Gate.io Блог Bitcoin vs. Ripple: What’s the difference?

Bitcoin vs. Ripple: What’s the difference?

01 February 14:18

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**<font size=>[TL; DR]</font>**
🔹 Both [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP are layer-1 blockchain coins.

🔹 [Bitcoin](https://www.gate.io/trade/BTC_USDT) uses the proof-of-work consensus mechanism while XRP uses the distributed ledger one.

🔹 The maximum supply of BTC is 21 million while that of XRP is 100 billion.

🔹 The Ripple network is more energy efficient, faster and cheaper than [Bitcoin](https://www.gate.io/trade/BTC_USDT). 
## Introduction 
Cryptocurrencies started when blockchain technology and  [Bitcoin](https://www.gate.io/trade/BTC_USDT) were created. After the creation of [Bitcoin](https://www.gate.io/trade/BTC_USDT), several cryptocurrencies such as Ether (ETH), Ripple (XRP) and Cardano (ADA) came on the market. Ripple and ETH were created and launched a few years after the introduction of [Bitcoin](https://www.gate.io/trade/BTC_USDT). This article will explain who developed [Bitcoin](https://www.gate.io/trade/BTC_USDT), who owns XRP and why Ripple (XRP) is better than [Bitcoin](https://www.gate.io/trade/BTC_USDT). 
## Understanding [Bitcoin](https://www.gate.io/trade/BTC_USDT)
As mentioned, [Bitcoin](https://www.gate.io/trade/BTC_USDT), launched in 2009, was the first established cryptocurrency which many people have adopted. In fact, a person with a pseudonym Satoshi Nakamoto invented [Bitcoin](https://www.gate.io/trade/BTC_USDT) in 2008 and launched it in 2009. Nakamoto aimed to make BTC a peer-to-peer payment system. He/she/them also believed that BTC would hedge against inflation.

Primarily, BTC is a decentralized currency, meaning that no government or central authority controls it. Rather, its global user base manages it through thousands of nodes that verify transactions through the mining process.  As such, all transactions dealing with BTC are recorded on a public ledger where no one can alter or modify them. Technically, BTC is transferable, divisible and scarce. 
## Ripple
In reality, Ripple is the name of the company that developed and launched a cryptocurrency called XRP. However, in most circles people call XRP Ripple, which is not correct. In the end, many people use XRP and Ripple interchangeably, something accepted in the crypto sector. Some people call it Ripple cryptocurrency or Ripple crypto.

David Schwartz, Jed McCaleb, and Arthur Britto developed XRP in 2011 and launched it in 2012. Later on, Chris Larsen joined the development team. Their major aim was to improve on the features and functionalities of [Bitcoin](https://www.gate.io/trade/BTC_USDT). For example, XRP is more energy efficient, with faster transactions and cheaper gas fees than BTC.That is why most people consider XRP better than [Bitcoin](https://www.gate.io/trade/BTC_USDT).

When Ripple introduced XRP, its aim was to make it a means of cross border financial transactions, working with the legacy banking system. It facilitates payment settlements among individuals and institutions around the globe. However, it is not a medium of exchange for daily transactions such as buying and selling of goods and services. 
## Similarities between [Bitcoin](https://www.gate.io/trade/BTC_USDT) and Ripple (XRP)
[Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP have similarities and differences which investors and crypto users should comprehend.

###It is easy to use XRP and BTC
Any person who has the know-how to use cryptocurrencies can use both BTC and XRP. One can send it to someone, store it, receive it or hold it in his/her digital wallet. People can use both cryptocurrencies as stores of wealth, medium of exchange or for speculative purposes. In addition, the users do not need to have bank accounts to use these cryptocurrencies.

### Both can facilitate borderless transactions
People can use BTC and XRP wherever they are since they are cross border means of payment.  As well, people do not need permission from anyone to carry out transactions using these cryptocurrencies. However, they should comply with regulations relating to crypto activities in their jurisdictions.

