Ethereum and Ripple both serve as a payment system and an indigenous currency. It’s not difficult to see that they have a lot in common. However, if you’re still trying to pick between the two, it’s the right time to examine the main distinctions between the two. To learn more about the two cryptocurrencies, read along.
We’ve mentioned before that Ripple was created to reduce the lengthy time required to transfer money between companies worldwide. It’s not surprising to learn that Ripple transactions are incredibly speedy. In the real world, the network can process over 10,000 different transactions in one second. That’s a thousand times quicker (and also 1000 cheaper) than the speed of a Bitcoin transaction.
Ethereum is currently slower than Ripple, approximately 670 times slower, to be exact! Ethereum can process about fifteen transactions per second. It may not seem like a lot of time to wait for it. However, the extra time means that Ethereum’s rate of exchange is more expensive than that of the Ripple network and makes it less efficient in terms of energy use. It is why the Ripple price INR projects better figures on certain occasions than that of Ethereum.
Another major differentiator between Ethereum and Ripple is the quantity of each cryptocurrency available. At present, there are around 41 billion XRP in circulation. Although Ethereum has an unlimited amount of Ether, Ethereum in circulation is approximately 110 million. Ethereum in CoinMarketCap reports its circulating supply as 117,934,043.12 Ether, which means that there are significantly lesser Ether tokens than XRP.
Since you aren’t able to mine XRP as you could mine Ether, the remaining Ripple supply is managed by Ripple’s company. To prevent investor concerns, approximately 55 billion XRP are kept in an encrypted account, allowing users to track the total amount of XRP in circulation.
Ethereum and Ripple rely on entirely different algorithms in terms of their respective systems. These algorithms are called the consensus mechanism. It may sound complex, but the consensus mechanism is the term used to describe the rules that enable blockchain systems to execute specific procedures.
The consensus mechanism Ethereum utilizes is described as the Proof-of-work algorithm (PoW). In the PoW system, cryptocurrency miners must solve complicated mathematical equations using their computer hardware to create blocks on the blockchain. This requires a fairly large amount of energy which is why the Ethereum technology is inefficient. It even impacts the Eth to INR value to a certain extent.
Ripple, on the other hand, utilizes an agreement-based mechanism called the Federated Byzantine Agreement (FBA). This may sound rather complicated. However, in essence, FBA works by connecting every node (a server linked with Ripple network) to a limited quantity of additional nodes. Each node group will be overlapping one another, making sure that each node is connected.
To verify every transaction, a certain number of nodes have to reach an agreement to confirm that a block is valid before it is added to the blockchain. This is why the technology is incredibly secure, as well as speedy.
Presently the Ripple FBA mechanism is more effective than Ethereum’s PoW. However, the announcement of Ethereum 2.0 could transform everything.
Should Ethereum Or Ripple Be In Your Portfolio?
There’s no ‘one size fits all’ policy. Hence the ‘Ethereum Vs. Ripple’ debate boils down to individual investment goals. The best choice that is right for you will depend on many aspects, including your preferred method of investing, the current portfolio, as well as your attitude towards risk.
Like any investment, it is important to remember that either Ethereum or Ripple is guaranteed to generate money or incur losses. Hence, it’s important to conduct all due diligence to remain safe while investing.