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How is Ripple different from bitcoin?

01 May 2022 By : Sourabh Agrawal
Southeast Asia’s Lar


Bitcoin works with publicblockchain ledgers that support digital currencies used to facilitate payments for goods and services. The Bitcoin networkis based on the concept ofblockchain, a public ledger with validatedtransactions and records. Miners areconstantly validating transactions and adding them tothe Bitcoin blockchain. In exchange for the time and computing power required to validate the ledger in this way, the miner receivesBTC if the transaction issuccessfully validated.

XRP is the native cryptocurrency of the productdeveloped by Ripple Labs. The productis used in payment processing, asset exchange and remittance systems that act like SWIFT, an international moneyand security transfer service used in banks and networks of financial intermediaries.XRP is pre-mined and uses a less complex mining engine. How to compare with Bitcoin.

The company was founded as a peer-to-peer trustnetwork that leverages social media. Users inthe network can bypass banks, lendto each other, and open credit lines. However, thenetwork was unable to takeoff.

Both HaveDifferent Methods to Validate Transactions

Instead of using the blockchain miningconcept, the Ripple network uses a unique distributed consensus mechanism tovalidate transactions in which participating nodes verify the authenticity of atransaction by conducting a poll. This enables almost instant confirmationswithout a central authority.

The result is that XRP remainsdecentralized and is faster and more reliable than many of its competitors. Italso means that the XRP consensus system consumes negligible amounts of energyas compared to Bitcoin, which is considered an energy hog.  

XRP is cheaper and fasterthan Bitcoin

 Due to the complexand intensive nature of cryptocurrency mining, confirming aBitcoin transaction can take severalminutes, which increases transaction costs. XRP transactions are confirmed withinseconds and usually occur at a very low cost.Similar to the 6 Bitcoin transaction processingfee, XRP transactions are charged. Each time a transaction is made on the Ripple network, the user (individual or organization)is charged a small amount of XRP.

XRP Has More Coins in the Market 

About 1 billion XRP werepre-mined at launch and have been released gradually into the market by itsmain investors. In contrast, Bitcoin’s supply is capped at 21 million,meaning there will only ever be 21 million Bitcoin in existence. BTC’sartificial scarcity has helped generate investor interest in its potential as astore of value.

TheCirculation Mechanisms of XRP and Bitcoin are Distinct.

When miners discover bitcoins, they are released andadded to the network. They have no set release date, and their supply islargely determined by network speeds and the difficulty of the algorithm usedto create coins.

The release of XRP is controlled by a smart contract.According to an in-built smart contract, Ripple expected to distribute amaximum of 1 billion XRP tokens every month; the current circulation is over 50billion. Any XRP that is not spent in a given month will be returned to anescrow account. This process ensures that there will be no misuse of XRP cryptocoins owing to an excess, and it will take many years for all XRP crypto coinsto be depleted.

While Ripple's workings are a little more intricate, theexample above demonstrates the basics. Because of its faster processing speedsand reduced transaction fees, the Ripple system outperforms the bitcoinnetwork. 87 BTC, on the other hand, is more widely used and recognized thanXRP, providing it an advantage in other respects.

Bitcoin is still a completely open system that is notcontrolled by any single person, organization, or government.

Although decentralized, the Ripple network is owned andmaintained by a private firm of the same name. Despite the fact that they both have their own cryptocurrency tokens,the two prominent virtual platforms are designed for different purposes.

Any XRP not spent within a month will be restored to anescrow account. This procedure ensures that here will be no misuse of XRPcrypto coins owing to an excess, and it will take many years for all XRP cryptocoins to be depleted.

 

Disclaimer

Crypto products are currently unregulated and subject to market risk.Please seek independent financial advice or do your own research beforeinvesting.


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