What is Ripple

Table of contents:

• XRP is cheaper and faster than Bitcoin
• XRP has more coins on the market
• XRP and Bitcoin have different mechanisms
• The bottom line

The result is that XRP remains decentralized and is faster and more reliable than many of its competitors. It also means that the XRP consensus system uses negligible amounts of energy compared to Bitcoin, which is considered a consumer of energy - nsbroker.com post explains it perfectly.

XRP is cheaper and faster than Bitcoin

Due to the complicated and intense nature of mining used in cryptocurrencies, Bitcoin transaction confirmations can take many minutes and carry high transaction costs. XRP transactions are confirmed in seconds and are generally done at a very low cost.

Similar to the processing fee for Bitcoin transactions, XRP transactions are charged. Every time a transaction takes place on the Ripple network, the user (individual or organization) is billed a small amount of XRP.

XRP has more coins on the market

Approximately 1 billion XRP was previously mined at launch and the major investors were gradually brought into the market. In contrast, the supply of Bitcoin is limited to 21 million, which means that only 21 million Bitcoin will exist. BTC's man-made scarcity has helped spark investor interest in its potential as a store of value.

XRP and Bitcoin have different mechanisms

Bitcoins are released and added to the network when miners find them. They do not adhere to a release plan and their delivery mainly depends on the speed of the network and the difficulty of the algorithm that is used to mine coins.

A smart contract controls the introduction of XRP. Ripple planned to issue a maximum of 1 billion XRP tokens each month as governed by an integrated smart contract; The current circulation is over 50 billion.

Every unused portion of the XRP in a given month is returned to an escrow account. This mechanism ensures that no abuse through an oversupply of XRP cryptocurrencies is possible and that it will take many years before all cryptocurrencies are available.

In general, XRP is better than Bitcoin for shorter processing times and lower transaction costs. To understand both with real comparisons, here are some analogies.

Peter, who lives in the US, visits Walmart and pays for his purchases in US dollars. You can also use your US dollar to buy other currencies for trading and investing such as GBP or JPY and then sell them at a later date at a profit or loss.

Bitcoin is an equivalent digital currency, for example an alternative to real US dollars. Peter can make a purchase and pay in bitcoins, or he can buy bitcoins to trade and invest at a later date and sell at a profit or loss, just like trading any other fiat currency such as GBP or JPY.

If Peter wants to send $ 100 to Paul in Italy in the US, he can do so by hiring his American bank to carry out the transaction. After paying the required fees, Peter's US bank will issue instructions through the current SWIFT system that will credit Paul's Italian bank account with the equivalent in euros (or USD). This process can be expensive at both ends and takes a number of days.

Enter Ripple, the payment and billing system that also has a currency, the XRP.

Ripple's payment system uses XRP tokens to transfer assets on the Ripple network. Peter can instantly convert the same $ 100 into equivalent XRP tokens that can be instantly transferred to Paul's account over the Ripple network.

After the transaction has been properly verified and authenticated by the decentralized Ripple network, Paul receives the XRP tokens. You have the option to convert it back to USD or any other currency of your choice, or even keep it as an XRP token. The verification process is faster than Bitcoin and traditional money transfer systems.

The bottom line

While Ripple works a bit more complicated, the above example explains the basic functionality. The Ripple system does better than the Bitcoin network due to its faster processing times and lower transaction fees. On the flip side, BTC is generally more widely used and known than XRP, which gives it an edge in other ways.