As far as publicity and buzz in the cryptocurrency community goes, the recent pace of Ripple’s alliances with major financial institutions all over the world has rejuvenated the company and its native token, XRP.
From MoneyGram to Western Union to Santander, the partnerships that Ripple has formed over the past few months have established it as a major player in the cryptocurrency field, with it only trailing behind Bitcoin and Ethereum as the cryptocurrency with the highest market cap.
However, the popularity has been a cause of confusion for new investors that come to the cryptocurrency world with the intention to purchase Bitcoin, only to learn about this relatively new coin that is forming alliances with names that a non-cryptocurrency trader would instantly know about, which, to no one’s surprise, then piques their interest towards this cryptocurrency instead.
But the concept of thinking that Bitcoin and Ripple operate within the same functionalities is something that needs to be clarified, so new investors can make an informed decision, and even if someone who is not intending to invest would at least learn about the differences between Bitcoin and Ripple.
While both Bitcoin and Ripple, at their surface, are cryptocurrencies that could be purchased, held as savings, and transacted between users, their backend functionalities are different, and so are their primary use cases.
Bitcoin’s core features
Bitcoin was created in 2009 by an anonymous entity, Satoshi Nakamoto, as a means of “digital cash.” Being the world’s first cryptocurrency, Bitcoin had aimed to serve as a means of exchange and to be used to purchase goods and services without the control of a central banking authority and to facilitate cross-border transactions easily.
Bitcoin was also built on a concept of freedom and decentralization, where no one controlled the functionalities of the blockchain. If any changes were ever required, then a certain number of people would need to come together to implement the change or “fork” the network. This method of gathering agreement from a certain percentage of miners is easier said than done, which could be considered as either a good or a bad thing, depending on how you look at it.
While it was meant as digital cash, Bitcoin soon started facing scaling issues on its network, which led to higher transaction times and costs, with the former going as higher as a few hours and the latter averaging at around $27, regardless of the amount that one wanted to transact.
At press time, several developers are working to fix these issues for the Bitcoin network. When implemented fully, solutions such as Segregated Witness (SegWit) and Lightning Network would resolve these issues and bring back Bitcoin’s one-held status as a primary mode of cryptocurrency transaction.
Ripple’s core features
On the other hand, Ripple was created in 2012 by its eponymous company and intended to be used as a cross-border payments solution through its native cryptocurrency, XRP.
Unlike Bitcoin, Ripple was created by a company and thus does not employ the concept of decentralization. It uses a consensus protocol when any updates need to be implemented to modify the network, and once consensus is reached by relevant parties, the Ripple developers go ahead and implement said updates.
Due to its intended use as a cryptocurrency to facilitate cross-border transactions, Ripple’s company has been focused on forging alliances with global institutions, and thus most of the network’s actions and updates are focused towards achieving that goal – unlike prioritizing peer to peer transactions.
With its transaction-centric approach, transactions in Ripple are performed by even lower than 1 cent in transaction costs, and within 4 seconds at most of transaction time.
At press time, Ripple’s core focus is on establishing itself as a cryptocurrency that facilitates international payment transfers, and the corporate alliances that it forms are a part of that program.
So which one is a better cryptocurrency?
Since both of them serve different functions, choosing which one of them is a better cryptocurrency is an unfair competition.
However, with the basics covered, which are the differences in decentralization and updates, both cryptocurrencies have their pros and cons.
Bitcoin offers complete decentralization but suffers from lagging transaction speed and costs. On the other hand, Ripple has fast transaction time with low costs, but is not a decentralized network and is controlled by a company.
As always, before investing, you should take your time to study and analyze what works for you, and then go with one option. If you are feeling adventurous, then go with a bit of both and see how it turns out for you before you decide to stick with one of them.