Bitcoin and Ripple: What differences?

Bitcoin is still the star of cryptocurrency, especially in terms of soaring prices and media coverage. But he faces several rivals who would like to steal his star status, and among them, is the Ripple.

But what exactly is the Ripple? How is it different from Bitcoin? Why is not this a cryptocurrency strictly speaking? Above all, remember that investing in cryptocurrency markets is speculative and is more or less regulated.

The Ripple network or the XRP
First of all, you must know that the Ripple is not a cryptocurrency, unlike Bitcoin, Ether or Litecoin. It is actually a settlement system offering a faster, more transparent and secure alternative to the systems used by banks, such as the SWIFT system.

The cryptocurrency of Ripple is the XRP. This is the token used by the Ripple network to facilitate transfers between different currencies. Existing settlement systems generally use the dollar as their base currency, but this creates significant exchange costs and delays, which is why money transfers to accounts domiciled in different countries may take a few days to complete. .

By first converting the transfer value to XRP instead of USD, there are no more exchange fees and payments are processed in seconds.

Banks such as Fidor Bank, Santander, the Commonwealth Bank of Australia and a consortium of 61 Japanese banks are either in the testing phase or in the process of implementing Ripple settlement system applications.

How is XRP different from Bitcoin?
XRP is the token used to represent the value transfer within the Ripple network. While Bitcoins are created by a mining process, there are already 55 billion XRP (often called "Ripples") that were created by Ripple's founders.

Thanks to a system of smart contracts, one billion "coins" of virtual currencies are available on the cryptocurrency markets every month. This follows the growth of the Bitcoin offer (which is what caused the soaring prices of Bitcoin) without having to resort to a significant energy consumption as is the case for the mining of Bitcoin.

In fact, technically speaking, the Ripple is not based on a blockchain (technology on which Bitcoin and most decentralized cryptocurrency are based) in the same way as other cryptocurrencies. Rather than being distributed on the computers of all the users running the "node" software, the database where the XRP exchanges are stored is hosted by trusted partners, on what is called a private network. or "permissioned". Currently, private partners include banks, money transfer organizations and universities. In addition to the fact that all its tokens were created by the network's founders and not by outsiders with the necessary computing power, these partnerships suggest that the Ripple is not a decentralized system.

It is certainly this centralized aspect that has allowed it to be adopted by international banking organizations, while Bitcoin and other decentralized systems are more often seen as threats to existing models.

Where to spend my XRP?
In short, you can not spend your Ripples. The XRP was not designed to become a currency or a means of payment. It can only be used to transfer payments to other currencies (or commodities such as gold or oil) on the Ripple network. Whenever a currency (or asset) is transferred, it uses the transfer and settlement network. The cost of the transfer is then deducted from the sum in XRP. That's what gives it value. In other words, it is the fuel of the transfer system.

How to invest in the Ripple? Is it a good idea ?
The Ripple has gained some momentum and the list of organizations using it indicates that its tokens themselves will become full assets. In fact, last year, the increase in the value of XRP exceeded Bitcoin and all other cryptocurrencies. At the beginning of 2017, an XRP was worth $ 0.006, before peaking a year later at £ 3.87, to quickly fall back to its current rate of $ 1 ( 0.82 €).

As for the second question, we are not financial advisers, so we can not give you advice on that. However, the adoption of Ripple by major financial institutions can provide good guidance as to the future value of the XRP. But keep in mind that before you invest in any cryptocurrency, you have to do some extensive research to see if that investment can pay off in the long run. As we have seen, the value of all cryptocurrencies is very volatile and can fall as fast as it can fly. The best advice we can give you is to always invest according to your means.