Ripple, released in 2012, has become the third cryptocurrency in the world by market cap. Today, Bybit will give you an introduction and explanation on what is Ripple, its main features and what is the difference between Ripple and Bitcoin.
What is Ripple?
In fact, Ripple(XRP) is a platform that aims to improve the speed and cost of financial transactions between banks, organizations, or individuals. Currently, our global banking system handles international transactions too slowly and charge quite a lot of fees. This problem troubles even us individuals as well as banks. For banks, the procedure is even exponentially more complicated. They have to go through several middlemen, which is costly and takes a lot of time with sometimes a low guarantee of success. Therefore, Ripple came into existence to solve this problem.
What is Ripple exactly? It is not only the name of the platform but also the currency used in this network. Ripple is now one of the fastest in crypto space with a transaction speed of only 4 seconds. How does it work? It functions as a medium currency. For example, Bank A wants to send $1,000,000 to Bank B in another country. Bank A will have to buy an amount of XRP that’s worth $1,000,000 and send the money to Bank B's institutional Ripple wallet, and then Bank B can convert them to the currency they want. The transaction happens within minutes. What’s more, all these procedures are done through the Ripple network, which saves their time and effort to buy and sell XRP on an exchange.
Besides the transaction speed, the cost of these transactions is extremely low and will be paid in XRP. In Ripple’s network, a small amount of XRP will be destroyed after a transaction, meaning that the total amount of the coin will become less and less and eventually causing the coin’s price, and possibly the transaction fee, to increase.
Time-saving and effort-saving are definitely two main advantages it holds against other cryptocurrencies. But the current amount of Ripple in circulation is only 38% of the total XRP created, which raises concerns of individual investors as the Ripple company holds the rest and may one day use it for malicious intent.
Ripple vs Bitcoin
To further explain Ripple’s value, we will compare it with the giant in cryptocurrency—Bitcoin. First of all, Bitcoin was developed as a digital currency to pay for services and goods. Ripple is built for banks and payment networks as a currency transfer system and exchange.
Secondly, Ripple is owned by a private company and has an amendment system. Unlike how a hard fork in Bitcoin can only happen when more than 51% of Bitcoin mining power supports it, an upgrade in Ripple will come into effect if an amendment gets at least an 80% support for two weeks. This results in a more democratic development of the network and allows for changes without irreversible splits.
Other than the two differences mentioned above, let’s take a look at Ripple vs Bitcoin in terms of transaction times and fees. Bitcoin’s TPS (transaction per second) is 7, and Ripple’s is 1,500. The transaction fee of Bitcoin is $0.5-$3 while Ripple requires less than $0.01 now. Moreover, the market value of Bitcoin is $104 billion, around 5 times larger than Ripple. However, the circulating supply of Ripple is 40 Billion, while Bitcoin currently has 17 million and is capped at 21 million.
In short, Ripple and Bitcoin are built for different purposes and have their own strengths. As a global crypto derivative exchange, Bybit suggests you do more research if you are interested in the Ripple network. You can also keep following us for more information you need.
This concludes today’s article on what is Ripple and its difference compared to Bitcoin. We hope you learned a lot, enjoyed the read, and stay tuned for more great content.