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Even if you are new to the crypto space, you’d have heard of the cryptocurrencies Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP). In terms of popularity, they are indeed among the top five digital assets across the globe. As for market capitalization, Bitcoin, Ethereum, and Ripple are again among the top ten cryptocurrencies worldwide, as of the beginning of March 2021. And since all three of these cryptocurrencies boast immense popularity among crypto traders, it’s only natural to wonder what the distinctions between these three are, so you can decide which one you want to invest in.
There are some evident dissimilarities between Bitcoin, Ethereum, and Ripple, be it concerning the blockchain technology and consensus algorithms used by the protocols, the distinction between the price of Ripple, that of Ethereum’s, and Bitcoin value, the workings of the coins, or any other functional differences. Before we get into these differences, let’s first briefly look at each of these cryptocurrencies and their various features.
Bitcoin: How Does It Work?
The majority of the global crypto community consider Bitcoin to be the OG cryptocurrency, launched back in 2009 by the mysterious Satoshi Nakamoto. The main objective behind this cryptocurrency’s introduction was to give users full power over their own money instead of traditional fiat financial systems, where there’s a centralized authority figure/institution controlling everything. Therefore the Bitcoin protocol is a decentralized platform, and the technology working behind it is, of course, the blockchain tech.
The Bitcoin blockchain is a transparent, peer-to-peer (P2P) network, and as mentioned before, no centralized figure controls the generation or circulation of bitcoins. A distributed network of computers (known as nodes) each maintains a record of all transactions on the Bitcoin blockchain. This way, the network’s security is ensured despite the complete transparency; since every user on the network gets a copy of the ledger, it’s almost impossible for hackers to access the network and alter any data stored in the blocks.
The Bitcoin protocol makes use of the proof-of-work (PoW) consensus algorithm and uses the ‘mining’ system to generate new bitcoins. A group of users known as miners has to use special hardware to verify transactions made on the Bitcoin blockchain and add new blocks to the chain. In return, they get newly minted bitcoins as block mining rewards. The total supply of bitcoins is capped at 21 million, as in there will only ever be 21 million bitcoins in circulation.
According to market cap, Bitcoin is the topmost cryptocurrency in the global crypto markets, with a market cap of over $952 billion.
Ethereum: How Does It Work?
Since Bitcoin’s success in 2009, many altcoins have been released to achieve the same popularity as Bitcoin. Out of all these projects, arguably, Ethereum has remained the most successful one so far.
Vitalik Buterin, the mastermind behind the Ethereum platform, was only seventeen years old when he conceptualized a robust blockchain platform for developers to create ‘decentralized applications’ effortlessly. Subsequently, the Ethereum protocol was launched in 2015.
Ethereum is defined by two primary features: smart contracts and dApps – or decentralized applications. Smart contracts are programs stored on a blockchain that self-execute when all predetermined conditions are met. And dApps are blockchain-enabled programs that run on a peer-to-peer (P2P) network of multiple computers. dApps can be anything ranging from websites to programs or software running on Ethereum. Decentralized applications operate through smart contracts.
Along with facilitating dApps, the developers behind Ethereum also aimed to combat one of the main issues the internet faces: user data vulnerability to any hacking attempts. Smart contracts are Ethereum’s way of combating security issues. Smart contracts also eliminate the need for an intermediary in a transaction, which helps reduce transaction fees for users.
Ethereum occupies the second spot among all cryptocurrencies in the market, right next to Bitcoin as per market cap. Ethereum’s market capitalization is a little over $200 billion at the moment.
Ripple: How Does It Work?
San Francisco-based Ripple Labs first introduced Ripple in 2012. Ripple is a blockchain-based digital payment mechanism that facilitates transactions – even cross-border ones – at a much lower cost and a greater speed than most other payment protocols. Ripple was rebranded to RippleNet in 2019.
