What Is the Difference Between Ripple XRP & Other Cryptocurrencies?

Cryptocurrencies, such as Ripple XRP (XRPUSD), Bitcoin (BTCUSD), Ether (ETHUSD), IOTA (IOTUSD), Litecoin (LTCUSD), and others run on a blockchain ledger system. This is designed to keep the cryptocurrency process transparent and monitored by a decentralised community.

When examined closely, each coin has its own purpose. Bitcoin, for example, is a form of currency that can be used in any marketplace. Others, such as XRP and Ethereum's Ether, are designed as currencies for specific platforms.

In this article, we cover how Ripple XRP differs from other currencies in the crypto market.

TL;DR

• Ripple XRP is designed for fast, scalable global transactions, mainly for financial institutions.
• XRP processes 1,500 transactions per second with a 3-5 second approval time, much faster than Bitcoin (10 minutes) and Ethereum (13 seconds).
• XRP cannot be mined; instead, validators are compensated through transaction fees, and coins are destroyed with each validated transaction.
• XRP uses a consensus system where only 80% of network nodes need to agree, allowing for faster transactions compared to unanimous consensus systems like Bitcoin's.
• Ripple's network blends centralised protocol control with decentralised transaction validation.
• XRP is focused on quick international transfers, making it ideal for financial institutions and merchants.
• XRP's volatility and regulatory challenges make it a risky investment despite its practical use case.

The Main Differences Between Cryptocurrencies

Understanding the differences between these digital coins can help traders to better understand the short-term and long-term potential of each currency.

Ledger system

All of the above-mentioned currencies have a ledger system that keeps track of each coin's movement. This allows for individual verifiers on the network (nodes) to confirm that a transaction is legitimate and the payee is the rightful owner of the coins they are trying to pay with. This also applies to meeting the criteria of Smart Contracts or other blockchain automatic payments.

The difference with XRP is that only 80% of nodes need to agree. This allows for transfers to run more smoothly with a lower potential for delays. On the other hand, having a unanimous consensus is a key feature that makes blockchain secure.

Uses

XRP was designed as a currency to be used on Ripple's blockchain platform.

For example, if a customer wants to transfer money to a merchant across the globe, they can either ask their bank to send the money through a web of bank relays, or they can convert the currency into XRP, where the merchant can receive it on the other end instantly.

While this is very convenient, a downside is that it forces an individual to pick XRP even if they already have Bitcoin or another cryptocurrency. On the other hand, it protects the transaction by using a closed system and ensures a use case for those who hold the coin as an investment.

Processing speed

Ripple's suite of products, including XRP, is designed to transfer money rapidly across the globe, similar to how credit cards work, which is important to merchants.

XRP can process 1500 transactions per second with an average ledger settlement (approval time) of 3-5 seconds, whereas Ether takes about 13 seconds and Bitcoin about 10 minutes.

This speed makes XRP a practical currency for instant transactions in comparison to other leading cryptocurrencies.

Mining Ripple XRP

Mining, the process of verifying transactions in exchange for the coin, is how validators are compensated on the Ethereum and Bitcoin networks.

While cryptocurrencies like Bitcoin can be mined, XRP cannot. Instead, Ripple destroys coins with each validated transaction as a transaction fee.

How Is Ripple's Network Maintained?

Fintech Companies and certain Banks around the world adopted Ripple's money transfer systems. In order to ensure transparency, Ripple employs a blend of both centralised and decentralised protocols.

Ripple Labs chooses which protocols validators must follow. In addition, it releases a recommended Unique Node List (UNL) of trusted and verified validators. Ripple users are not required to use these validators for transactions, although it is recommended. In addition, validators operate independently without needing to check in with a central system before updating their ledger.

Is Ripple a centralised or decentralised platform?

Ripple is centralised with regard to protocols and acceptance onto the network. It is decentralised with respect to how transactions are validated.

Ripple's products, including XRP, are created to be moved quickly and efficiently. Ripple Labs' global network of active users, along with the ability to integrate payments into apps, ensures a use case for XRP. This can be attractive to traders who feel that XRP holds potential for long-term use.

Regardless of XRP's practicality, it has still proven to be a highly volatile instrument, allowing traders to gain exposure to potential gains and losses.

Conclusion

Ripple's XRP is a cryptocurrency designed specifically for fast, cost-effective, and scalable global transactions. With its unique consensus algorithm, the Ripple network can process transactions much quicker than Bitcoin or Ethereum, making it a practical choice for financial institutions and merchants needing rapid transfers. While XRP faces regulatory challenges and has been volatile, its growing adoption and integration into the financial system could provide long-term value for traders and investors. Understanding the distinctions between XRP and other cryptocurrencies, as well as its role within Ripple's broader platform, is key for anyone looking to engage with the world of digital currencies.