overall investor traction as the most well-known cryptocurrency.
But there are a number of alternative choices available for people looking to diversify their holdings and try out coins that have a different perspective on the idea of digital currency. One of them is XRP from Ripple. The cryptocurrency was sixth in terms of overall market value in May 2022.
Examples of Ripple vs Bitcoin
Here are some analogies to help you grasp both using examples from everyday life.
Peter, who resides in America, goes to Walmart and uses dollars to pay for his items. He may also buy GBP or JPY using his US dollars for trading and investing purposes, and then later sell them for a profit or loss.
Bitcoin is a comparable digital money that serves as an alternative, for instance, to US dollars in the real world. As with trading any other fiat currency, such as the GBP or JPY, Peter may make a purchase and pay for it with bitcoins or he can buy bitcoins for trading and investments and sell them off at a later time for profit or loss.
Instructing his American bank to carry out the transaction will enable Peter in America to transfer $100 to Paul in Italy. Peter’s American bank will send instructions using the current SWIFT system to credit Paul’s Italian bank account with the corresponding amount of dollars after taking the relevant charges (or USD). This procedure takes a certain amount of time to complete and may include expensive fees on both sides.
Let’s talk about Ripple, a system for payments and settlements that also has its own currency, XRP.
For the transfer of assets on the Ripple network, the payment mechanism of Ripple employs XRP tokens.
Peter may quickly convert the same $100 into comparable XRP tokens, and then instantaneously send those tokens to Paul’s account through the Ripple network.
Paul will get the XRP tokens when the decentralized Ripple network has properly verified and authenticated the transaction. He will have the opportunity to either keep it as XRP tokens or convert it back to USD or any other currency of his choosing. Compared to typical money transfer platforms and the Bitcoin network, the verification procedure is quicker.
While Ripple operates in a somewhat more intricate manner, the example above illustrates how it works in general. In comparison to the bitcoin network, the ripple system performs better because to its quicker transaction processing and less transaction fees. On the other hand, BTC has an edge over XRP in other aspects since it is typically more popular and well-known.
Bitcoin continues to be a genuinely public system that is not controlled by any one person, group, or country.
Despite being decentralized, a private business by the same name owns and runs the Ripple network.
Although the two well-known virtual systems each have their own distinctive cryptocurrency coins, they are designed for different purposes.