###XRP and [Bitcoin](https://www.gate.io/trade/BTC_USDT) are popular cryptocurrencies
Since both XRP and [Bitcoin](https://www.gate.io/trade/BTC_USDT) are within the top ten ranked cryptocurrencies, they are equally popular. [Bitcoin](https://www.gate.io/trade/BTC_USDT) is the number one ranked cryptocurrency based on market capitalization while XRP is ranked sixth. It is essential to note that the crypto users can purchase [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP at crypto exchanges such Gate.io.

### Both [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP are used for speculative purposes
Similar to other cryptocurrencies, people can speculate on BTC and XRP since they are traded on public exchanges such as Gate.io. In effect, traders can [buy BTC](https://www.gate.io/trade/BTC_USDT) and XRP at low prices and sell them when their values have increased. It is vital to understand that both XRP and BTC have high liquidity which makes them suitable investment assets.

### Storage and transactions 
People can manage both XRP and BTC using digital wallets such as MetaMask.  Likewise, they can also use wallets that exist on crypto exchanges such as Gate.io. The trading process is similar as traders can use leverage for both cryptocurrencies. Furthermore, the traders can also use similar trading strategies when trading XRP and BTC.
## Main differences between [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP
Although these two cryptocurrencies have similarities they have striking differences.

###Supply of the coins
We already know that both [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP are layer-1 coins but their supply mechanisms are not the same. The current circulating supply of [Bitcoin](https://www.gate.io/trade/BTC_USDT) is slightly above 19 million. In addition, the supply of [Bitcoin](https://www.gate.io/trade/BTC_USDT) increases constantly as a result of mining.

On the other hand, people do not mine XRP because it was premined, meaning that the public ledger produced its maximum supply of 100 billion coins when it was launched.

However, the other amount is not within circulation as it is in an escrow account, where Ripple releases them periodically. At present, XRP has a current circulating supply of over 50.7 billion, with Ripple holding more than 50% of that amount.

### [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP do not have the same throughput
The transaction on the [Bitcoin](https://www.gate.io/trade/BTC_USDT) network is slower than that of XRP. Specifically, [Bitcoin](https://www.gate.io/trade/BTC_USDT) only handles between 3 and 5 transactions per second whereas XRP processes about 1,500 transactions per second.

As you may anticipate, the transaction cost for BTC is far higher than that of XRP because BTC experiences congestion since the network is slow. However, XRP may rarely experience congestion as the transaction speed is very high.

### [Bitcoin](https://www.gate.io/trade/BTC_USDT) and XRP have different use cases
The main function of XRP is to support a global financial transfer, a payment settlement system and currency exchange. As such, it enables people to transfer or send their funds and cryptocurrencies locally and internationally at low cost.

Ripple seeks to overcome the costly and cumbersome way of sending money using the traditional financial system that involves banks and other intermediaries.

As such, it uses XRP as a bridging currency, meaning that individuals and institutions do not need to convert one fiat currency to another when they send funds as they do with the  traditional financial system. However, with Ripple, the users can convert their remittance into XRP which they can send at very low cost.

When using banks or SWIFT, it may take up to 4 days for the money to reach the intended destination. However, when using XRP the funds are received within less than 1 minute.

[Bitcoin](https://www.gate.io/trade/BTC_USDT) works differently from XRP since it is a peer-to-peer digital currency. In fact, Satoshi designed it to be an alternative to the fiat currency which people can use to buy and sell goods and services, the way they use cash, on a daily basis.

### The consensus mechanisms
XRP and [Bitcoin](https://www.gate.io/trade/BTC_USDT) use different consensus mechanisms. [Bitcoin](https://www.gate.io/trade/BTC_USDT) uses the proof of work consensus mechanism where the validators use computational power to solve some complex mathematical problems. A validator who adds a block to the blockchain gets a reward worth 6.25 BTC.

This process of solving the cryptographic equation, also called crypto mining, consumes much energy. Nevertheless, the Ripple network, which is not a blockchain, uses a distributed ledger called The XRP Ledger to validate transactions using a poll system. At least 80% of the validators should agree in order to approve a transaction. This is one reason Ripple is better than [Bitcoin](https://www.gate.io/trade/BTC_USDT).

