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Bitcoin vs Ripple Labs: What’s the Difference?

What is Ripple

Notably, XRP’s blockchain operates a little differently than most other cryptos. Other cryptocurrencies open their transaction ledgers and verification processes to anyone who can solve complex equations quickly. But transactions are secure as the majority of ledger holders must agree with the verification for them to be added. Securities and Exchange Commission charged Ripple with selling unregistered securities in the form of XRP on cryptocurrency exchanges. After years of litigation, on July 13 a federal judge handed the company a partial victory by ruling that XRP sales on public crypto exchanges were not offers of securities under the law.

This is much in the same fashion as Ethereum is the name for the platform that facilitates trades in Ether. Like other cryptocurrencies, Ripple is built atop the idea of a distributed ledger network which requires various parties to participate in validating transactions, rather than any single centralized authority. Ripple’s digital currency, XRP, acts as a bridge currency to other currencies. It does not discriminate between any fiat/cryptocurrency, which makes it easy for any currency to be exchanged for another. Each currency on the ecosystem has its own gateway—for example, CADBluzelle, BTCbitstamp, and USDsnapswap.

How is Ripple Different From Other Cryptocurrencies?

In actuality, Ripple Labs is looking to leverage the technology behind XRP to allow for faster banking transactions around the world. While Bitcoin and other cryptocurrencies are built on the idea of separating financial transactions from the commercial organizations of traditional currencies, Ripple is almost the opposite in every sense. This allows Ripple to securely and efficiently validate transactions, which gives it an edge over other cryptocurrencies, like Bitcoin. Notably, XRP’s blockchain operates a little differently than most other cryptos’. The token used for the cryptocurrency is premined and uses the ticker symbol XRP. Ripple is the name of the company and the network, and XRP is the cryptocurrency token.

What is Ripple

Evidence of this hope can be seen in the latest development, where the filers, among them VanEck, Grayscale and Fidelity,  have filed for registration of securities with the financial regulator. The approval hype momentum appears to be in full swing after the SEC met with NYSE, NASDAQ, and CBOE exchanges to discuss the spot BTC ETF. The XRP ledger is scalable and can handle up to 1,500 transactions per second. Bitcoin’s transactions per second average between four and five, while Ethereum maintains about 13 transactions per second. The introduction of the Lightning Network that assists the Bitcoin blockchain solves its scalability problem.

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John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight. His work has appeared in CNBC + Acorns’s Grow, MarketWatch and The Financial Diet. For example, imagine Lawrence needs to send $100 to River, who lives in a different city.

What is Ripple

This is a big win for banks, who may want to change transactions, either to catch a criminal or to fix a mistake. Whatever the reason, Ripple’s fewer nodes means the blockchain is more editable, which can be a huge benefit. To explain, this is a list of nodes the server queries to reach a consensus about a state or value in the network. In other words, when determining consensus, each node in the network only considers the votes of nodes in its own UNL. This means Ripple relies on significantly fewer nodes to reach a consensus than blockchains like Bitcoin and Ethereum. Unlike Bitcoin or Ethereum, Ripple neither uses the proof of work (PoW) or proof of stake (PoS).

What Is a Cryptocurrency?

The nodes simply validate transactions themselves – much like traditional banks do. Forbes Advisor has provided this content for educational reasons only and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

This is unlike banks, which could take days or weeks to complete a wire transfer. The XRP Ledger keeps track of all IOUs in a given currency for any user or gateway. IOU credits and transaction flows between wallets are publicly available on the XRP ledger. But even though financial transaction history is publicly recorded and made available on a blockchain, the data is not linked to the ID or account of any individual or business.

Even at the recently reduced value of around 20 cents per XRP, that means Ripple Labs is currently sitting on approximately $12 billion worth of the cryptocurrency. It holds 55 billion XRP in an escrow account, which allows it to sell up to a billion per month if it so chooses to fund new projects and acquisitions. Selling such an amount would likely have a drastic effect on the What is Ripple cryptocurrency’s value, and isn’t something Ripple Labs plans to do anytime soon. Although Bitcoin is still the king of the cryptocurrency hill, there are many pretenders to its throne, and some of them are quite different. One of the most intriguing in its diversion from several crypto-norms is Ripple, a much more centralized cryptocurrency in a very decentralized space.

  • Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
  • It uses an entirely different consensus mechanism to confirm transactions.
  • Another approximately 48% are held in a reserve for regular release into the market through sales.
  • As Ripple sells XRP from its escrow accounts, they realize a profit that is paid to the Ripple Foundation.
  • In October 2023, the SEC dropped the lawsuit’s charges against Ripple Labs CEO Brad Garlinghouse and co-founder Chris Larsen, who were accused of aiding and abetting the company’s alleged sale of unregistered securities.

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