The developers behind RippleNet envisioned the XRP coins as a link between fiat currencies during cross-border connections instead of aiming for it to become an alternative to fiat currency, like Bitcoin. The consensus algorithm RippleNet uses allows a poll to be conducted for the network nodes to decide by consensus the validity of the transactions happening on the blockchain. This mechanism also curbs the chances of double-spending (cloning a crypto coin and using those copies in transactions).
Ripple started out by announcing a total of 100 billion XRPs, all of which were released at the time of its launch. However, most of the XRP coins are held by RippleNet and its partners, and RippleNet also holds the right to print out more XRP if they see it fit. This particular fact leads many within the crypto community to question Ripple’s claims of being a decentralized protocol.
Ripple’s market capitalization is around $21.5 billion right now, which places it among the top ten cryptocurrencies in market cap.
So, What Are the Differences Between Bitcoin, Ethereum, and Ripple?
Now that we have gone through the basic features of all three cryptocurrencies, here are the most basic differences between the three:
| Bitcoin | Ethereum | Ripple | |
| Algorithm | Proof-of-Work (PoW)SHA-256 | Proof-of-Work (PoW)Ethash (although ETH 2.0 will use a Proof-of-Stake or PoS algorithm) | Ripple Protocol consensus algorithm |
| Coin Generation Method | Mining | Mining | Launched all at once during Ripple’s launch |
| Mining Hardware | ASICs (application-specific integrated circuit) | GPUs (Graphical Processing Unit) | Not required |
| Average Time a Transactions Needs | 10 minutes | 10 to 19 seconds | 4 seconds |
| Maximum Supply of Coins | 21 billion | 18 million per year | 100 billion (but more might be created) |
| Market Capitalization | $952 billion | Almost $200.2 billion | Around $21.5 billion |
| Price | Bitcoin India rate today is around INR 38 lakhs/ coin | 1 ETH = nearly INR 1.3 lakh | The price of Ripple is around INR 35 |
| Objective behind Protocol | To replace fiat currency in general marketplaces and give users full control of their money. | To make it easier for developers to create decentralized applications and to get rid of the security issues that come with using the internet. | To facilitate fast and cost-effective cross-border transactions. |
Despite Bitcoin being the most popular crypto across the globe, the quite high transaction charges and the slow transaction speeds are yet barriers in its way to going mainstream. Ethereum, despite providing better transaction speeds and lower trading charges than Bitcoin, is not as widely accepted as BTC by businesses and vendors. Plus, Ethereum is also not looking to become an alternative to fiat money, just like Ripple.
And of course, there’s a stark difference between the prices of these three cryptocurrencies, with Bitcoin value being the highest – at about INR 38 lakhs and Ripple’s price is the lowest – around INR 35. This is another crucial distinction you might consider before choosing which cryptocurrency to invest in.
And there you have it, the differences between Bitcoin, Ethereum, and Ripple! We do hope this post would help you decide which coin you want to put your money behind!
WazirX allows you to trade 100+ cryptocurrencies, including the three ones mentioned above. To find out more about trading cryptocurrencies on WazirX, do give our website a visit!
Happy trading!
Further Reading:
What is the difference between a token and a Bitcoin?
What are the Differences Between Bitcoin and Ripple?
What is the difference between Litecoin and Ethereum?
What are the Differences Between Bitcoin and Ethereum?
What are the Differences Between Ripple (XRP) and Ethereum (ETH)?
What is Litecoin (LTC)? Hows is it Different from Bitcoin?
Difference between Litecoin (LTC) and Ripple (XRP)
Frequently Asked Questions
What Is Bitcoin Used For?
Bitcoin was created as a means of sending money over the internet. The digital currency was designed to be a non-centralized alternative payment system that could be used in the same way as traditional currencies. Bitcoin is being used by an increasing number of businesses and individuals. This includes establishments such as restaurants, apartments, and law firms.
How To Create Bitcoin Account?
Firstly, Go to the WazirX website and sign up. Then, a verification mail will be sent to you. The link sent via verification mail would be available only for a few seconds so make sure you click on the link sent to you as soon as possible, and it will verify your email address successfully. The next step is to set up security, so select the most suitable option for you. After you have set up the security, you will get a choice to either proceed further with or without completing the KYC procedure. After that, you will be directed to the Funds and Transfer page, where you could start depositing Bitcoins to your wallet. You can also deposit INR and then use it to buy Bitcoin for your WazirX Bitcoin wallet.
