Ripple vs Bitcoin: How Do The Currencies Compare?
In this Ripple vs Bitcoin article you will find out the similarities and differences between the two cryptos. Both Ripple (XRP) and Bitcoin are cryptocurrencies that are meant to serve as currencies and nothing else. However that is where the similarities stop.
Investors pick one crypto over the other or both for very different reasons. Of course some investors don’t bother with either of them. This is because they might favour other cryptos for fundamental reasons. Or chase the latest trendy coins or they want to speculate.
To clarify investors outlook on XRP and Bitcoin could change. Especially because events happen quickly and news travels fast. As a result some investors might hold the cryptos and then choose to sell them later on.
Note that this article is based on research and is not meant as financial advice. If you are thinking of investing in cryptocurrencies you should do your own research. Additionally you may need to consult a financial advisor.
Ripple vs Bitcoin: Basic Differences
Ripple was created by Ripple Labs which is by banks for banks. They saw the benefits of using a cryptocurrency. However the banks wanted a crypto they could call their own that suited their purposes.
Banks wanted to save money on fees. The fees to use XRP are a fraction of the cost of using fiat. Each transactions costs one cent/penny.
Apart from being cheap, transactions involving XRP are extremely fast and take around 4-5 seconds to send. Moreover the RippleNet network supports a messaging system that is fully transparent. RippleNet is being used worldwide and is intended to replace the SWIFT system.
Now getting onto Bitcoin in the Ripple vs Bitcoin debate.
On the other hand Bitcoin works in a different way to XRP. Bitcoin has a problem with high transaction fees. Usually the transaction fee is around $23, but it fluctuates depending on the demand on the network.
Additionally usually a transaction takes around 10minutes to go through. So far the lag has not impacted Bitcoin whatsoever. Especially because it is still faster than bank transfers. Plus people buy Bitcoin as a store of value. So they hold onto it for future returns.
So the bankers that created XRP thought XRP was better. This is because it was faster and more cost effective. Additionally unlike Bitcoin they liked the fact they had control over XRP.
However to fix the high network fee and transaction time for Bitcoin, developers created the lightning network. With the lightning network people can make even small micro transactions at a fraction of the cost. So they can pay even for a cup of coffee without thinking of the cost.
What is Keeping Ripple (XRP) Back
XRP is one of the 10 most popular cryptocurrencies. It has some of the world’s largest institutions backing it up. For example Bank of America, SABB, Santander, Standard Chartered, American Express and many more.
However the US financial markets regulator the SEC (US Securities and Exchange Commission) filed a lawsuit against Ripple in 2020. The SEC is saying that in December 2020 Ripple Labs organised an unregistered securities sale using XRP.
The SEC is treating cryptocurrencies differently. Additionally it is not applying the rules consistently throughout the whole crypto industry.
From Ripples perspective the SEC is treating Bitcoin and Ethereum as commodities. Even though the two cryptos are very different. Moreover it is classifying XRP as a security.
In fact there are many other cases where regulators single out a crypto over others. Or do not single out a cryptocurrency when they probably should.
Ripple Labs definitely want to resolve the dispute with the SEC as quickly as possible. They also need more regulatory clarity on the way XRP is going to be regulated. However in general it is the whole cryptocurrency space that needs more clarity. Not just Ripple Labs.
For the time being Ripple Labs is holding back from going public with XRP. This is as a result of the SEC lawsuit. Additionally they will not go public before the SEC lawsuit is resolved. You can read all about it on Coindesk’s article: Ripple waiting for SEC suit resolution before going public.
Bitcoin‘s Advantages Over XRP
Bitcoin is the first successful cryptocurrency. There were other digital monies before it, but they ended up failing.
As a result Bitcoin benefits from being the first in the space. It has brand recognition and has a good developer team behind it. It is the crypto with the largest market cap out of the thousands available.
Unlike XRP, Bitcoin was created by an anonymous individual or group of individuals. His or their name is Satoshi Nakamoto. Satokshi is shrouded in mystery, but he had the best intentions when he created Bitcoin.
