Jan 6, 2019
Ripple (XRP) or Bitcoin (BTC) — Who Will Lead the Crypto Market in the Future?
By Marko Vidrih on ALTCOIN MAGAZINE
The digital economy and cryptocurrencies are now inextricably linked and Bitcoin is the key cryptocurrency of this partnership — currently. However, given the slow pace of development and increased transaction costs, many observers are left wondering if this will continue. Ripple, on the other hand, has done its homework and more and more banks and financial institutions are using xCurrent and xRapid for their cross-border transactions.
Is it the time come for a new key cryptocurrency of the digital economy? Will Ripple lead the crypto market in the future? More and more investors and users ask themselves this question — a good opportunity to take a look at the foundations of the two industry giants. Before deciding to buy one or the other, you should ask yourself three questions:
- Who has control over Bitcoin or Ripple?
- Which goals are the focus?
- What is the technical performance?
Who controls the industry of Ripple and Bitcoin?
Blockchain technology has tangled up the financial world with a central promise: not trust in banks and economic policy should make a currency safe, but decentralized account books. The basic principle behind this is that all trading partners’ transactions can be managed more securely, faster and more cost-effectively through the shared digital network than is possible with conventional technology.
So when personal contact does not create trust anymore, but algorithms take over the guarantee, one question comes to the fore: who is behind the technology? In the case of Bitcoin vs Ripple, the answer is Community vs Enterprise.
Ripple Labs Inc. — Company or Open Network?
The headlines about cryptocurrencies are often related to community, developer conferences or enthusiastic miners. Accordingly, we have become accustomed to the fact that it is often about discussions and new old coins enter the market as spin-offs of Bitcoins. Ripple news, on the other hand, has a different focus.
Since 2004, long before the crypto boom, Ripple offers decentralized payment options. Step by step, the company has further developed the technology and built up a customer base. Numerous major banks and financial service providers, such as Western Union or MoneyGram, are now taking advantage of Ripple.
The Ripple Road Map is therefore also unaffected — apart from the jumps in the XRP course. The most important reason for this is that the company Ripple controls all the essential aspects of the network. The technical development is based on a clearly structured amendment procedure in which proposals are first introduced, discussed and finally implemented.
The flip side, however, is that only a few independent developers contribute ideas and innovations. For this reason, two new Ripple White Papers were published at the beginning of 2018, which should make it easier for all research groups to submit ideas and suggestions for implementation.
In addition, the company founders have also provided a strong control of their own Ripples from the start. With the introduction of the XRP 2014 around 20% were put into circulation and now about 40% are freely available and this affects the Ripple trading negative.
- This strong, centralized control was not uncontroversial within the developer team. Jed McCaleb, who co-developed the Ripple network, left the company in 2014 to create a community-based version with Stellar.
Who decides on Bitcoin?
The BTC was launched in 2009 with a simple and convincing mission: users decide on all the major issues of the cryptocurrency and are responsible for it. This openness is still the most important feature and anyone who wants can install a Bitcoin Node and join the network.
Of course, over the years, different groups have emerged that pursue different interests. The most important groups are:
- The core developers
- The miners
- Wallet operator
- Users like you and me
The software developers, around the chief developer Wladimir van der Laan, are the conservative group — which may look a bit odd, but it is at Bitcoins but one of the most advanced technologies.
They feel like the vision of the (unknown) founder Satoshi Nakamoto committed: Power to the people is their credo and they are strongly against technical innovations that could endanger the influence of users.
The miners, on the other hand, are more of a driving force. They have created servers and server farms with high investments and benefit from a high number of transactions. Their interest is therefore obvious: rapid expansion of the blockchain to solve the current scaling problems.
Similar interest has also the numerous startups, which provide the technical infrastructure so that Bitcoins actually function as currency. Coinbase, Kraken or Bitpanda benefit not only from the exchange rates but also from the numerous private investors. They are therefore interested both in improving performance and in involving users.
Users do not have their own voice when it comes to important questions. However, developers and miners always refer to them when it comes to protecting or benefiting them. The discussions about Bitcoins are not always in your interest. By the end of 2017, a significant improvement of the technical core had already been planned, the so-called Segwit2x update.When it was finally canceled, this also led to a significant decline in prices.
Where does Ripple or Bitcoin have control?
The blockchain is an exciting new technology and it is currently unclear which markets it can revolutionize. The Ethereum platform is currently working hard to implement Web 3.0 and the Internet of Things, and Tron is creating a new kind of entertainment network.
But the financial industry has already been turned around by Bitcoin or Ripple and the race for the one global payment service provider is in a hot phase. Many analysts believe that this is a classic The-Winner-takes-All-Market.
- Whatever the solution, it not only has to be fast, secure and cost-effective but above all it must be accepted and usable by all. So there is a lot to say that ultimately there will only be one standard.
Can the Bitcoin be improved in time?
The BTC is currently ambivalent about its goals. In the community, with its different interests, there are two main trends:
- global currency or
- controls a peer-to-peer currency of users
The direction is basically the same for both goals, the unanswered question is just what speed to control. Above all, if Bitcoins are to become the global currency, the network must be quickly adapted to the increased number of users. It may be advantageous not to have all open questions answered by the community itself.