How Bitcoin Works?
Bitcoin is based on the blockchain, a distributed digital ledger. As the name implies, blockchain is a connected database made up of blocks that hold information about each transaction, such as the date and time, total value, buyer and seller, and a unique identifier for each exchange. Entries are linked in chronological sequence, forming a digital chain of blocks. Blockchain is decentralized, meaning a centralized institution does not own it
Should I Invest In XRP 2023?
XRP is a virtual currency that was created by Ripple Labs. It is used to facilitate cross-border payments and is often referred to as a "bridge currency." XRP is one of the top Cryptos by market capitalization and is traded on many Crypto exchanges. You can consider investing in XRP in 2023, but it is also advisable to conduct your own research before making any investment decision.
Is Bitcoin Legal In India?
In India, Bitcoin is not illegal. Because of cryptocurrency's rapid evolution, policymakers and regulators seemed to have recognized the chance to accept the new technology early. From the infamous 'RBI ban' in 2018 to reports of an impending bill banning cryptos in 2021 that has yet to develop, India has seen its fair share of ups and downs when it comes to Bitcoin regulation. Last year, the Supreme Court Of India approved the use of Bitcoin throughout the country. According to the Supreme Court, the existence of Bitcoin or any other cryptocurrency is unregulated but not unlawful.
How To Convert Bitcoin To Cash?
There are many ways of converting Bitcoin to cash, such as crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, Peer to Peer Transactions. You can use cryptocurrency exchanges such as WazirX for this. Unlike typical ATMs, which allow you to withdraw money from your bank account, a Bitcoin ATM is a physical location where you may buy and sell Bitcoins using fiat currency. Several websites provide the option of selling Bitcoin in return for a prepaid debit card that may be used just like a standard debit card. You can sell Bitcoin for cash through a peer-to-peer platform in a faster and more anonymous manner.
Should I Buy Ripple Coin?
Based on your personal circumstances and investment plan, you should conduct your own research to determine whether the Ripple (XRP) crypto is a suitable asset for your portfolio. Always keep in mind that previous performance is no guarantee of future profits, and never buy XRP or any other Crypto with money you cannot afford to lose.
Can Bitcoin Be Converted To Real Money?
Crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer Peer Transactions are all options for converting Bitcoin to cash. This can be accomplished by using Bitcoin exchanges such as WazirX. A Bitcoin ATM is a real place where you may purchase and sell Bitcoins with cash, unlike standard ATMs that allow you to withdraw money from your bank account. Many websites provide the option of purchasing Bitcoin in return for a prepaid debit card that works similarly to a standard debit card. Through a peer-to-peer marketplace, you may sell Bitcoin for cash faster and more privately.
How Bitcoin Mining Works?
Bitcoin mining is a crucial element of the blockchain ledger's upkeep and development and the act of bringing new Bitcoins into circulation. It's done with the help of cutting-edge computers that solve exceedingly challenging computational arithmetic problems. Auditor miners are rewarded for their work. They're in charge of ensuring that Bitcoin transactions go through smoothly and legitimately. This standard was established by Satoshi Nakamoto, the founder of Bitcoin, to keep Bitcoin users ethical. By confirming transactions, miners assist in avoiding the "double-spending issue."
How Can I Get Bitcoin?
To begin, go to the WazirX website and register. After that, you will receive a verification email. The link received by verification mail will only be available for a few seconds, so make sure you click it as quickly as possible. This will successfully verify your email address. The following step is to set up security, so choose the best solution for you. After you've set up the security, you'll be given the option of continuing with or without completing the KYC process. Following that, you'll be sent to the Funds & Transfers section, where you can begin depositing Bitcoins into your wallet. You may also use INR to fund your WazirX Bitcoin wallet and then use it to purchase Bitcoin.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