### Involvement of banks
According to Satoshi Nakamoto, BTC is fully decentralized, implying that it does not use banks and other financial institutions as intermediaries. Conversely, Ripple works closely with financial institutions, especially banks, to facilitate the transfer of funds. It aims to compete with some global financial transfer systems such as SWIFT and PayPal.
## XRP vs BTC: Which is better to invest in?
Many investors would like a clear answer on which coin to invest in, BTC or XRP. Nevertheless,  it is counterintuitive to say with certainty that one should invest in BTC or XRP. This is because the two coins offer different investment opportunities.

For example, [Bitcoin](https://www.gate.io/trade/BTC_USDT) is a better investment asset than XRP in a short period such as one year. This is so because an investor is likely to get a better return with BTC than with XRP in 2023, considering the lawsuit SEC has against XRP. However, it is likely that the price of BTC may rise significantly in 2023.

On the contrary, XRP seems a better investment asset than BTC in the long run if Ripple wins the case against SEC. The reason is that there is a greater potential for the long term growth of XRP than BTC.

Currently,  XRP is less adopted than BTC. Therefore, when many people start using XRP its price is likely to rise. The current price of XRP is $0.39 as at 20 January 2023.

As you note, there is potential for the price of XRP to increase. If someone invests in it at such an undervalued price, the gains will be high if the value increases, for instance, to $30 within the next two years. Therefore, the XRP price today is a good entry point for investors with a long term investment mentality.

Having said this, it is important to note that the best position for any investor is to diversify his/her portfolio by investing in both BTC and XRP. 
## Conclusion
Many people have a tendency of comparing [Bitcoin](https://www.gate.io/trade/BTC_USDT) with other cryptocurrencies. We found how Ripple is different from BTC as well as how they are similar. For example, just like [Bitcoin](https://www.gate.io/trade/BTC_USDT), XRP is decentralized and it is a good investment asset for the long run. On the contrary, investing in BTC in the short term may bring better returns than trading XRP. 
## FAQs about Ripple and [Bitcoin](https://www.gate.io/trade/BTC_USDT) differences
### Is Ripple better than BTC?
The truth is that Ripple (XRP) is better than BTC in some aspects. For example XRP is faster, more scalable and more energy efficient than BTC. It has a better prospect of growth than [Bitcoin](https://www.gate.io/trade/BTC_USDT) since it has a smaller market capitalization.

However, BTC is better than XRP in other aspects. For instance, [Bitcoin](https://www.gate.io/trade/BTC_USDT) is more adopted and has a bigger market capitalization than XRP.

### Is Ripple and [Bitcoin](https://www.gate.io/trade/BTC_USDT) the same?
Ripple and [Bitcoin](https://www.gate.io/trade/BTC_USDT) are not the same, although they are both cryptocurrency. [Bitcoin](https://www.gate.io/trade/BTC_USDT) was launched in 2009 and mainly functions as a medium of exchange. On the other hand, XRP was founded in 2011 and launched in 2012. It is a cryptocurrency that supports the international transfer of money at low cost and speedily.

### Should I invest in BTC or XRP?
Your choice to invest in BTC or XRP depends on the period you want to maintain the investment.  In the short term, BTC is a better investment asset than XRP since its price is likely to grow faster than that of XRP. However, XRP seems a better long term investment asset since it still has a higher capacity for growth. The best strategy, though, is to invest in both XRP and BTC as they compliment each other.

### Can Ripple be as big as [Bitcoin](https://www.gate.io/trade/BTC_USDT)? 
Ripple has the potential to become as big as BTC if many banks adopt it. Currently, Ripple has formed partnerships with over 300 banks in over 45 countries. With the constant increase in cross border transfer of funds the demand of XRP is likely to increase, pushing its price up. Considering that its current price is around $0.40, as at 22 January 2023, there is a high possibility for it to appreciate.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

BTC/USDT + 0.04%

ETH/USDT -0.86%

XRP/USDT + 1.25%

GT/USDT + 1.04%

Introduction

Understanding Bitcoin

Ripple

Similarities between bitcoin and Ripple

Main differences between Bitcoin and XRP

XRP vs BTC: Which is better to invest in?

Conclusion

FAQs about Ripple and Bitcoin differences

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