Of course, that would be a break from the most important and, for the most attractive, a foundation of BTC: user control.
The problem that the existing Bitcoin Blockchain is too slow for the high number of users is already known since 2015. The solutions are already at the table and the necessary code lines are already written — it just lacks the implementation.
With the beginning of 2018, the software core of Bitcoins has been extended at least to the extent that the implementation of the so-called Lightning networks is possible. However, it will still be clear whether they will be able to achieve the necessary increase in performance.
Ripple: One to rule all?
If it goes by the will of CEO Brad Garlinghouse, then Ripple-Wallet for transfers should become what Google is for Internet search: a global de facto standard. What sounds like a pithy marketing slogan, on closer inspection, however, has a realistic core.
In the struggle for market presence, XRPs are currently entering the ring, especially against traditional technologies such as SWIFT and Co. Here, the Ripple has meanwhile conquered a very large share.
The success is mainly due to the clear focus on network performance: For the company, the cryptocurrency was never in the foreground. Much more important was creating a secure and fast Ripple Blockchain that could transfer all forms of digital assets.
With xRapid, the company’s latest solution, the XRP has also become more prominent. The Ripple coin works here as a bridge currency, which is used for transfers between different currencies. As a result, liquidity costs can be reduced enormously. The own cryptocurrency is considerably upgraded thereby and also to a direct competitor of Bitcoin.
Right from the start, the Ripple share was oriented towards the real economic benefits as a payment service provider. Here, the company has put in a good position and that is ultimately the decisive factor for the value of the Ripples.
Performance: Who creates the most transactions?
Transactions per second (short: TPS) has become a new Internet meme. In the past, Visa or PayPal had a match about who made the most money transfers, and today, TPS are a measure of the crypto-economy. The measure best illustrates how well a network is prepared for the challenges of the digital economy.
How powerful is Ripple?
The XRP Ledger Protocol works like any other blockchain in which all transactions are encrypted and stored in a decentrally managed ledger. The validation (ensuring that all account books store the same information) happens here via consensus algorithms.
The Ripple Mining is, according to the basic orientation of the company, but not provided by independent miners, but by a few special servers. The so-called validation nodes are a network in the network and are controlled by the company itself.
- This central control is also the biggest criticism of the network. On the other hand, it is also an additional security channel that excludes disruptions such as 51% attacks.
Another technical peculiarity is the off-line transactions: A provider of a Ripple gateway can pre-process a certain number of transfers before feeding the overall result into the network. This relieves the network server and ensures the considerable gain in speed.
Ripple creates around 1500 TPS and a transfer takes a maximum of 4 seconds. If necessary, the network can also be scaled flexibly and process some 10,000 transactions. The resulting network costs amount to 0.00001 XRP and are therefore vanishingly small. These features, performance and low cost, are the key factors that will determine the price of the XRP chart in the medium and long term.
Can Bitcoin get faster?
Speed and effectiveness are the promises that make the crypto market attractive. Bitcoin has been showing significant weaknesses for some time now. The original blockchain generates around 4–10 TPS and is thus far below the demand that is currently expected from the market. Of course, this is also due to the enormous popularity, yet waiting times of several hours are currently not really acceptable.
- If you want to have your transfers processed faster, you can deposit appropriate fees. But transaction costs of $70 or $80 can not be competitive in the long run.
The solution for Bitcoins lies in Lightning networks. They can be used as an onTop network since 2018 and work much like Ripples off-line transactions:The operators can handle transactions in their own cycle and secure the results, they are only in the main network when needed. This should make possible between 40 and 60,000 TPS in the future.
In the meantime, numerous LApps (Lightning Apps), such as the Eclair Walletfor Android, are already available. Crucial for the functioning is that enough Lightning nodes are available, which must also have basic equipment at BTC. In the course of 2018, around 5000 nodes have been installed with a total capacity of just over 100 Bitcoins.
The Lightning network is still too small for smooth use. It is currently in the pioneer phase and can be used more experimentally and not productively. It remains to be seen whether the expansion will happen quickly enough to be able to decide on the race against competitors like Ripple.
Conclusion Ripple or Bitcoin: Who has a better coin of the future?
The place at the top of the crypto industry has long been undisputed and Bitcoin has been able to hold its own against its competitors despite weaknesses. Meanwhile, the air has become relatively thin and the chances are good that Ripples rise to the new key currency of the new technology.
It now seems certain that Ripple has a significant share in international payments. But Bitcoin is still the most popular and attractive coin on the crypto exchanges. The race between the two will also be influenced by other players. Two important events that have been postponed since a felt eternity could reshuffle the cards:
- The US Securities and Exchange Commission has now announced a final decision to approve Bitcoin funds.
- The technology exchange Nasdaq has announced that it will launch futures to Bitcoins, regardless of the decision of the SEC.
Whatever the market response, XRP, and BTC are attractive cryptocurrencies. Even if a change at the top is possible, the other cryptocurrency will continue to be significant.
The two are too different in their orientation: Ripple will probably never manage to become the darling of the community and banks and financial services will probably need a long time to reduce their emotional inhibitions and biases against the Bitcoin.
Author: Marko Vidrih
Images via Shutterstock
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The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses. This article was written and composed by Mohammad Musharraf on ALTCOIN MAGAZINE.
