Bitcoin is not only the oldest but also the largest and most popular Cryptocurrency. However, this has not stopped the development of other altcoins. In 2015, Ripple, a San Francisco based tech company created XRP virtual currency. The coin has grown to become one of the leading competitors. “The next Bitcoin” is a term that is sometimes used to refer to XRP. Although both currencies rely on cryptography to secure transactions, they have various differences as explained below.
End Goals
Bitcoin was created to replace fiat currencies such USD and EUR. As a transaction currency, the users can pay for goods and services and even pay taxes with it. It can also be used to transfer value between two or more parties. Furthermore, the currency was developed to eliminate the need for third parties in money transfer such as banks and financial institutions.
XRP was not developed to replace fiat currencies but to facilitate international money transfer. Whereas Bitcoin was created to fight banks, XRP was created for such third parties. The banks, corporations and any other financial institution can use XRP to transfer money globally. XRP seeks to improve transactions and international money transfers. The currency does not seek to replace the existing system.
Decentralization
In terms of governance and ownership structure, XRP and Bitcoin are different. As a highly decentralized currency, no central organization, government, or company controls the coin. A community of enthusiastic developers who must consult each other before implementing any changes owns the coin. This makes any upgrade difficult to achieve.
A private company called Ripple, on the other hand, owns XRP. The goal of the investors in this project is profit. The company is in charge of all aspects of the currency. Ripple has over 100 customers worldwide and has offices in San Francisco, New York, Luxembourg, Singapore, India, Sydney, and London.
Size and Price
In terms of size, Bitcoin is the largest Cryptocurrency with a market capitalization of $67,789,694,922 at the time of writing this article. The coin is also more expensive than XRP with each unit trading at $3,888.14 at the same time.
XRP has continued to experience growth in recent times with its market cap reaching $14,627,478,151 according to coinmarketcap.com. The currency is now the second largest Cryptocurrency. In terms of prices, XRP was selling at $0.358568 at the time of writing this article making it much cheaper than Bitcoin.
Transaction Duration and Cost
The functionality of both XRP and Bitcoin is different. On average, confirmations of Bitcoin transaction take about 10 minutes. They may take even over 24 hours when there’s network congestion. In terms of costs, the average fees on the Bitcoin network are around $0.50 with the figure hitting $50 during peak (like in December 2017).
XRP transactions are much faster taking only less than five seconds. With the transaction cost being less than $0.01, XRP is much cheaper than Bitcoin. Whereas Bitcoin processes about 7 transactions in a second, XRP handles up to a whopping 1,500 transactions in the same time.
Cryptocurrency Supply and Mining
The highest number of Bitcoins that can be in supply is 21 million coins. Only 83 percent (around 17.37 million) coins are in circulation. Bitcoin’s mining system has been accused of being power-hungry with some environmentalist claiming it could be a major cause for global warming. The coins are brought into circulation through mining, which becomes more difficult as time goes by. The last coin will be mined in 2140.
XRP has a supply of 100 billion coins, which is much higher than Bitcoin. No mining is required as they are already pre-mined. Ripple Company holds about 60 percent of the coins in escrow. However, given that XRP tokens are destroyed with each transaction, they will drop to a small amount with time. Furthermore, XRP system is not as power-intensive as the Bitcoin system due to its mining-free mechanism.
Type of Users
Both individuals and organizations use Bitcoin as a transaction currency. Most people prefer to use it for payment as it is cheaper and faster especially in settling cross-border transactions. Many businesses around the world are accepting the currency for the payment of their goods and services.
XRP is mainly popular among the banks. This is because the Ripple system mainly works as SWIFT but reduces both the cost and time for transactions. That’s why XRP only has a small number of customers. Already, Japanese and some global banks such as Fidor Bank and American Express card are testing the use of Ripple’s payment system.
Reserve Currencies
The creators of both Cryptocurrencies hold some of the coins in reserve. Satoshi Nakamoto, Bitcoin’s founder is believed to hold 980,000 BTC. Despite that the real identity of the founder(s) is not known, it is clear that he/she/they could be the only one(s) with access to such a high number of coins.
Ripple, the company behind XRP also holds a high amount of the coin. With around 60 billion XRP in reserve, the company maintains around 60 percent of the total supply. Some people believe that this figure is quite high. However, unlike Bitcoin, which has never released any of its coins, Ripple regularly releases some of that supply.
When it comes to investing, Bitcoin is easy to deal with as you can get it from various Cryptocurrency exchanges or individuals. You can purchase it using fiat or even other Cryptocurrencies. Only a few exchanges allow people to purchase XRP using fiat currencies making it a little harder to get. However, you can also buy it in other Cryptocurrencies such as Ethereum and Bitcoin in most of the trading platforms.
Final Thought
XRP has continued to experience strong growth in recent times. Unlike Bitcoin, the coin has a strong financial backing than any other Cryptocurrency. Whereas regulation remains an issue with Bitcoin, traders are comfortable dealing with XRP due to its openness and operating in a regulated environment. Nevertheless, it’s quite early to assume that Bitcoin will lose its position as largest and most popular Cryptocurrency.