If you’ve heard of Ripple, you probably have also heard of XRP as well. It is even more likely that you have heard of Bitcoin, which is the first cryptocurrency to be launched, but what’s the difference between the two?
As an investor, you may be wondering which one to buy, or you may just be a crypto enthusiast that wants to know the difference between the two top cryptocurrencies. This guide focuses on them, highlighting their differences to help you appreciate them a little more.
What is XRP?
XRP is often referred to as Ripple, and while people can easily tell that it is XRP they refer to, the nomenclature isn’t accurate. Ripple is actually a blockchain company, and XRP is its native token, just like ether is the native token of the Ethereum network.
The token is used as a bridge currency to make trustless, instant cross-border payments. Using XRP gives financial institutions a more cost-effective way to exchange both crypto and fiat currencies.
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While XRP still retains scary cryptocurrency attributes such as volatility, financial institutions still find the use of Ripple attractive because of the instant transactions and low fees. Ripple can process up to 1,500 transactions per second, making it highly scalable.
It is also a green cryptocurrency that is carbon-neutral and highly energy-efficient. As a pre-mined cryptocurrency, XRP does not require any energy-consuming activities such as mining to get it circulating. There are only 100 billion XRP available for use and no more, unless the team decides to change the game.
Like any other cryptocurrency, XRP transactions are recorded on a ledger known as XRP Ledger of XRPL. Transactions on the ledger are confirmed by a network of over 150 validators. Validators agree on a set of transactions for a particular ledger entry based on the Ripple Protocol Consensus Algorithm (RPCA).
After validating, the transactions are then permanently recorded onto the XRP ledger in compliance with the RPCA, and are permanently timestamped on the blockchain to ensure the ledger data entry remains immutable.
What is Bitcoin?
Bitcoin needs no introduction as far as crypto is concerned. Being the first cryptocurrency launched, it is well-known even among people who aren’t really into crypto. Bitcoin is currently the biggest crypto asset by market cap, and is an attractive investment asset to investors.
It uses the proof-of-work (PoW) consensus algorithm to verify transactions. This means that Bitcoin requires mining to release new Bitcoins into circulation. Bitcoin has a capped supply of 21 million BTC, almost all of which have been mined.
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By helping to verify blocks, miners get rewarded with new BTC and this is how new BTC come into circulation. Bitcoin’s primary use was for peer-to-peer electronic cash transactions, but that has changed as the asset is now used mainly as a store of value.
Differences Between XRP and Bitcoin
Bitcoin and XRP are two cryptocurrencies that are different in so many ways, but the following are some of the most important differences between the two.
Purpose
Bitcoin was created primarily as peer-to-peer electronic cash, while XRP was created to facilitate cross-border payment in a cheap and affordable manner.
Supply
Bitcoin has a maximum supply of 21 million coins, while XRP has a maximum supply of 100 billion tokens.
Consensus Mechanism
Bitcoin uses the PoW consensus mechanism with the SHA-256 algorithm to secure its network, while XRP uses the Ripple Protocol Consensus Algorithm (RPCA), which is not used by any other crypto network. XRP has been accused of being centralized because of this.
Method of Circulation
Bitcoin is mined for the coins to come into circulation, while XRP is pre-mined.
Block Time
Bitcoin mines a new block once in roughly ten minutes, but XRP blocks are mined every 3.5 seconds, making it much faster than Bitcoin.
Final Thoughts
If you didn’t know the differences between Bitcoin and XRP before now, hopefully you do now, because these are the fundamental differences between the two.
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