Bitcoin Vs. Ripple: Interesting Comparison!
Ripple is all about trust, whereas other cryptocurrencies, for the most part, don’t give that much importance to trust. In Bitcoin, any two parties can send each other Bitcoin tokens, and the network then validates that no one is cheating in that transaction. Another significant difference is that Ripple does not use proof-of-work consensus. Beyond how decentralization and consensus work on Ripple, here are some other important ways in which Ripple differs from Bitcoin (Bitcoin vs Ripple):
- Ripple is a software that acts as middleware between financial products and institutions. If you plan to use the Ripple network, you’ll likely need to be a licensed money services provider or mobile money operator. The Bitcoin protocol is open for anyone to utilize as he or she sees fit. Regulation may change, but at this time, you don’t have to be licensed to use Bitcoin. Any developers can get up and start running on Ripple, but using the Ripple software may be illegal if you aren’t licensed to do so. This is one of the reasons that Ripple targets large financial institutions as their users. Bitcoin can be used by everyone, and it’s specifically useful for small transactions.
- Ripple is based on a consensus algorithm rather than mining. It uses probabilistic voting among trusted nodes. This type of consensus allows the nodes to come to an agreement and confirm transactions in five seconds. With Bitcoin, a transaction may take hours.
- Assets inside of Ripple, except XRP (the native token of Ripple), exist as debts. Bitcoin on the other hand only accounts for the transfer of tokens between Bitcoin addresses. Outside markets assess the value of the Bitcoin token.
- The supply of XRP is set at 100,000,000,000 and Ripple owned and created all 100 billion XRP units at the outset of the network. They then distributed the XRP to the owners of the company and others. Bitcoin creates new Bitcoin tokens every time it creates a new block. The new tokens are awarded to nodes that win the blocks during consensus. Over time, the supply increases. Algorithmically, Bitcoin is set to stop making new Bitcoins when the total hits 21 million.
- Ripple protects itself from spam and denial-of-service attacks by requiring a minimum transaction cost. The standard transaction fee is 0.00001 XRP, which is called ten drops. The Ripple protocol will increase the number of drops required if higher-than-normal transaction volumes are seen. This is similar to how Bitcoin protects itself from spam, but there is no minimum fee. Bitcoin miners will probably ignore your transaction and it won’t be confirmed without including one.
- XRP does not need a “trust path” to be traded. Because of this, it facilitates trade when there is no path between two parties. You will need to do an XRP exchange in the middle to facilitate the trade with untrusted parties or low-liquidity markets. Bitcoin, on the other hand, is a trustless system. It allows any two parties to trade, even if the parties don’t know or trust one another — but the trade is limited to the Bitcoin token. This extra feature in Ripple allows users to exchange just about anything.
- Ripple picks the nodes used to secure their consensus system for their network. It isn’t quite as open as Bitcoin, where anyone can participate fully in the network. This means that Ripple is somewhat centralized, but it will become more decentralized over time.