- Banks use it for the international transfer of money over the secure decentralized XRP Blockchain network.
- Ripple works on the Federated Byzantine Agreement (FBA) consensus mechanism.
- Ripple has the upper hand with all the features more distinctive of that of Bitcoin.
This was never thought of when Bitcoin was first introduced that there will be a potential of other advanced cryptocurrency overtaking and overpowering Bitcoin since its release in 2009. Bitcoin has still remained the #1 coin in the crypto market and is the highest adopted digital currency worldwide.
Bitcoin is known for its decentralized distributed ledger which supports digital currency for peer to peer transactions without any intermediate control. Ripple, on the other hand, is highly favored by banking institutions and financial sectors for its ledger application that enables payment settlement, asset exchange, and remittance system.
Banks use it for the international transfer of money over the secure decentralized XRP Blockchain network. Below are a few features where both the digital assets are compared and from which a review is drawn.
Bitcoin uses proof of work (PoW) consensus mechanism and is the first mechanism introduced on the Blockchain network. The working of PoW is done through complex calculations which take around ten minutes for computing and later when the calculation is done, the transaction of the Bitcoin is verified.
The PoW consensus mechanism is, however, highly disadvantageous compare to the new mechanisms. It consumes a lot of power, charges higher transaction fees, it is slower and takes minutes to confirm a transaction over its network and has very poor scalability factor.
Ripple works on the Federated Byzantine Agreement (FBA) consensus mechanism which validates on different nodes that work as an overlapped circle taking a few seconds for the transaction to occur, unlike the Bitcoin’s PoW mechanism. The FBA consensus mechanism can carry out 1,500 transactions per second with only a charge of $0.01 and a less per transaction.
Transactions, Processing Time and cost
Bitcoin uses transaction verification and complex computing the process is called mining which takes a lot of minutes to verify the transaction and uses other online hardware to validate the process, which consumes a lot of power and also comes with a higher cost in making a transaction.
Ripple, however, uses its Blockchain network independently to make verification of transactions and does it in seconds, thanks to its overlapped Blockchain network where nodes are connected in a circular fashion.
The cost of this transaction is well below a dollar which makes it a cheaper transaction and hence the reason why banking institutions have selected Ripple as payment institution and Blockchain network for cross border transactions which appear to be very seamless.
The mining feature of both the crypto coins are very different to each other, and Bitcoin uses other online users’ hardware to validate and verify the transaction and hence give the fee in terms of Bitcoin for utilizing the system for the transaction purpose.
Ripple is already pre-mined for a month ad is regulated and controlled in a month using a smart contract. 1 Billion XRP tokens are bought in every month for circulation and facilitate the mining. This mechanism of Ripple ensures no misuse of the token in its network. XRP token is mainly used to facilitate the transfer of other assets.
Clearly, Ripple has the upper hand with all the features more distinctive of that of Bitcoin, although Bitcoin has gained global recognition and tops the charts with the highest market capitalization and circulation volume, it might take some time for Ripple to reach that level to match the performance of Bitcoin but having some major advantages in its side, it can be assumed that Ripple will soon reach the Bitcoins’ level and also surpass the coin for good. It all depends on the global response of the crypto community on individual assets.