Coin Overview – Ripple
Due to the soaring price of Bitcoin in 2017, a lot of people are starting to pay more attention to cryptocurrencies. However, while Bitcoin may grab a lot of the headlines, there are a number of “altcoins,” or alternative cryptocurrencies which are also starting to grow in popularity.
On of these is Ripple, and in the last month of 2017 went on a run from 25c to almost $3 USD. Here is a closer look at Ripple, which can help you to gain a better understanding of this coin and how it differs from some of the others out there.
What is Ripple?
The term, “Ripple” refers both to the cryptocurrency, and also to the real time gross settlement system based on this cryptocurrency. Ripple is also referred to as XRP. The cryptocurrency was first released in the year 2012. Ripple is the third largest cryptocurrency by market capitalization. It is behind only Ethereum and Bitcoin this respect. [EDIT: And in the time we wrote this to publish it went to the number 2 ] Ripple is similar to Bitcoin, however, there are a number of key differences between the two cryptocurrencies.
How is Ripple different from Bitcoin?
Although both Ripple and Bitcoin are both encrypted digital currencies that can be easily bought, sold, and exchanged over the internet, Ripple does not rely on a public “blockchain” for transaction validations and to uphold the integrity of its network. A blockchain is an open source universal ledger that can be accessed by anyone at any time, and which records every single transaction for a currency in an organized manner. Bitcoin uses a blockchain. Ripple instead relies on a network of nodes to validate transactions. These nodes include banks and other financial institutions. So, Ripple has closer ties to the banking industry than many other cryptocurrencies do.
This often becomes a point of contention between traditionalist cryptocurrency proponents and the more recent comers to cryptocurrencies who may not hold such extreme views about decentralisation.
Another key difference between Bitcoin and Ripple is that Bitcoins have to be “mined” into existence. This means that people have to use expensive software and computing power to solve intense mathematical equations in order for a Bitcoin to be brought into existence. All Ripple coins were pre-mined. This is an aspect of Ripple that many cryptocurrency fundamentalists look down on.
The number of total currency units is another major difference between Ripple and Bitcoin. The total amount of Bitcoins that will ever exist is 21 million. However, there are 100 billion Ripple coins. So, essentially, Bitcoins are much more scarce, and they cannot be brought into the market on a whim, unlike Ripple. On December 7th 2017 Ripple escrowed 55 billion coins in order to stabilise the currency and what they believe will increase liquidity and trust in the market.
Who created Ripple?
Ripple was created by Chris Larsen and Jed McCaleb. The company that is behind Ripple is called OpenCoin. Ripple is openly traded on cryptocurrency exchanges and there are now many people who own Ripple coins.
Why does Ripple seem to be gaining more and more attention in the cryptocurrency market?
There are several reasons for this. First, Ripple has made some astonishing gains in 2017. In late December, 2016, one Ripple coin was worth less than a penny. However, now a single Ripple is worth $1.86. [EDIT: Higher now] This means that Ripple has been an astonishing investment for anyone who purchased it in early 2017 or before then.
One of the top reasons why people buy cryptocurrencies is because many have gone up tremendously in value over time and helped to create excellent returns on investment. So, the enormous gains made by Ripple in 2017 are helping to drive a lot of interest in the cryptocurrency at the present time.
The fact that the price of Ripple is still very low compared to other cryptocurrencies is also appealing to investors. This is because many people believe that it will be easier for Ripple, which is still less than two dollars, to double or triple in value than it will be for Bitcoin, which would have to go to around $30,000 to double in value. Ripple would only have to go to $4 to double.
Is Ripple a legitimate competitor to Bitcoin?
Bitcoin was the first cryptocurrency to hit the market. It came out in 2009, and because it was first, it had the first mover advantage. This enabled Bitcoin to gain control of the market before other cryptocurrencies came out. Bitcoin has not been hacked in its entire existence and has proven itself to be very reliable and trustworthy. It has become something of a digital form of gold and is used by many people as a store of value.
It is unlikely that Ripple will threaten the status of Bitcoin as a reliable digital store of value any time soon. However, Ripple could be a serious rival to Bitcoin when it comes to transactions. This is because Ripple transactions are cheaper and faster than Bitcoin transactions currently are.
However, despite the fact that Bitcoin currently has slower transaction fees and higher transaction prices, this could soon change. This is because a scaling solution called the “Lightning Network,” may be soon put into place would dramatically speed up Bitcoin transactions and make them more efficient. So, yes, Ripple may compete with Bitcoin for market share. However, the two cryptocurrencies appear to serve slightly different purposes in the cryptocurrency space, at least for the time being.
Ripple is a cryptocurrency that has a lot of promise and could soon potentially rise to become even more significant in the cryptocurrency market. It has a very long way to go before it could compete with the market capitalization of Bitcoin. However, it is possible that Ripple could supplant Ethereum as the second largest cryptocurrency in the world in terms of market cap.
Ripple may not be as appealing to the more traditional and conservative cryptocurrency supporters who prefer mined coins as opposed to pre-mined coins, and who prefer open source blockchains. However, it is very appealing to many people who are looking for a cryptocurrency to invest in, and to others who are looking for a good cryptocurrency to use for daily transactions. Ripple is a good cryptocurrency to keep an eye out for in 2018.