Ripple is a payment settlement, currency exchange, and remittance system that intends to create a more efficient way of transferring assets – both domestically and internationally. On the other hand, Bitcoin is a digital currency created as a means of payment for goods and services.
“Ripple” refers to a privately owned company responsible for developing the cryptocurrency XRP and the RippleNet network. It should be noted that Ripple is both a cryptocurrency and a payment settlement platform.
Bitcoin is a blockchain-based technology, whereas Ripple uses a consensus ledger and a network of validating servers along with the cryptocurrency XRP to facilitate transfers.
Ripple vs. Bitcoin – The Key Differences
Ripple’s entire supply of 100 billion XRP was minted when it was first launched, and over 45 billion is currently in circulation. Bitcoin’s supply is capped at 21 million, of which more than 18 million is already in circulation.
2. Control Over Coin Issuance
Ripple controls the entire supply of XRP and periodically sells certain amounts in the market. Besides the 45 billion XRP in circulation, around 55% of all XRP tokens are currently held by Ripple.
On the contrary, bitcoin can be mined by solving a computational math problem on a computer. Its supply is not controlled by any organization; however, its supply is limited to 21 million.
3. Transaction Speed
Ripple primarily offers fast and cheap transactions, allowing for low cost, high-speed currency exchanges, payment settlements, and remittances. Bitcoin functions as a decentralized digital currency – rather than transaction speeds, bitcoin focuses more on its resistance to censorship and centralization.
XRP transactions are confirmed within seconds. On the other hand, Bitcoin transaction confirmations take around 10 minutes on average.
The bitcoin network relies on blockchain technology – a shared public ledger that includes all confirmed transactions, and the mining concept to validate transactions. Ripple uses a consensus ledger along with a network of validating servers or validators. These validators are vetted and chosen by Ripple and are key to the transaction validation process.
Ripple’s primary functions are currency exchange, remittances, and international payments. As an alternative to the status quo of SWIFT payments, Ripple offers a much faster, cheaper, and hassle-free way to exchange currencies and send money across borders.
Bitcoin is mainly a currency that involves no third-parties and no central authority controlling its supply and demand. It can be used for various purposes, ranging from paying for a haircut to booking hotels online.
Ripple vs. Bitcoin in Practical Applications
The RippleNet network is currently being used by more than 300 financial institutions, including American Express and Santander. Ripple helps make money transfers cheaper, faster, and more convenient for institutions and their customers across the globe.
Bitcoin continues to rise in popularity, seen in an increase in adoption among businesses. Today, several businesses accept bitcoin as a form of payment for goods and services. Also, bitcoin’s proven itself as an investment that can deliver significant returns.
Ripple: Suppose Paul wants to send $2,000 to Sophia, who stays in Argentina. In a scenario without Ripple, Paul would need to send a transfer through his bank, which would take 1-2 days. The transaction would involve exchanging US dollars for Argentine pesos, usually at a higher-than-market exchange rate, along with transaction charges.
However, with Ripple, Paul could just exchange the $2,000 for XRP tokens and send the tokens to Sophia in a matter of seconds at an affordable rate.
Bitcoin: Andrea wishes to purchase a yoga mat online that costs US$50. Instead of paying $50 from her bank account using a debit card, Andrea transfers 0.0026 bitcoin from her wallet to the vendor’s wallet.
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