What is XRP – Introduction
Ripple (XRP) is a cryptocurrency that has a different purpose from the other ones trading in the market. It works in an integrated way to the traditional financial market. If you have no idea what XRP is, it’s time to know its major features.
In the next topics, we’ll explain how XRP came into existence, what technology it applies during its transactions, and introduce the difference between XRP and Bitcoin (BTC). Are you up to learn more about cryptocurrencies? Then, enjoy it!
XRP origin
XRP was conceived by Ryan Fugger (developer) Jed MacCaleb (programmer) and Chris Larsen (businessman) in 2012. It’s managed by Ripple Labs, an US private company, and its major target is to make transactions easier in banking.
Therefore, XRP has different attributes from other cryptocurrencies in the financial market. After all, most cryptos came into existence not to belong to the traditional financial system, but to dissociate itself from that.
Transaction Technology and Ripple Protocol
XRP is the native cryptocurrency from Ripple protocol, which is a blockchain-based digital payment network created by Ripple Labs. In this system, banks and other financial companies can connect to each other and make fast and simple transactions.
Each of these transactions is validated by the RippleNet network through a code. The code, in turn, is executed by validators previously chosen by the company. The authentication process is made with votes. Thus, when 80% of validators approve a transaction, it’s released by the network.
Integration with traditional banking systems
If you’ve ever wire transfer between different banks, you know that it takes too long to occur and it might be an expensive process. It happens because transactions can only be processed on business days and, depending on the case, the transactions must pass through other financial institutions until they reach the receiver.
For this reason, Ripple Labs created Ripple protocol. It’s a global system that works 24-7. All banks are able to connect to the protocol. Agencies can make transactions in it with any crypto or fiat currency e.g.: XRP, BTC, Dollar and so on.
Differences between XRP and Bitcoin
Now, you’ll see the divergence between XRP and BTC – the world’s most popular cryptocurrency.
Mining
BTC mining is a reward process for people who act by validating transactions made with it. This occurs through the resolution of complex math problems that are automatically released in the Blockchain system. Thus, for each problem solved, new BTCs are created as a reward for the validator.
On the other hand, there isn’t any XRP mining, because there isn’t no longer any new XRP to be conceived. This means that validators don’t receive compensation for their work. Strange as it may seem, it works. After all, the biggest benefit for those who use the Ripple protocol and XRP is being able to leverage the technology.
See more:
Transaction velocity
Due to the mining process and the structure of the Blockchain, the average confirmation time for a BTC payment is about 10 minutes. On the other hand, the average confirmation time for a XRP payment is about 4 seconds.
This means that the computational capacity of the BTC system allows 7 transactions per second. Although, the capacity of XRP is over 1,500 transactions.
Faster processing is due to a short number of authorized validators by Ripple Labs and by its approval mechanism. As previously mentioned, approval is with votes and not by solving complex problems.
Using cryptocurrencies on the market
XRP and BTC are finite cryptocurrencies. However, there are differences on how both of them have reached the market.
For instance, the first one has 100 billion of coins and all of them were mined in 2012. Now, Ripple Labs releases the public its amount gradually. So far, there are a little more than over 30 billion in circulation.
BTC was created to have a maximum amount of 21 million units. The big problem is that the units are still being mined. Statistical prediction says the last BTC will be mined in 2140.
Type of crypto control
The last and (perhaps) most important difference between XRP and BTC is how both are controlled.
XRP is an extremely centralized crypto, once Ripple Labs controls the list of validators, as well as release of digital currency on the market. On the other hand, BTC is completely decentralized. After all, anyone can become a miner (with necessary technological resources) and get new currencies.
What is XRP – Conclusion
As you can see, XRP is a cryptocurrency with specific features. That’s why people tend to take extreme positions towards it, whether it’s being a crypto-XRP lover or someone who says it’s not a safe crypto.
Regardless of what you think, the truth is that XRP and the Ripple protocol are focused on the financial sector. It allows this type of sector to conduct real-time transactions with less bureaucracy.
Did you like this article? For more information about cryptocurrencies and technologies related to this world, check our blog: ECC Project Blog!
