Bitcoin vs. Ripple’s XRP: What’s the difference?
Many consider Bitcoin to be the first cryptocurrency. Founded in 2009 by an anonymous person or persons known only by the pseudonym Satoshi Nakamoto, Bitcoin has helped bring blockchain technology and decentralized digital currencies to the mainstream.
But Bitcoin is only the beginning of the cryptocurrency story. Since 2009, numerous others have entered the picture, competing to dethrone the big B from the crypto throne. Ripple’s XRP is one of those ambitious currencies — currently the seventh largest cryptocurrency by market cap.
So what’s the difference between Bitcoin and Ripple’s XRP? In short, quite a lot. Let’s take a look.
- XRP is designed to help improve traditional financial systems
Bitcoin’s original purpose was to offer an alternative to central bank-controlled fiat money. Twitter founder Jack Dorsey thinks it could oneday replace the USD as the global reserve currency.
Ripple’s XRP, on the other hand, is designed to help improve the traditional financial system. Ripple partners with financial institutions, like banks, to deploy payment corridors in compliance with local jurisdictions.
- XRP is much more abundant
Bitcoin has a limited supply (21 million). This artificial scarcity has helped increase its value among investors. It’s also difficult to mine and requires a lot of computing power to do so.
Creators of XRP created more than 100 billions coins — more than 50 billion of which are currently in circulation. Ripple, the company that created XRP, is the only one that can increase the amount in circulation.
- XRP’s centralized nature makes it faster and more environmentally-friendly than Bitcoin
Though blockchain mining is a core concept of most cryptocurrencies, like Bitcoin, Ripple does things a different way. Due to the complicated nature of mining, confirming Bitcoin transactions takes a lot of time and requires a lot of computing power. As a result, Bitcoin is a real energy hog. The process of mining Bitcoin around the world consumes as much energy as entire nations like Sweden, Findland and Malaysia. Even Bitcoin transactions use a lot of energy — the average transaction consumes almost twice the monthly amount used by the average U.S. home.
XRP transactions, on the other hand, are confirmed in seconds without needing to expend a lot of energy in the process — this is because transactions are powered through a “centralized” blockchain to make it cheaper, faster and more reliable.
The centralization of XRP means Ripple has complete control over it — which is one reason why many financial institutions have embraced the cryptocurrency.
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