The cryptocurrency investing world appears to be limited to bitcoin from the outside. Bitcoin, as the most well-known cryptocurrency, is the market leader in terms of market capitalization and investor interest.
There are, however, various additional possibilities for people looking to diversify their portfolios and try out cryptocurrencies that take a different approach to the concept of digital currency. One of them is Ripple’s XRP. The cryptocurrency was ranked sixth in terms of total market capitalization in July 2021. Let’s look at what sets XRP apart from Bitcoin and other popular digital tokens.
Bitcoin is a digital currency that is supported by a public blockchain record. It is used to make payments for products and services. The blockchain concept, which is a public ledger of verifiable transactions and record-keeping, underpins the bitcoin network.
Miners continuously verify transactions and add them to the Bitcoin blockchain. Miners are rewarded with BTC when transactions are successfully validated in exchange for their time and processing power.
XRP is the native cryptocurrency for Ripple Labs’s products. Its solutions are used for payment settlement, asset exchange, and remittance systems that are similar to SWIFT, an international money and security transfer service provided by a network of banks and financial intermediaries. In comparison to Bitcoin, XRP is pre-mined and uses a simpler mining mechanism.
XRP is a cryptocurrency that is both cheaper and faster than Bitcoin.
Bitcoin transaction confirmations can take several minutes and are associated with significant transaction charges due to the intricate and expensive nature of mining utilised in the cryptocurrency. XRP transactions are confirmed in seconds and have very cheap transaction fees.
XRP transactions are charged in the same way as bitcoin transactions are. A tiny amount of XRP is charged to the user each time a transaction is completed on the Ripple network (individual or organization).
There are More XRP Coins on the Market
At the time of its debut, about 1 billion XRP were pre-mined and progressively released into the market by the company’s major investors. Bitcoin, on the other hand, has a supply limit of 21 million coins, which means there will only ever be 21 million Bitcoin in existence. The artificial scarcity of BTC has sparked investor interest in the currency’s potential as a store of value.
Transactions are validated in different ways by both of them.
Instead of using the blockchain mining idea to authenticate transactions, the Ripple network employs a unique distributed consensus process in which participating nodes poll each other to verify the transaction’s legitimacy. This allows for near-instant confirmations without the need for a central authority.
As a result, XRP stays decentralized and outperforms many of its competitors in terms of speed and reliability. It also means that, in comparison to Bitcoin, which is regarded as an energy hog, the XRP consensus method uses very little energy.
Bitcoin is still a completely open system that is not controlled by any single person, organization, or government. Although decentralized, the Ripple network is owned and maintained by a private firm of the same name. Despite the fact that they both have their own cryptocurrency tokens, the two prominent virtual platforms are designed for different purposes.