Comparing Bitcoin, Ethereum and Ripple may not be efficient since the three leading cryptocurrencies were designed based on completely different principles and have entirely different functions yet all of them benefit from the mainstream adoption and escalating corporate acceptance.
Let’s examine which advantages and opportunities these differences create
Ethereum was developed to resolve certain limitations of Bitcoin, as its creators wanted to broaden the range of uses of the blockchain. They wanted to empower individuals to develop applications in other industries, not just finance. Being an open source platform with its programming language, Ethereum helps to perform a much wider range of tasks apart from verifying transactions. Its smart contracts can be coded and executed for many uses ranging from real estate to education and healthcare. Applications on Ethereum platform run using a specific cryptographic token Ether. The platform underwent an attack which resulted in a hard fork separating it in two versions.
Ripple was designed a single goal – to permit quick financial settlements. Featuring a unique design this cryptocoin meets this goal while clearly outpacing the competition. It took the company more than five years to earn their strong reputation. The innovative approach to coin generation technology helps XRP ledger to execute instant, secure, and less expensive transfers. The XRP ledger doesn’t require mining which differentiates XRP from other cryptocoins. Without the need to mine, the computing power is dedicated to transaction negotiation. The extra hashing power shortens the time required to verify the transaction metadata.
The smart investor has already been looking at the majority of altcoins which have a relatively small price but are continually growing in value and enjoy mainstream financial adoption. The key thing to look at in the modern crypto space is the way that the blockchain-powered platform is being used.
As crypto-economy is becoming an integral part of the international monetary system, the way that financial industry functions today may soon change entirely. There has been a growing pressure on banks to figure out ways to bring crypto coins to use within their existing systems without competing with fiat money.
Scalability is another important factor. In terms of cryptocurrencies as applications, it refers to their ability to be used for solving various business needs and to accommodate the growing amount of data. Technical aspect should also be considered when you compare these two currencies. Ripple has a simple protocol which is narrowly focused on financial transfer requirements and its use outside the finance not certain, yet when it comes to the velocity of transactions settlement, this token is better than Ethereum. Smart contracts powered by the Ethereum platform can accommodate a nearly unlimited range of business applications which is important for adoption and acceptance.
Ripple price shoots up more than 35,000 percent until November 2017. This won the currency a spot ahead of top performing cryptocurrencies this year in terms of growth. While it costs only a fraction of Bitcoin its mining-free nature and many of the mainstream financial partnerships with notable players on the financial scene mean that this coin has not yet realized its full potential of blockchain technology.
One of the reasons for this explosive growth is the ongoing grow in the number of XRP token partnerships in the financial sector. American Express and Banco Santander are among the most famous companies that started implementing Ripple technology in international money transfers and instantly settled non-card payments. Since the sole function of the Ripple protocol is financial transaction settlement, the protocol it used could allow processing time to be shortened to several seconds. Considering the average settlement time of 2-5 business days this advantage in the speed of transaction may break the game for many financial institutions that decided to adopt Ripple technology.
Another successful partnership was announced in early 2018. Ripple teamed with MoneyGram money transfer company which tested XRP token in its xRapid platform which delivers on-demand remittance services for enterprises. MoneyGram has even far-reaching plans of using XRP token as an arbitration currency in international financial transactions. This would allow almost instant transfers between currencies since the currency of the sender would be converted to the XRP token and then into the receiver’s currency, which in turn reduces transaction fees and increases the number of transactions delivered. If such a promising partnership proves to be a success, MoneyGram will be on its way to the top spot in the industry.
Ethereum and its blockchain platform is also being explored by more than two hundred of global financial institutions as part of the Enterprise Ethereum Alliance although this cryptocurrency is not solely focused on financial transactions. Yet its flexibility, scalability and smart contract functionality on the Ethereum platform of decentralized applications are Ether’s clear advantages.
There are over 1,500 virtual currencies trading today. While none of them look like an immediate threat to Ripple in the niche of financial transaction settlement, newcomers are. One day another digital solution could exceed the value of these pioneers.
The early acceptation of Ripple by bankers who are traditionally slow in accepting change is very significant for blockchain potential. Traditional slow to embrace the change, the banking industry welcomed the promise of cost efficiency and competitive edge that leads to increased revenue. This explains why bankers were not excited about the invention of Bitcoin which questioned the very basic principle of the traditional finance system.
In contrast with acceptation by bankers, the advocates of cryptocurrency criticized Ripple for being too centralized which in their belief was against the cryptocurrency ethos. But this very “disadvantage” won the currency such a positive attitude from the financial industry.
This perception of Ripple as “not-quite-crypto” coin could eventually become the determining factor in Ripple vs Ethereum competition. With the adoption growth like today, XRP may soon compete with Bitcoin if cryptocurrency pioneers do not adapt to changing business and legislative environment is not very crypto-friendly at the moment.
The transaction speed is where XRP outsmarts its competition. The platform can process more than 1500 transactions per second which are over a hundred times faster than Ethereum (at the time of writing). A transaction is verified on Ethereum blockchain in 2 minutes compared to only four seconds on Ripple. This explains the favorable attitude from financial institutions who welcomed the speed paired with reliability as a way to enhance their financial infrastructure.
It’s evident that banking professionals and major financial industry players, in general, have preferred Ripple and its functionality over that of Ethereum. Ripple and its partnerships with recognized big names in finance improve trust in Ripple protocol. Even skeptics now believe that Ripple can bring unique benefits to financial companies of all sizes.
But even with this support Ripple can hardly compete with Bitcoin and Ethereum in terms of value for investors. Its closest competitors are priced a lot higher and it could take several years until this crypto coin can complete with Bitcoin and Ether.
The price of best-performing cryptocurrencies have dipped recently and it’s unclear if the market will continue to move in this direction. The legislative framework could change the investment climate dramatically which will grow the popularity of cryptocoins with practical and scalable application potential.
The use of intermediary currency for international money transfers created by Ripple can achieve mass adoption. It allows completing transfers thousands of times more quickly than it’s possible right now. The blockchain can be implemented into various user cases which partially explains the growing acceptance of XRP token. Financial institutions appreciate the fact that they keep control over the whole process which helps ensure regulatory compliance. Cryptocurrency evangelists find even more reasons for slamming Ripple over the lack of commitment to decentralized principles. Supporters of Ripple admit that the company is maintaining a healthy balance between decentralization and scalability.
It’s too early to say that a particular coin could be a winner and replace Bitcoin at the top, as Ethereum and Ripple show great promise, are technologically advanced and remain attractive to investors. It’s becoming clear that the future belongs to currencies that contribute to solving more problems than just transaction verification.