So you’ve probably heard the buzz about XRP right about now - the newest member of our cryptocurrency offering and in true crypto style, there’s plenty of excitement (and confusion) surrounding XRP.
If you’re a newbie to the crypto scene, navigating between your Bitcoin, Litecoin, Ether and the like, can seem like you’re sailing into uncharted waters. You want to try it out, but you’re not sure which cryptocurrency is right for you, or how they’re different from one another.
Well grab your life vest, because we’re going to dive right into XRP! 🏊🏻♂️
Are XRP and Ripple the same? 🧐
In a nutshell - NO!
If you’ve heard of Ripple, you might know that it’s actually a payment platform, or a real-time gross settlement system (RTGS) currency exchange and remittance network, designed to allow seamless transfers of money in any form, be it USD, Litecoin, Yen or others.
The idea behind the creation of this platform was to enable almost instant global transactions at low costs. This drew the attention of some of the worlds biggest financial players, including Santander, UBS, American Express, RBC and more. They liked RippleNet as it meant they could send large sums of money, without the huge bank fees and long wait times, traditionally associated with international payment systems such as SWIFT.
And then there was XRP - a digital asset for payments, otherwise known as a cryptocurrency or token.
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So how is XRP different from other cryptocurrencies? 🤷
1. Volume 💰
In a similar fashion to a company releasing stocks, Ripple released 100 billion XRP tokens at the get go - and this is the maximum amount of tokens there will ever be.
This is in contrast to other cryptocurrencies such as Ether which essentially has no limit to the amount of tokens it can release, or Bitcoin which has to be ‘mined’ and will eventually reach a maximum amount of coins.
To dive a little deeper - Bitcoins are released as rewards for for the ‘miners’ in order to incentivise the continuation of the network, whereas XRP tokens have already been created and are released when Ripple chooses to do so. And if all that sounds like crazy talk to you - put simply - we don’t know exactly when Bitcoin will reach its supposed limit of 21 million Bitcoins, but we do know exactly how many XRP are in existence. Make of that what you will!
2. Ownership 👑
One of the key elements of other cryptocurrencies is the fact that they are totally decentralised and not owned by any one authority or individual. Bitcoin for example is reliant on its huge number of global miners for it to function, grow and develop - which effectively means that no one person has full control over the currency.
In contrast Ripple owns 61 billion of the 100 billion XRP that were created and the rest of the currency is traded freely on the open market. It’s claimed that Ripple holds nearly 50 billion in an escrow account, systematically releasing the tokens to clients.
Other cryptocurrencies are based firmly on the idea of separating themselves from financial institutions and authorities, whereas Ripple and XRP actively welcome them.
Some crypto fans aren’t keen on the fact that this currency is owned by a company with centralised control and is therefore more regulated, whereas others see this as a sign of security and the potential longevity of XRP.
3. Speed 🏎
Another defining difference between XRP and other cryptocurrencies is the speed at which payments can be processed. A transaction made with XRP is settled in just 4 seconds, unlike Bitcoin where transaction times can vary depending on how congested the network is - ranging anywhere from 10 minutes to extreme cases of 16 hours.
4. Purpose 💵
Cryptocurrencies like Bitcoin were created as a peer-to-peer payment system, with the purpose of cutting out banks and government control.
XRP was actually intended as a ‘bridge currency’ for financial institutions, to allow them to make simple, fast, cross-border payments, without the need for multiple middlemen, or the huge fees usually associated with these types of transactions.
Although XRP isn’t necessary to use the Ripple platform to make payments, it’s thought that various companies are looking to adopt it. The company’s CEO Brad Garlinghouse tweeted that banks and payment providers are “indeed planning to use XRP in a serious way.”
So that’s our lowdown on XRP - we hope that we’ve shed some light on one of the more talked about tokens, made things clearer and helped you to understand how and why it differs from the other cryptocurrencies out there!
There's no question XRP is one of the most interesting tokens out there with an offering that could potentially change inter-bank transactions and hence the monetary system as we know it.
A lot of cryptocurrencies are trying to disrupt the way we use and circulate money, however only time will tell how we adopt the changes put forth by this up-and-coming technology.
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