Satoshi created Bitcoin as a possible solution to all the problems our current banking system has. That is to say, so that we could have a superior form of money: hard money.
In fact Satoshi made sure that no one can increase or decrease the supply of Bitcoin coins. The Bitcoin network can only support 21 million Bitcoins. This is because it is important to have money that is scarce and hence limited in supply.
As a result no one can inflate Bitcoin. Inflation was something Satoshi wanted to avoid at all cost. This is because inflation has a negative impact on society over the long term.
Inflation is one of the reasons which makes prices of goods and services increase over time. Perhaps to the point where people cannot keep up with everyday costs like today. It is what happens in a fiat system like the one we currently have.
In that respect Satoshi wanted to separate money from the state. In fact the discussion between Ripple vs Bitcoin is slightly steered by this point.
The Ideologues View of Ripple vs Bitcoin
For cryptocurrency ideologues Ripple is an abomination. They do not want to own it because its ‘dirty’ in a sense. This is partly because ideologues want sound money. They know society will be better off with having a strong currency that no one can inflate.
Additionally they want the separation of money from the state. This is because they understand that otherwise politicians will always make the same mistakes. Like they have done time and again throughout history.
An easy money fiat system allows politicians to print too much money until society collapses. As per usual the politicians shield themselves. However the population at large end up shouldering the worst consequences.
Most people do not have any concept of how bad it can get. However you can read When Money Dies to understand the true extent of what happens when politicians are reckless. You can find a brief description of the book in our top list of cryptocurrency books.
XRP is fundamentally a banker coin. Ripple Labs can change XRP’s money supply whenever they desire. For this reason ideologues would never consider investing in Ripple.
Although there are crypto ideologues that shun Ripple it is not the whole picture. There are a lot of cryptocurrency ideologues in the space. However the crypto space is not always going to take the direction a small portion of crypto ideologues want.
This is especially the case as more and more investors come into the space. They may not necessarily share the same view. So the importance of this debate could get lost because people will not bother about this sort of thing. However it will depend on future developments of each crypto and the space at large.
Ripple vs Bitcoin Conclusion
Both Are Popular Cryptos
To conclude on this Ripple vs Bitcoin article, there is not really much comparison between the two cryptocurrencies. Although they are both trying to be a medium of exchange they need to be valued differently. There is also different potential for both.
Bitcoin has been in the news a lot because it was the first crypto ever made. Additionally Bitcoin is a good crypto that has had a stellar rise. It is the cryptocurrency that has the largest market cap. XRP is also popular, but for different reasons.
Ripple has not had quite the price gains that Bitcoin has had, but it is has done well. However Bitcoin lately has not had such spectacular percentage gains. In 2021 Bitcoin went up by 70% while XRP was up by 278%.
Of course there is no guarantee that future performance is going to be determined by past performance. Especially considering the cryptocurrency space is constantly evolving.
Additionally some people expect Bitcoin to have diminishing returns over time. They think this is normal. This is because Bitcoin is a maturing asset and its chart will start mimicking other assets. As a result it will become more stable over time and gradually less volatile.
Some people might prefer Bitcoin because it is more of a sure bet. On the other hand other investors might want to invest in more volatile cryptocurrencies like XRP. They are more risky and you could lose everything. However if your investment goes well, volatility can give back greater returns.
The SEC lawsuit against XRP will get resolved in one way or another. Once it’s over with it will enable Ripple Labs to go public with XRP. When this happens some investors expect XRP to make some gains because of the listing.
XRP may do well. However it may perform similarly to Coinbase’s debut on the stock market. On the first day the stock did well however it went down as you can see from Yahoo finance. Some investors play this by selling as soon as they see some gains on the day the stock is listed.
What might happen to Bitcoin is hyperbitcoinisation. If more countries like El Salvador or more institutional investors buy Bitcoin this could happen. As a result no one will be able to say where the Bitcoin price will go.
Most investors tend to have a selection of cryptos in their portfolio. This is to avoid having all your eggs in one basket. You never know what may happen in future. Moreover a small selection of coins will likely succeed in the long run. You don’t want to just bank on one of them and miss the gains enjoyed by other coins.
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