Ripple Vs. Bitcoin: Key Differences
Despite the controversial situation with the XRP asset, it remains interesting for traders and investors.
According to the SEC complaint against Ripple, Christian Larsen (co-founder, executive president and former CEO of the company) and Brad Garlinghouse (current CEO of the company) raised capital to finance the company’s activities. The complaint states that Ripple has raised funds since 2013 by selling XRP tokens as part of an offer of non-registered securities to investors in the United States and worldwide.
An asset registration requirement is presented to allow potential investors (including retail trade) receive important information about the issuer’s business operations and financial situation.
The XRP price has fallen due to these declarations. But it doesn’t mean that this asset will be worth 0 cents. Like they say, you’ve got to take it while they’re at it.
Now, let’s talk about the benefits of this platform and its objectives.
Ripple cryptocurrency can make international trading more comfortable and profitable by speeding up business activities and increasing the financial system’s efficiency. Ripple has many advantages, substantial hands-on experience, and good support from the team and users – that’s enough to become the most popular way to exchange funds. But there are also some nuances. Let’s find out where the Ripple cryptocurrency came from and how it differs from Bitcoin.
What Is Ripple? Everything You Need To Know
Ripple uses its tamper-resistant RPCA (Ripple Protocol Consensus Algorithm). It works like SMTP for email – it connects peers who can use many fiat currencies or cryptocurrencies, exchanging them using an XRP token. It is subdivided into a million particles called “drops.” By itself, the Ripple payment gateway system is an alternative payment method for banks. It’s more secure, faster, and cheaper than the traditional one already used.
In the Ripple system, the user can store funds in dollars, pay in parallel in euros or yen, bitcoins, or even gold. At the same time, the network “converts” currencies by routing orders through market makers. In turn, they compete with each other for the right to make money on the difference in selling/buying prices. When processing each trade, the system deducts a commission of 0.00001 XRP. It’s done for the sake of security. In transactional spam, the amount will be automatically raised until it becomes unprofitable for the attacker.
Ripple is a worthy addition to Bitcoin as a payment protocol, but there is a big difference between the two cryptocurrencies. The point is that Ripple does not rely on blockchain, and XRP coins cannot be mined. XRP is an intermediate currency on the Ripple network. It does not require establishing a trust relationship with a third party to work and cannot be devalued as it exists in limited quantities. During the creation of the protocol, the developers issued only 100 billion coins. They distributed a third of tokens among users and left two-thirds in their wallets.
Ripple Vs. Bitcoin: Key Differences
What are the main differences between Ripple and Bitcoin, and what are their pros and cons? Let’s take a look at each of them in greater detail.
The aims of development
Bitcoin was developed as a digital currency to pay for services and goods. Ripple, in turn, was created for banks and payment networks as a payment settlement, money transfer system, and currency exchange. Ripple’s main idea was to develop a network of direct asset transfers in real-time, cheaper, more transparent, and secure than the existing payment methods, such as SWIFT payments.
Who are the developers?
A group of enthusiastic developers maintains Bitcoin. It is a decentralized system and isn’t governed by any bank, government, or third party. It was created by a mysterious person or a group of people called Satoshi Nakamoto.
Ripple, though, is developed by an official company with set goals and investors called the Ripple company, founded in 2012. In 2015 – 2016 the Ripple company had offices in Australia, Luxembourg, and the UK.
Bitcoin is a Blockchain-based currency using mining (proof-of-work), and Ripple uses an iterative consensus ledger and validating servers network along with XRP cryptocurrency tokens.
The Ripple network is managed by a range of independent servers comparing their transaction records constantly. A new ledger of Ripple is created each second.
Ripple is not designed to be mined at all. That’s why these two currencies are very different from each other. Miners of Bitcoin usually get a reward in the form of new Bitcoin.
XRP tokens at the amount of 100 bln have been pre-mined initially, and just 38 bln are available in the market; the rest are in Ripple labs and can be periodically released.
Bitcoin is not pre-mined at all, and the maximum supply is just 21 mln.
Issuance of coins
Bitcoins are spread out all over the globe. Ripple owns sixty percent of XRP tokens. Ripple’s price is tiny in number when compared to Bitcoin’s price.
