If you think of digital currencies, Bitcoin will probably come to mind first. No wonder, because the crypto currency is by far the best known on the market. But the competition is not sleeping, alternatives to Bitcoin are being found more and more often. These include, for example, the Ripple.
The digital currency market has developed to such an extent that investors should definitely compare whether Bitcoins or Ripples are worth buying before investing. Without comparing Bitcoins and Ripples, investors quickly run the risk of investing in the product that is unsuitable for them.
Buy Bitcoin or Ripple? – And why is Bitcoin so famous?
When crypto currencies were first taken notice of by the general public in 2008, experts gave them little chance of ever becoming a serious currency. But Bitcoin in particular -and its inventor Satoshi Nakamoto- have successfully managed to convince the financial world of the opposite in recent years. Over time, the brand has developed into the best-known crypto currency in the world and can probably look forward not only to an immense increase in value but also to lots of new customers.
Apart from the many critics, there were also many who recognized the potential of Bitcoin in the early days. Even then, some had the expectation that digital currencies could prevail in the long term. After an admittedly slow start, Bitcoin owners of the first hour soon enjoyed an immense rise in prices, with other investors then becoming aware of this. Interest in Bitcoins increased rapidly and this increased interest had of course a positive effect on the price.
More and more companies are now offering payment by Bitcoin transaction, making the digital currency attractive to the average consumer. However, many banks still do not want to acknowledge that Bitcoins (and other crypto currencies) could represent an alternative to traditional systems in the future.
What are the negative aspects of Bitcoin?
As is often the case, rapid success is just as quickly attracting critics. Bitcoins are no exception. Despite the excellent reputation that the digital currency has gained, partly thanks to the rapid increase in value, there are a number of points that critics regularly highlight. As a digital currency, Bitcoins are completely dependent on the availability of modern technology. This is needed for mining the Bitcoins. Mining gives everyone who takes part in it the opportunity to generate coins themselves, but it takes up a great deal of energy. But what happens if this energy is no longer available at some point? This would have fatal consequences for the Bitcoins.
As with traditional currencies, it is the case with Bitcoin, too, that a large amount is owned by a very small group of people. In this context, it is estimated that around 96 percent of Bitcoin assets are held by only 4 percent of users. The fact that more and more new users are being added does not change this much, as they usually only have small amounts of the digital currency themselves. Bitcoin prices depend on supply and demand. As demand has been very high in recent years, the share price rose sharply within a very short period of time. Should one of the owners throw large quantities of Bitcoins onto the market in one fell swoop, the result would be an oversupply with only one logical consequence: a rapid decline in the Bitcoin price.
Bitcoin vs. Ripple – what is the deal with the currency Ripple?
Those interested in the topic of crypto currencies can hardly avoid Bitcoins. The brand is just too well-known and widespread for this. In addition, however, there are now other currencies that could be considered as investments. One of these: Ripple. Ryan Fugger is one of its original authors, and his ideas are currently being implemented by Ripple Labs. The Ripple payment network is based on an open source protocol that has created a virtual currency market and a peer-to-peer process for transactions. The currency market assigns a Ripple rate to each currency – regardless of whether it is a real or a digital currency. This gives traders the opportunity to speculate on price changes.
The basis of the digital currency is a relationship of trust between all persons involved in the payment system. This is also a basic prerequisite for the success of traditional payment systems (for example between bank and customer); Ripple merely moved this idea to the internet. For this purpose, a special platform has been created, through which all payment transactions take place and any liabilities between two or more parties are recorded. Behind the platform, on which all transactions in the network are stored, stands a complex system, which is not always immediately understood by technology amateurs and beginners on the topic. Many experts regard this fact as a reason why many private investors are currently still opting for the former when it comes to the question “Bitcoin or Ripple?”.
All transactions relating to the crypto currency are stored in a central and public database. So it can be used by everyone who is interested in Ripples. The account balances of all participants are stored in the database register. This not only allows you to view your own account balance, but also the number of Ripple coins from other users. One of the security mechanisms of the Ripple network: the records of all processes can also be viewed at any time. Since the database is also a trading platform, users can call up information on offers to buy and sell currencies and commodities and process the corresponding transactions.
The terms Ripple and Ripple coin and the abbreviation XRP are used more or less synonymously for the digital currency. Buyers of the coins can either save them or use them for payment transactions. The currency is also interesting for investments in foreign exchange.
Buying Bitcoins or Ripples is a question that interested parties regularly ask themselves. Whoever is drawn to the Ripple coins, can handle the purchase over a desktop wallet named “Rippex”. This client can be used by anyone who decides to invest in the crypto currency and to hold the Ripple. Since the project is still open source, users can make suggestions for improvement at any time.
Criticism: are Ripples even a real crypto currency?
When alternatives to the crypto currency Bitcoin are listed, Ripple is often mentioned first. The fact that Ripple is not always mentioned first results from the fact that some people do not regard Ripple as a true crypto currency. The point of criticism: it is not a free currency, as is the case with Bitcoins. Regarding the latter coins, attention is repeatedly drawn to being independent of physical currency, experts also see this as their biggest advantage. Ripples, on the other hand, are managed centrally via a platform and thus lose a property that makes other crypto currencies so strong. In addition, the Ripples are produced solely by Ripple Labs. With Bitcoins, as already mentioned, all users can participate in mining.
The manufacturer has limited the maximum number of Ripples available to 100 billion. Once this mark is reached, Ripple Labs will not create and distribute any more XRP on the network. At present, more than 99 billion Ripples have already been produced, so it can be assumed that the upper limit will soon be reached and production will cease. This property also does not apply to any other crypto currency; Ripple enjoys a unique selling point in this respect.
