Bitcoin has become a household name, and it’s often the first thing that people will ask about when you mention cryptocurrencies, but the second and third most valuable cryptos, Ethereum and Ripple could soon be enjoying the same kind of familiarity as the one that started it all. They may be newer, and their prices may look minuscule next to bitcoin’s, but they are already making a strong impression, such that many people want to know which to invest in between Ethereum vs Ripple.
The Ethereum vs Ripple question needs some definitions, so let’s explain Ripple first. Ripple is a cryptocurrency, and it’s owned by a company called Ripple Labs, Inc. which offers fast and cheap ways of sending money around the world.
Some of the company’s payment systems use Ripple coin, a cryptocurrency that trades under the name of XRP. The company says that it’s 1,000 times quicker and 1,000 times less expensive to use XRP than it is to use Bitcoin.
It’s interesting to note that XRP transactions are also a lot cheaper than the usual money transfer methods and in many cases, they are a lot quicker too.
Ripple’s xCurrent payment settlement system is now used by upwards of a hundred banks because it’s said to be able to settle cash transactions almost in real-time. At the start of 2018, the company let it be known that MoneyGram, one of the biggest money transfer companies in the world, will include XRP in its payment systems, and Western Union will use its xRapid solution too.
Ethereum uses the blockchain concept just like Bitcoin and other cryptocurrencies, but the difference is that it offers more than just another digital currency or investment opportunity. The Ethereum vs Ripple question becomes interesting here because we’re identifying an advantage with Ethereum—its blockchain can hold what are called “smart contracts” and programs too, which can be used to set rules that apply to transactions.
Ethereum also features what’s known as Swarm functionality. This distributes stored data between cloud providers, meaning that user information is more difficult to read and isn’t tied to one storage entity; a unique benefit in the Ethereum vs Ripple debate.
The fact that Ethereum could be used in ways that we haven’t even thought of yet is one of the reasons why it has increased in popularity in such a short period of time. It’s a bit like a Swiss army knife in comparison to the single-use offerings of many of the other cryptocurrencies, which means it’s seeing strong adoption that’s putting it well on its way to becoming a disruptive technology.
It’s worth noting that the name of the currency is actually Ether, but people use the term Ethereum with it.
Ripple’s main aim is to help banks and big corporates move money around the globe, fast. Ethereum is a currency too, but it’s also a platform for decentralized applications.
Ethereum’s market cap is currently $60 billion, while Ripple’s is $26 billion. The similarity here is that both have more than doubled their values in the last year.
Ripple may not have built-in smart contracts like Ethereum does, but it does have “Codius,” which is a project designed to bring this kind of functionality to any type of cryptocurrency currently out there. Ethereum offers native support for smart contracts, but Codius will be able to attach them to any cryptocurrency in time.
There’s some argument about whether Ripple is decentralized or centralized. On the supply side, the answer is clear. Ripple Labs can do what they want with the XRP supply, up to and including flooding the market with coins if the fancy should ever take them. That’s about as centralized as you can get, but on the other side of the coin (metaphorically speaking) Ripple transaction validations will become relatively more decentralized because the hashing power that’s used to validate many other crypto transactions puts those currencies in a more tightly controlled—which is to say more centralized—group, and Ripple will seem more decentralised in comparison.
It’s easier to label Ethereum as a decentralized currency at the moment. There isn’t a single authority in control of supplying coins or verifying transactions. But the system isn’t quite a true democracy because as mining gets more difficult, it demands more resources—like dedicated hardware—which means that hashing power is being placed in the hands of fewer and fewer mining pools.
Ethereum’s supply can be said to be expanding because it can be created through mining based on the “Proof of Work” (PoW) principal. This necessitates the solving of encrypted codes to add transactions to the blockchain by miners. But Ethereum is moving to a “Proof of Stake” (PoS) system where miners need to have enough Ethereum to qualify them for further mining. With the shift from PoW to PoS, it will be easier to mine, which opens the door to others and relieves the larger mining groups of much of their power and influence.
Each transaction destroys a small amount of Ripple, so the supply is shrinking (although at a tiny rate). Overall there are one hundred billion Ripple coins, and around 38 billion of those are currently circulating.
You can buy Ethereum using a credit or debit card on Coinbase and GDAX, its trading platform. Ripple can be bought via some smaller exchanges, but some of these will only let you purchase Ripple by using Bitcoin or Ethereum. It’s true that it’s harder to buy Ripple than Ethereum, but if you’re an active cryptocurrency investor this shouldn’t pose a problem for you.
Ethereum vs Ripple is a tale of two currencies championed by enthusiastic investors who have quickly turned them into top-three propositions.
It’s difficult to beat Ethereum for its ease of purchase on exchanges like Coinbase. You can also get Ethereum through many brokerage accounts—although the premium is steep—via Grayscale’s Ethereum Classic Investment Trust (ETCG). Ripple has dwindled in comparison, retreating from its historic highs and now languishing at a lower but more stable $0.60 to $0.70 per coin (at the time of writing)
There isn’t an ETF for Ripple yet, but if it keeps showing as much promise as it has up-to-date, there’s every chance that XRP will be used in some investment vehicle further down the line. But overall, it’s clear that Ethereum currently has the advantage in the Ethereum vs Ripple question.