ripple-bitcoin

Bitcoin vs Ripple

Should you buy Ripple or bitcoin?

Ripple is the name of the company, and XRP is the name of its coin. Ripple was specifically created to improve upon a now-outdated system of international transactions.

In the information age, when photos, videos and other data can be sent anywhere in the world almost instantly, there’s no reason a transfer of value should be so expensive or inefficient.

This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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Ripple vs bitcoin: head to head

Fiat currency*Bitcoin (BTC)**Ripple (XRP)***
OwnershipGovernments and banksPublicPrivate company
DevelopersVariesA small group of core developersA large group of Ripple developers
Transaction time3-5 daysApprox. 1 hour depending on fee chosenApprox. 3 seconds
Average transaction cost$30-$40US$40$0.004
Transactions per secondNo set limitApprox. 101,500
Energy cost per transactionVaries. Usually negligibleApprox. 250kWhNegligible
Processing algorithmn/aProof of workConsensus
Inflationn/aCoin supply increasing to 21 million cap by 2140.Static/deflationary. An almost indiscernible amount of XRP is destroyed in each transaction.
Coin supply limitn/a21 million100 billion***

*With bank international transfers
**As of 22 December 2017
***55 billion XRP are held in an escrow smart contract

Prices: Bitcoin vs Ripple

Bitcoin

1
0
Updated: 22 Feb 2018 14:52:56 UTC

Ripple

1
0
Updated: 22 Feb 2018 14:52:57 UTC

Ripple in escrow

To quell fears that Ripple would flood the market with XRP at a later date, 55 billion XRP tokens were put into escrow for gradual release. A smart contract enforces the release of this XRP from escrow.

The XRP assets in escrow are set to be released to Ripple at a rate of 1 billion a month over the course of 55 months. Any unused portion of the XRP released that month will go back into escrow for another month.

Assuming 50% of the newly released Ripple is used each month, it would take 15 years for 90% of the 55 billion to get released into the market.

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Name Product Payment Methods Available Fiat Currencies Available Cryptocurrencies
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CoinSpot is an Australian marketplace that allows you to easily buy, sell or exchange multiple cryptocurrencies using AUD.
Cryptocurrency
BTC, XRP, USDT, ETH, NEB, XVG, TRX, NEBL, ETH, NEO, FUN, ETC, BCC, POE, DASH, ELF, ICX, BNB, ZRX, APPC & 80+ more
Trade 60+ cryptocurrency pairs on this up-and-coming exchange based in China. Multi-language support.
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AUD
BTC, BCH, ETH, ETC, LTC, DASH, XMR, XRP, ANT, REP, BNT, BAT, BTS, BLK, CVC, CLAM, DCR, DGB, DGD, DOGE & 35+ more
Buy a variety of cryptocurrencies through an Australian exchange platform through POLi, Cash or Electronic Funds Transfer.
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USD, EUR, RUB, GBP
BTC, DASH, ETH, XRP, ZEC
Use your USD, EUR or RUB to buy and sell cryptocurrency at competitive exchange rates and with high maximums for verified accounts.
Credit card, Debit card, Neteller, PayPal, Skrill, WebMoney, Yandex Money
USD
BTC, BCH, DASH, ETC, ETH, LTC, XRP
Losses can exceed deposits.
Copy the trades of leading cryptocurrency investors on this unique social investment platform.
Credit card, Debit card
USD, EUR
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Access competitive crypto-to-crypto exchange rates for more than 35 cryptocurrencies on this global exchange.
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Compare up to 4 providers

How Ripple works vs how bitcoin works

Each bitcoin (BTC) is a straightforward store of value. You can transfer it on the bitcoin blockchain and convert it into fiat currency (such as Australian dollars) by selling it on an exchange. It is worth a certain amount and is transferable.

Ripple XRP is slightly more complicated in function and purpose.

The problem with international money transfers

International money transfers are slow, inefficient and expensive. A typical international payment from the US takes 3-5 days to settle, has an average cost of $42 and an error rate of at least 5%.

Ripple aims to make it happen instantly, at negligible cost and with a 0% error rate.

Other than the technical challenges, the main problem with international money transfers is liquidity. Unless the receiving bank has enough money on hand, in the correct currency, it cannot let the customer access the funds.

Ripple solves this by letting XRP serve as a pool of liquidity. Banks, international companies and anyone who needs to make international money transfers will be able to hold a pool of XRP to draw upon for instant liquidity anywhere in the world.

With this system, a money transfer can actually be as simple as sending data, instead of as complicated as sending actual money.

Ripple features vs bitcoin features

Bitcoin itself doesn’t have any features other than being transferable, decentralised and transparent. Current bitcoin developments are mostly oriented around solving the problems of its slow transactions and high fees.

By contrast, the Ripple network has developed to incorporate additional features. The following are the main ones:

  • Escrow. An automated escrow service can safely hold funds until a certain time or until certain conditions are met. For example, setting up a fund that automatically releases a certain amount as a birthday present for someone every year.
  • Payment channels. This scalable feature allows for the possibility of tens of thousands of transactions per second.

The downsides of Ripple

Ripple has two main downsides.

  • Centralisation
  • Competition

Centralisation

A lot of people feel that Ripple (XRP) cannot be trusted as a currency because Ripple itself is a private company with close connections to the banking system.

By contrast, bitcoin is a decentralised currency which cannot officially partner with any company or entity.

However, this is more of an ideological distinction than a functional one. Ripple still operates through a transparent blockchain which operates just as reliably as the miner-dependent bitcoin blockchain.

The ideology is important though because it’s also a point of difference between Ripple and its competition.

Competition

As a pure store of value rather than a functional token, bitcoin is arguably in competition with any other coin that’s being bought as an investment or for transactional purposes.

Ripple has competition of its own. This might be one of the main challenges to its value in the future. Plus, there’s the possibility that a true global cryptocurrency could mean Ripple’s ability to facilitate international fiat currency transfers is much less useful.

One of the main alternatives to Ripple is Stellar Lumens (XLM), which was also designed to facilitate international transactions.

The main difference is that Stellar is designed to let people do it themselves, peer to peer, while Ripple is integrating with banks and existing services.

It’s also worth noting that extremely low transaction fees, extremely fast transfers and high scalability aren’t particularly unique for newer cryptocurrencies. For example, some cryptocurrencies, such as Verge, are aiming to offer completely free near-instant transactions.

Bitcoin isn’t the baseline of what blockchain transactions should look like. It’s by far the slowest and most expensive cryptocurrency for transfers. In comparison Ripple is quicker and less expensive, but has challenges with competition and centralisation. Potential buyers should carefully weigh the differences between bitcoin and Ripple.

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