Bitcoin vs Ripple (XRP)

Posted on: February 16th, 2018 by jms No Comments

I once wrote how I thought Ripple’s XRP is the only other cryptocurrency worth investing in besides Bitcoin (this was before Ethereum hit the scenes).


At the time I didn’t fully understand Ripple’s intent for its own blockchain technology. Now I have some different opinions about XRP, but do I still believe it has value and a lot of potential (maybe even more so than Bitcoin) as it relates to the future of digital transactions.



What is Bitcoin really?


Satoshi Nakamoto’s whitepaper is what you’ll want to read in order to fully understand the original intent behind Bitcoin, but I’ll sum it up by saying… Bitcoin was originally meant to be a peer-to-peer system for handling digital financial transactions. It was meant to take intermediaries like banks out of the picture while also seeking to solve the problem of double spending.


What Bitcoin has become


Bitcoin today is less of a means of payment as much as a perceived store of value. As long as the price of Bitcoin can fluctuate double digit percentages every day it can’t really be a viable means of handling ordinary transactions. Why would someone ever want to use Bitcoin to buy something if the price of their Bitcoin may go up 20% in the next hour? And why would someone want to accept Bitcoin in exchange for something if the price of the Bitcoin they accept may go down 20% in the next hour? People are not acquiring Bitcoin today because they believe in the ideology it was meant for. They are acquiring it because they believe it will go up in value faster than other types of investments. Bitcoin has become a version of digital gold more than a version of digital cash like it was originally intended.



What is Ripple?


Ripple is a company, not a cryptocurrency. Ripple has created their own version of a cryptocurrency called XRP. This cryptocurrency is unique to the Ripple system, which is really intended to favor the banking system by creating a cheaper and faster alternative to the current SWIFT system. Ripple is trying to solve a very different problem than other cryptocurrencies, and it is not decentralized.


The value of XRP is directly tied to the value other financial institutions place on the Ripple system. It may one day evolve into a better form of handling ordinary transactions if banks and credit card companies adopt XRP as a better way to validate transactions, especially since it will help solve the double spending problem. What this ultimately does for the value of XRP is yet to be determined. Personally, I don’t see this type of adoption causing the price of XRP to skyrocket like Bitcoin, but I do see it allowing XRP to become a new standard for payments, which should cause it’s value to go up at a relatively steady pace over time.



So there you have it… XRP and Bitcoin are meant for two very different purposes, and Bitcoin has evolved to be something very different than what it was originally intended for. XRP and Bitcoin should not be compared as similar types of assets. Bitcoin will likely be the better store of value for faster growth in the foreseeable future, assuming it doesn’t come crashing down. XRP has a better chance of becoming the standard cryptocurrency for handling ordinary payments since it favors existing financial institutions and improves the way they can handle transactions. This will allow XRP to be a safer store of value long term once Ripple solidifies it’s position as a better alternative to the status quo.



Here’s another great article on the differences between Bitcoin and Ripple’s XRP.