Like Bitcoins, XRP is stored in an online wallet that is managed via the network mentioned above. However, this creates the problem that the user is completely dependent on Ripple Labs for the security of his possessions. He has no way to protect his property outside the network. However, it is precisely this dependency that supporters of the crypto currencies want to leave behind them, which is why Ripple often encounters rejection by the community. To make matters worse, the manufacturer only distributes 50 percent of the digital currency on the network, while itholds the other half back for itself. The biggest beneficiary of a rise in the Ripples’ share price is undoubtedly the company behind it: Ripple Labs.
But if Ripple is not considered a classic crypto currency, for whom is it of interest? As an example, of course, for all those who want to use Ripple as an investment. Because even if the company behind it benefits most from a price increase, every owner of XRP benefits at the same time. Ripple can therefore also be regarded as a bank that has created its own currency. If you want to support the system behind the company, you can also use Ripple as a payment platform. Although payment with Ripple is not nearly as common as with Bitcoins, it is easy within the network.
The differences: Bitcoins vs. Ripples
Before deciding whether to buy Bitcoins or Ripples, investors should be aware of all the similarities and differences between the two investment options. Because once own investment behaviour is often the decisive factor in the choice of the system, it should be clarified beforehand which is best suited to you.
Payment system or currency: Ripple is less a crypto currency than a payment system through which transaction partners can record and pay debts. Bitcoin has made a name for itself as a true digital currency with decentralized management and the possibility of mining.
Currency source: If you want to buy Bitcoins or Ripples, you can’t do without internet access. With Bitcoins the purchase is quite simple, on the special market places the coins can be bought and sold again. If you want to invest, you only have to register there. With Ripple coins, however, it is necessary to establish a connection to the platform via a gateway. In concrete terms, this means that you have to buy Ripple coins directly from the supplier. The latter must then inform the gateway that he has given the buyer permission to receive Ripple coins.
Security for the users: As already mentioned, Bitcoins are stored in a personal wallet. There they are basically protected from access by unauthorized third parties and cannot be lost. In this point, too, they differ from the Ripple coins. Coins are assigned exclusively via licensed gateways. If a gateway has no more money, the coins are also lost. Ripple coins credit can therefore be frozen or withdrawn by the gateway at any time. A loss in Bitcoins is also possible at any time, but due to price fluctuations. Although this makes them highly speculative, they are not withdrawn from the owner’s wallet even in the event of a high loss in value.
Critics often accuse Ripple of being very close to the banking system. This escapes the actual idea of crypto currencies to exert pressure on the banking system by establishing an alternative currency. Ripple is not seen as a competitor to the existing system, but much more as bank-friendly. Bitcoin, on the other hand, is exerting pressure on governments and banks and wants to achieve change. Therefore, Bitcoins appeal to a much larger target group than Ripples.
Which of the crypto currencies has the higher increase in value?
For many investors, the expected increase in value is decisive for the trading decision. However, there are a number of factors to consider in order to avoid making the wrong decision when deciding whether to buy Bitcoins or Ripples. Especially beginners are often dazzled by the increase in value, because this can create the wrong impression when it comes to Bitcoins vs. Ripples. The biggest presence in the media is undoubtedly Bitcoins, so even small price increases are reported more than price increases of competing products. This quickly gives the subjective impression that the Bitcoin price increases are better to evaluate than those of the Ripples. But an exact look at the market value can quickly convince us of the opposite.
In our example, we look at the period from January to August 2017, when Bitcoin’s market capitalization was $15,491 million and Ripple’s market capitalization was comparatively low at $237 million. One reason for this is, of course, the significantly shorter time Ripple had previously been on the market compared to Bitcoin. It will now be interesting when we look at the market capitalization in August 2017. First of all: currencies showed a rapid development. As a result, Bitcoin’s market capitalization in August was $71,084 million and Ripple’s market capitalization was $7,623 million. At first glance, this looks like a clear victory in the Bitcoins vs. Ripples duel, but a closer look at the development in percentage terms quickly leads to the opposite conclusion. While Bitcoin’s market capitalization increased by an impressive 359 percent – which in itself is of course a first-class result – Ripple’s market capitalization increased by 3,116.5 percent!
From the investors’ point of view: Buy Bitcoins or Ripples?
Despite all the criticisms and the significantly lower level of awareness compared to Bitcoin, Ripple is an interesting currency for investors. In the area of crypto currencies, it is one of the best-financed companies and was thus able to arouse investor interest in the individual financing phases. Obviously, investors seem to have some confidence in the brand and see potential in the digital currency. Ripple coins also seem to be able to have a decisive influence on payment transactions in the future.
The crypto currency Bitcoin is considered highly speculative, despite – or precisely because of – the rapid increase in value that was recorded in 2017. Quite a few experts expect the bubble to burst in the foreseeable future, some believe that this event is already overdue. But as long as the increase in value continues, investors seem to trust the Bitcoin brand – not least because it promises high returns within a very short time. Although these are not to be expected with Ripples, this coin is also regarded as an ascending currency. Should it continue to prove itself on the market, experts expect it to be able to establish itself as a payment alternative.
Conclusion: Bitcoins and Ripples can hardly be compared
A direct comparison of Bitcoins vs. Ripples seems to be hardly possible. While Ripple appears as a payment system that offers new ways of paying debts, Bitcoin has been an institution among digital currencies for almost ten years. For investors, of course, the potential return is primarily decisive. Bitcoins offer the best conditions in this respect, however, the investor should bring along a starting capital in the six-digit range.