There is so much hype and confusion in the blockchain, distributed ledger and cryptocurrency world and one name that keeps increasignly coming up in that space is Ripple.
I often get asked about the difference between Bitcoin still the best known cryptocurrency based on blockchain and Ripple. So in this post I try to explain what exactly Ripple is and what makes it different from Bitcoin.
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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 bitcoin ripple direct transfer of assets e.
Bitcoin is based on blockchain technology, while Ripple doesn't use blockchain but uses a distributed consensus ledger using a network of validating servers and crypto tokens called XRP sometimes referred to as Ripples.
XRP tokens XRP — which is the actual cryptocurrency — is a token bitcoin ripple 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.
Any unused tokens will be placed back into escrow. According to internal sources, last month which was the bitcoin ripple month of escrow Ripple only used approximately million and put million back into escrow.
Ripple was never designed to bitcoin ripple a currency or a method of payment. However, there is a small list of merchants which accept payment in XRP tokens online.
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You can find a list of vendors that are supposedly willing to accept Ripple's XRP, but things are changing constantly and some that are listed there do not or no longer accept it.
The primary use case for XRP is intended to be for transfer of other currencies or indeed commodities such as gold or oil over the Ripple network.
How can I invest in Ripple? And should I?
What Is The Difference Between Bitcoin And Ripple?
Ripple has certainly gained a lot of momentum and the list of organisations which are using it indicates that the tokens themselves will become valued commodities in their own right. In fact, last year, the increase in value of one XRP token outperformed Bitcoin or any other cryptocurrency. XRP are traded on cryptocurrency exchanges such as Binance and Poloniex.
However, before investing in any crypocurrency you should thoroughly research it first, and make up your own mind about whether or not it is likely to be a valuable asset in the future. As we have seen, the value of all cryptocurrencies is highly volatile, and can go down just as quickly as it goes up. A solid piece of advice is never to invest more than you can comfortably afford to lose.