The movement and distribution of XRP tokens can be tracked on the Ripple Charts website.
Bitcoin transaction confirmations take 10 minutes on average, while XRP transaction confirmations take 5 seconds.
Difference in utilizing
Bitcoin is used in the capacity of money. Ripple’s goal is to use it for other currencies or commodities transfers such as oil or gold over the network.
The Ripple network is a decentralized currency exchange, while Bitcoin entails centralized ones. It means that users are intended to exchange XRP for USD within the Ripple network without intermediaries or third parties.
How To Buy Ripple
XRP is traded on cryptocurrency exchanges. You will need to create an account with the exchange and provide documentation to verify your identity.
To trade and use XRP, you’ll need a wallet that stores your means of accessing your holdings. The wallet contains a cryptographic key that encrypts and decrypts data and makes it difficult for thieves to steal your currencies.
Many traders use hardware wallets that you connect to your computer only when needed. Software wallets are less secure because they are typically connected to the internet at all times.
How To Sell Ripple For USD Or Bitcoin
Here we’ll give you tips on how to sell your XRP for US dollars or other cryptocurrencies, whether it’s through a centralized exchange or via peer-to-peer networks.
Selling Ripple for fiat or BTC via exchange
To sell XRP on any exchange, you must follow some general steps. As an example, we’ll use Binaryx crypto exchange:
- Register to create an account (using email or social network account), and confirm through email.
- Pass the KYC procedure. The ability to withdraw fiat or cryptocurrencies will require at least your name, country, pictures of ID documents like a national ID card or passport, and sometimes proof of residence. For example, Binaryx requires a national ID card, driver’s license, or residence permit.
- Deposit XRP into the account’s wallet. Binaryx doesn’t have a fee for crypto deposits.
- Sell the XRP and buy USD or another cryptocurrency via the “Quick Buy” menu on the Dashboard page.
- Withdraw the USD or crypto (look for the limits on the “Limits” page).
Selling via the P2P network
The only option to buy or sell Ripple via peer-to-peer (P2P) right now is through an exchange called Cointal.
Why would you want to sell P2P? While there may be limited options, selling P2P has its perks compared to centralized exchanges. P2P exchanges are run by software; sellers and buyers are automatically connected, with no human intervention.
If you do, you’ll see a page where you can choose to sell or buy (select “sell” in this case) and a list of currencies (select the Ripple icon). You can also modify the search by entering an amount, a coin you’re selling for (USD), and a payment method.
Cointal automatically detracts a small transaction fee from your wallet. Deposits and purchases are free of charge. Withdrawals and selling both incur a 1 percent fee.
When it comes to selling XRP via P2P networks, we strongly recommend not to give other users any personal information. The site does not ask for any info, such as email address or phone number. If another user asks you to provide this info, immediately inform the support team.
Ripple (XRP) Wallets For Beginners
All the available ways to store Ripple can be divided into the following categories:
- Desktop (desktop) wallets (Toast Wallet);
- Hardware devices (Ledger Nano (Blue, S и X), Trezor and CoolWallet S);
- Online wallets (official Ripple wallet, GateHub);
- Mobile wallets (Toast Wallet, Coinbase Wallet, Jaxx или Edge);
- Storage on the exchange (for example, Binaryx);
- Paper wallets.
Regardless of where you store XRP, it is essential not to forget about the precautions in backing up data to restore access to assets (private keys, backup phrases, etc.) in multiple copies on reliable media, preferably disconnected from the network.
For the rest, everything will depend on your preferences, goals, and desire to secure XRP assets. The ideal option would be to proportionally distribute your coins between different wallets to minimize all existing risks as much as possible.
Ripple’s XRP and Bitcoin are both cryptocurrencies that are tradable like government-issued currencies. You can also use both to buy goods and services, though the number of companies that will accept them for payment is limited.
Ripple, the company that holds the vast majority of XRP, uses the cryptocurrency to facilitate transactions between banks using different currencies. XRP is much less likely to be used by consumers than Bitcoin, which was intended to be an alternative to government-backed currencies.