What Is The Difference Between Ripple And Bitcoin?
While cryptocurrency trading is growing in popularity, a great deal of confusion remains around the world of blockchain. Bitcoin is a name well-known in this arena, but there are many other cryptocurrencies emerging as the year's progress. One name is Ripple - but what is the difference between Ripple and Bitcoin? Surely, if it's all cryptocurrency they should be the same thing? This article will provide some information on what Ripple is and how it differs from the traditional Bitcoin.
By Anton Kovačić
What Is Ripple?
If Bitcoin is the digital currency intended for payment of services and goods, Ripple is the currency exchange for payment networks and banks. Ripple was created as a system for the direct transfer of assets to settle payments in real-time quickly, cost-effectively, and more securely than the transfer systems between banks. Unlike Bitcoin, Ripple is not based on blockchain technology; however, it does use XRP tokens known as Ripples. XRP tokens involve a distributed ledger with network validating servers to perform payments.
What Are XRP Tokens?
When looking deeper into the difference between Ripple and Bitcoin we view the XRP tokens. The XRP tokens are the cryptocurrency used on the Ripple network to support the transfers of money between different currencies. Typically, a settlement system will use US dollars as the common currency to convert between other types of currencies. This can often result in currency exchange fees and is time-consuming, which is why international bank transfers can take approximately two or three days to process. By converting the value of the amount to be transferred into Ripples, instead of US dollars, the fees are removed and the payment procedure is reduced to a few seconds instead of days.
XRP tokens are currently being used as a representative of payment transfers on various digital platforms, including the Ripple Network. Banks, including the Commonwealth Bank of Australia, Santander, Fidor Bank and a consortium of Japanese banks, have all stated they are willing to implement applications using this payment system. Unlike Bitcoin, the coins provided are created to a capped amount as a reward for participants offering computing power to maintain the blockchain network. At the inception of the feature, Ripple created 100 billion XRP tokens.
Recently, Ripple added a new feature whereby they released one billion of their XRP holding to themselves each month to promote the development of business operations, sales to investors, and offering incentives to customers. This is conducted using a smart contract service known as escrows, and once the tokens have been used any unused XRPs will be returned to escrow. According to reports, the first month of Ripple escrow saw Ripple using approximately 100 million tokens placing 900 million back into escrow.
Can I Spend Ripple's XRP Tokens?
The original idea behind Ripple was for it to be used as a payment settling option and not currency, but there are certain merchants that accept XRP tokens as a form of online payment. For instance, you can purchase jewellery, confectionary or hot sauces by searching for the small list of vendors that are reported to accept Ripple's XRP. Of course, the cryptocurrency world changes dramatically every day and the vendors can change their mind on whether or not to accept Ripples. Remember, the original use for XRP tokens is to transfer other currencies or commodities over the Ripple network.
Can I Invest In Ripple?
In recent years, the Ripple network has gained a great deal of momentum in the cryptocurrency sector with many organizations using the tokens. In fact, in 2017 the increase of a single XRP token outperformed Bitcoin and other cryptocurrencies. At the beginning of 2018, Ripple XRP tokens peaked at '3.00 per token but quickly crashed to the standard (and existing) value of $1 per token.
Ripple XRP tokens are typically traded on the Binance and Poloniex cryptocurrency exchanges. To purchase XRP, you will first need to buy Ethereum or Bitcoin and then transfer them to an exchange for XRP. So, yes it is possible to invest in Ripple if you have the time and money.
Should I Invest In Ripple?
The answer to whether you should or should not invest in Ripple is difficult to answer. It is safe to say that Ripple is a good investment, but one should always research investments before making a commitment. Be sure to speak with a professional financial advisor before investing in Ripple. They will help you determine the difference between Ripple and Bitcoin.