It’s extremely difficult for a crypto project to stand out and capture users’ attention, not just because Bitcoin and Ethereum seem to draw all the spotlight onto themselves with their snowball-effect growth but also because the crypto market is pretty crowded and getting more crammed by the day.
Although, in one way or another, all the existing digital currencies take inspiration from their predecessor and have various features in common with it, some don’t even have an ounce of originality and merely mirror Bitcoin’s structure. So, in large part, crypto ventures are either Bitcoin doppelgangers that bring nothing new to the table or projects of little value and potential. There are only a handful of digital currencies that are actually worthy of attention and contribute to the development of the industry, which makes it rather challenging for analysts and market participants to spot the diamonds in the rough.
Therefore, many promising projects often go under the radar for quite a long time until they finally make their big breakthrough. Fortunately, Ripple (XRP) is one of the cryptocurrencies that has managed to rise above the rest and maintain its popularity for years, which is why many traders and investors continue to buy Ripple and trust in its appreciation potential. There are many aspects that prove Ripple is not just another Bitcoin spinoff like so many others, as we’re going to reveal shortly.
The beginning
Ripple’s journey began in 2012, when Chris Larsen and developers Jed McCaleb, David Schwartz and Arthur Britto launched the NewCoin company, later renamed OpenCoin and then Ripple, which aimed to revolutionize the traditional financial system through the provision of innovative payment solutions resembling the SWIFT system.
The company’s operations relied on their decentralized XRP Ledger whose development started one year earlier. As with many other digital payment systems, Bitcoin served as the source of inspiration for the XRPL, but instead of creating a copycat, the three developers working on the project sought to address the various shortcomings and limitations they had identified in Bitcoin’s structure and improve on its core features. Ripple’s native cryptocurrency token, XRP, was created to facilitate transactions on the network and enhance the ledger’s functionality.
Unlike other industry players who dream about a future where blockchain technology and digital currencies completely replace conventional financial structures, Ripple’s developing team envisioned a different scenario where these advanced solutions transform and complement established products and services.
Eventually, market participants started to take notice of Ripple’s value proposition and the project took off, gaining more ground over the years and reaching a market cap of $29.75B at the time of writing, with the XRP token being valued at $0.523595.
The distinguishing features
At first glance, one might assume that Ripple isn’t much different from other digital currencies that have come before or after it. However, at a more thorough examination, the disparities become evident, so let’s take a closer look at the unique characteristics that have helped Ripple distinguish itself in the competitive crypto market and contributed to its enduring allure.
First, we have the Ripple Protocol Consensus Algorithm (RPCA), which forms the bedrock of Ripple’s infrastructure. Ripple doesn’t utilize blockchain technology to enable transactions like Bitcoin or Ethereum, but it provides similar functionalities through this innovative consensus mechanism.
RPCA is a federated Byzantine agreement (FBA) algorithm where trusted validator nodes known as the Unique Node List (UNL) compare transactions on the network until they reach a consensus. Therefore, Ripple’s RPCA differs widely from the Proof-of-Work method that Bitcoin and many other crypto projects employ, which means no mining is required. All the XRP coins (100 billion tokens in total) were pre-mined from the start and are gradually released into circulation to ensure a healthy supply and demand balance, making Ripple one of the most sustainable crypto ventures so far.
The swift validation process allows the Ripple network to settle transactions much faster, usually in about 3 to 5 seconds, and ensures a processing capacity of up to 1,500 transactions per second. By comparison, Bitcoin takes 10 minutes on average to confirm payments, although this value is greatly influenced by network activity and other factors. This gives Ripple a huge advantage over first-generation blockchain systems, which have gained a bad rep for their long processing times caused by recurrent network congestions.
As a result, Ripple has become an appealing payment alternative that many banks and traditional financial institutions resort to in order to reduce costs when carrying out cross-border transactions. They can do that by either using XRP as an intermediary currency or by employing the platform’s messaging system.
Ripple is also superior to many blockchain systems in terms of transaction fees which are much lower on its platform. The typical cost of a transaction on Ripple is 0.00001 XRP, whereas Bitcoin fees can sometimes rise to $25-50 per transaction. This means that financial companies and organizations can reduce their transfer-related expenses by up to 60% by utilizing RippleNet when conducting international payments.
Ripple doesn’t disappoint when it comes to scalability, either. The network is not just incredibly fast and cheap to use, but it also has remarkable growth potential. It is estimated that Ripple could expand its processing volume to 50,000 TPS by implementing adequate optimization solutions. Ripple’s main advantage in this regard is that it can maintain a lean and efficient network by removing older transactions from its structure, so it can handle a higher transaction volume without compromising on performance.
Wrapping up
Many tend to use Bitcoin as a point of reference and compare every crypto project to the original coin. In Ripple’s case, the comparison reveals that Bitcoin served as a great model for its creation, but Ripple managed to carve a path of its own in the market by building a faster, cheaper, and more sustainable solution than Bitcoin and many of the other digital currencies available nowadays. With real-world applicability and a growing number of financial institutions’ increasing interest in the platform, Ripple has secured a safe spot in the crypto landscape for itself.