If you are a newbie in Blockchain, cryptocurrency and distributed ledger, then the chances are high of you getting confused about things like bitcoins and ripples. It’s very crucial to know the actual difference between these two terms. Before getting to the differences, let’s see what they mean.
What are Bitcoins?
Bitcoins are nothing but a digital currency which is used for the payments of service and goods. Blockchain is the technology used in bitcoins. This currency is highly trendy these days in the world of online trading. Bitcoins were primarily created in 2009. A fun fact about these bitcoins are the one who created them isn’t identified. There is no as such physical bitcoins. They are very transparent, not a single government or authority can interfere in these bitcoins. This is a big reason for trusting bitcoins by people as they know the bitcoins are transparent and their money will go nowhere. Every transaction made in bitcoins are stored in a vast distributed public ledger called blockchains.
What are Ripples?
Ripples are nothing but an idea of transferring of assets like gold, money, etc. Ripple is used in online trading for payment settling, currency exchange also system intended for banks and payment networks like remittance system.
The best thing about ripples is they settle in almost real-time, secure, more transparent, and is cheaper. They are very fast in the transactional process and charge a very minimal amount of transactional fee. Also, they are so fast in the transaction that it takes only 3-5 seconds to transfer the asset from the sender end to the receiver end. They use XRP tokens for marketing. Let’s see what XRP tokens are.
Before we reach to the differences between bitcoins and ripples lets know little more about XRP. XRP is the actual digital asset which is meant only for payments. On the ripple network, this is used as a token to proceed with the money transfer between two countries. The traditional way of transferring money from one country to another is using US dollars as a currency. The reason behind this conventional method getting out of trend is they are slow, and also the transactional fee is very high.
In the modern trend, the money is directly converted into XRP instead of converting them in USD. This saves the transactional fees and the total time in the whole process.
Some banks have already started using ripples for their majority of payments and transaction these banks include Fidor Bank, Santandar, The Commonwealth Bank Of Australia etc.
With the help of a smart contract system ripple has introduced a new feature. The company will release 1 billion of its XRP every month to fund business operations. They use these XRP, and the remaining XRP goes back in the escrow. This feature was introduced very recently. In the first month, ripple released 1 billion XRPs and used only 100 million of them. What happened with the rest of the amount? They were stored back in the escrow.
BITCOINS VS RIPPLE
When we talk about bitcoins and ripple, we generally don’t find a difference because they have a very slight difference. Let’s check what makes these two different from each other:
- Bitcoin is itself a digital currency which you can use for trading goods and services online while on the other hand ripple is a payment settling and currency exchange and also remittance system intended for banks and payment networks.
- Blockchain technology: Bitcoins use the technology of Blockchain for the transaction while ripple doesn’t use blockchain technology for any payment settlements and currency exchange and also remittance system.
- Used for: In ripple, the idea is to exchange of assets like gold, money etc. while in bitcoin is itself a currency used for online trading.
- Ownership: The ownership of bitcoin is public on the other hand, Ripple (XRP) ownership is private. Since the ownership of bitcoins uses blockchain technology to maintain a public ledger for every transaction made through bitcoins.
- Transaction speed: Bitcoins take longer time which is about an hour while ripple completes the process within 3-5 seconds. If the transactional speed is slow, it can result in some significant losses.
- Transaction cost: This is much higher in bitcoins as compared to ripple. In bitcoins, if the transaction cost is $40 for a certain amount then for the same account the transaction cost in ripple is $0.004. This transactional cost becomes a considerable amount when the transfer of money is enormous.
- A number of the transactions: Bitcoins offer less number of the transactions per second as of ripple. You can make a transaction of approx. 10 per second using bitcoins while 1500 in ripple. This results in saving a considerable amount of time if you have to make the transaction daily or very frequently.
- Energy cost/transaction: Energy consumed is also very high in bitcoins. While ripple takes minor energy and bitcoins consumes approx.. 250 kWH.
- Algorithm: The algorithm used in bitcoins is proof-of-work and ripple use consensus as to their algorithm.
These were some of the significant differences between ripple and bitcoins, which are mentioned in the above points. Overall by going through these substantial and meaningful differences, you will also be able to figure out which is better bitcoins or ripple. Although when we talk about bitcoins and other cryptocurrencies, it’s good to know even about Blockchain.
What is Blockchain Technology?
A system in which a record of transactions made in bitcoin or another cryptocurrency is maintained across several computers that are linked in a peer-to-peer network. In other simple words, Blockchain is the technology the underpins digital currency (Bitcoin, Litecoin, Ethereum, and the like). The tech allows digital information to be distributed but not copied. That means each piece of data can only have one owner. The ownership doesn’t get violated, which makes it more secure. In other words, it is a digital ledger stored in a distributed network. This technology can be used in more than one currency and transaction.
By the above article you will clearly know the key difference between BITCOINS and RIPPPLE. Share this article with the people whom you think this can help.