There are several cryptocurrencies available, each of which was inspired by bitcoin, their common progenitor. Bitcoin was humanity’s first description of what it means to be a cryptocurrency, yet it is a complex organism with many unique functions and components. Bitcoin, for example, features a decentralized blockchain ledger on which its millions of users arrange and keep a record of their transactions. It also includes cryptographic hashing, allowing traders to protect their identities using a system of public and private keys.
Miners, a friendly and rewarded community that keeps everything functioning smoothly, execute Bitcoin transactions. It also has a limited supply, which is relevant. These features have made it simple to trade securely, store money, and even speculate.
Should a cryptocurrency have all of the characteristics of bitcoin, or can any kind of digital money be branded as such? These are reasonable questions, but they are seldom raised, owing to the fact that most of bitcoin’s peers have mainly followed their collective predecessor’s model.
Ripple is a currency that is gaining popularity after years of living in bitcoin’s shadow, mostly because to its conventional infrastructure, which provides a better balance between crypto and fiat money. Because Ripple is so unique, some in the community have hesitated to accept it as a true cryptocurrency. Is this correct? (Read more: Why Is Ripple Back?
Ripple: The Strange Hybrid
Ripple was never intended to be a coin or a traditional cryptocurrency in the traditional sense. While bitcoin and related cryptocurrencies prioritize currency value above network security, speed, and usefulness, Ripple rejects the concept of XRP as an investment asset and instead concentrates on making the blockchain as powerful as possible. This is largely for the benefit of the institutional institutions served by Ripple, such as American Express or Santander Bank. To do this, the Ripple Foundation invented XRP while also modifying each conventional component of cryptocurrency to an almost unrecognizable form.
Miners Be Gone
Ripple has no mining operations or miners. Instead, transactions are enabled by a “centralized” blockchain to increase reliability and speed. Mining is a fundamental principle of most other cryptocurrencies, and each has its own mechanism for determining how much power miners have. Proof-of-Work is used by some, such as bitcoin, but there are also Proof-of-Stake and Proof-of-Importance.
Miners are encouraged to execute network transactions using the money itself in bitcoin, but this has caused several challenges that Ripple considers unworkable. There should be no distinct group with its own specific objectives for operating the network in a system designed for large institutions.
While this concept has aided other cryptocurrencies in being decentralized, it has also slowed them down, something Ripple cannot afford. This lack of mining impacts other features of Ripple, pushing it farther away from the norm.
Plug in the Printing Press
Miners are compensated with cryptocurrencies in addition to processing transactions. This is basically how it’s made. The exclusion of miners by Ripple inevitably puts a kink in the works in this sense. Ripple has no limited supply and can be “produced” on demand, making it much more trustworthy for payment processing, money exchange, and other institutional transactions. It is easily destroyed after usage.
The Ripple Foundation developed the 100 billion XRP now in circulation, giving it a steady, non-volatile personality that is ideal for its largest customers. However, this eliminates one of the most important aspects of any real cryptocurrency: the potential to acquire and store value in the way that only a deflationary asset can.
A Centralized Blockchain?
Ripple has a wallet, but acquiring access to the blockchain is difficult. Access is not permitted for retail participants because it brings dangerous, unusual aspects into an otherwise sterile atmosphere. The Ripple blockchain, unlike those of other cryptocurrencies, is closed. XRP may be securely saved and retained, and it employs encryption to safeguard participants, but the nodes it protects aren’t people, but “trusted” Ripple network administrators. This enables the currency to take use of the benefits of the blockchain ledger while remaining inside a closed environment, making it more efficient.
While bitcoin promises to be “trustless,” it has just produced a shaky house of cards in which everyone has an incentive to keep it from collapsing. Miners may still turn off their machines and halt the network, but not with Ripple.
Putting a Title on Ripple
Like the numerous issues surrounding bitcoin cash, the inventors of Ripple advise against using their product as a speculative currency since it isn’t one. Ripple is most reminiscent of a financial platform and has simply blended the greatest components of fiat money with blockchain cryptocurrency.
Ripple, although not a “real” cryptocurrency by definition, may represent the dividing line between two different things to emerge from the cryptocurrency revolution: assets and solutions. While assets may be used as investments by putting confidence in a decentralized community and the deflationary qualities of mining, solutions will avoid speculation by creating platforms that are “technically” cryptocurrencies but are not typically seen as such.
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