Bitcoin ripple difference

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In , three years after Bitcoin ushered in the cryptocurrency era, Ripple changed tracks and became OpenCoin—a network for money transfers where large businesses and financial services firms acted as counterparties to transactions. XRP, its cryptocurrency, was launched in the same year with 80 billion tokens going to the company and 20 billion to its co-founders. The purpose of XRP was to serve as an intermediate mechanism of exchange between two currencies or networks.

OpenCoin became Ripple Labs in September Ripple describes itself as a global payments network and counts major banks and financial services amongst its customers. XRP is used in its products to facilitate quick conversion between different currencies.

Key Differences The main differences between Bitcoin and XRP are as follows: Both Have Different Methods to Validate Transactions Instead of using the blockchain mining concept, the Ripple network uses a unique distributed consensus mechanism to validate transactions in which participating nodes verify the authenticity of a transaction by conducting a poll.

This enables almost instant confirmations without a central authority. The result is that XRP remains decentralized and is faster and more reliable than many of its competitors. It also means that the XRP consensus system consumes negligible amounts of energy as compared to Bitcoin, which is considered an energy hog.

XRP Is Cheaper and Faster than Bitcoin Due to the complicated and intensive nature of mining used in the cryptocurrency, Bitcoin transaction confirmations may take many minutes and are associated with high transaction costs. XRP transactions are confirmed within seconds and generally occur at very low costs. Similar to the bitcoin transaction processing fee, XRP transactions are charged. Each time a transaction is performed on the Ripple network, a small amount of XRP is charged to the user individual or organization.

They do not adhere to a release schedule and their supply depends mostly on network speeds and difficulty of the algorithm used to mine coins. A smart contract controls the release of XRP. Ripple planned to release a maximum of 1 billion XRP tokens each month as governed by an in-built smart contract; the current circulation is 55 billion. Any unused portion of the XRP in a particular month will be shifted back to an escrow account. This mechanism ensures that there will be no possibility of misuse due to an oversupply of XRP cryptocoins, and it will take many years before all the cryptocoins will be available.

Ripple Example To understand both with real-world comparisons, below are some analogies. Peter, living in America, visits Walmart and pays for his purchases in US dollars. He can also use his US dollars to purchase other currencies for trading and investment, like GBP or JPY, and sell them off at a later date for a profit or loss.

Bitcoin is an equivalent digital currency—an alternative to real-world US dollars, for example. Peter can make a purchase and pay for it in bitcoins, or he can purchase bitcoins for trading and investments and sell them off at a later date for profit or loss, just like trading any other fiat currency like the GBP or JPY. Before I go into any more detail, always, remember that investing in cryptocoins or tokens is highly speculative and the market is largely unregulated.

Anyone considering it should be prepared to lose their entire investment. Ripple v Bitcoin While Bitcoin is a digital currency intended as a means of payment for goods and services, Ripple is a payment settling, currency exchange and remittance system intended for banks and payment networks. The idea is to provide a system for direct transfer of assets e.

XRP tokens XRP — which is the actual cryptocurrency — is a token which is used on the Ripple network to facilitate transfers of money between different currencies. Existing settlement systems generally use US dollars as a common currency for converting between other currencies.

This incurs currency exchange fees and takes time — which is why bank transfers between accounts in different countries often take up to three days to process. By first converting the value of the transfer into XRP, rather than USD, exchange fees are eliminated and processing of payments is reduced to seconds. Banks including Fidor Bank, Santander, the Commonwealth Bank of Australia and a consortium of 61 Japanese banks have all said that they are trialing or implementing applications utilising the Ripple Network payment system.

XRP is a token used for representing transfer of value across the Ripple Network. Different to bitcoin, where new coins are created up the a capped level as rewards for participants offering computing power to maintain the blockchain network, Ripple created billion XRP coins at its inception.

Ripple recently added a new feature whereby, through a smart contract system escrows , the company releases 1 billion of its XRP holding to themselves each month to help fund business operations, incentivise customers, and sell to accredited investors.

Any unused tokens will be placed back into escrow. According to internal sources, last month which was the first month of escrow Ripple only used approximately million and put million back into escrow.