Why is Ripple So Different to Bitcoin?
Bitcoin has now hit its most considerable slump to date regarding its control over the market. Not necessarily self-instigated, the sharp decline in Bitcoin’s value of late can be directly linked to the success of newer and more technologically advanced cryptocurrencies – with Ripple being one of the leading victors.
The Second-Largest Cryptocurrency
Ripple’s value soared past $3 on January 3, 2017, having traded under $1 for the vast majority of 2017. Although this amount seems laughable to those comparing it to Bitcoin’s current price, Ripple’s market cap may silence any scoffing.
At over $110 billion, it has overtaken Ethereum to become the second-largest cryptocurrency in the world, succeeded only by Bitcoin – which, incidentally, exists in an entirely different playing field. To quantify its worth in the financial market, Ripple’s total market cap is now worth more than Uber.
Indeed, comparing Ripple to Bitcoin is a mistake often made, as the general assumption is that all cryptocurrencies are equal. In truth, the two are nothing alike. If one were to get technical, the latter is not even a currency – it’s a token.
If the pioneer cryptocurrency is like internet banking, Ripple is like an online gift card – it does not hold any intrinsic value. Simply put, if you want a standard dollar to do what Bitcoin can do regarding fast, international payment, you might end up with something like Ripple.
Further, unlike Bitcoin’s Satoshi Nakamoto, the details of Ripple’s creators are common knowledge. Ripple Labs is the company behind the token, formally called XRP tokens. Additionally, it is largely controlled and backed by its creators, making it far less decentralized than Bitcoin.
Ripple and Altcoins
If we were to take Bitcoin out of the equation, Ripple would still be largely different to any other cryptocurrency out there. Unlike other cryptocurrencies, it cannot surge into the thousands or even the hundreds of dollars. At this stage, it is remarkable that XRP tokens are even worth more than $1 each.
Additionally, most digital currencies exist for the sole purpose of providing an alternative to fiat money; Ripple was explicitly designed for low-cost, high-speed international money transfers. Furthermore, Ripple covers the cost of interbank transfer fees, which can significantly expedite the transfer process.
As a testament to its value, major financial institutions such as American Express are partnering with Ripple to streamline their banking processes. This mass adoption doesn’t seem to be the case for all banking institutions.
Although Ripple will never reach the heights of Bitcoin, its token value is still influenced by demand and supply. Before Coinbase squelched rumors of adding the cryptocurrency to its platform, prices shot through the roof as people hoped to get in on the action and profit from the price surge – an action which, in itself, contributed significantly to the price surge.