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What is the difference between Bitcoin, Ethereum, and Ripple?

By March 22, 2021May 10th, 20236 minute read

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.

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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:

Algorithm Proof-of-Work (PoW)SHA-256Proof-of-Work (PoW)Ethash (although ETH 2.0 will use a Proof-of-Stake or PoS algorithm)Ripple Protocol consensus algorithm
Coin Generation MethodMiningMining Launched all at once during Ripple’s launch
Mining HardwareASICs (application-specific integrated circuit)GPUs (Graphical Processing Unit)Not required
Average Time a Transactions Needs10 minutes10 to 19 seconds4 seconds
Maximum Supply of Coins21 billion18 million per year100 billion (but more might be created)
Market Capitalization$952 billionAlmost $200.2 billionAround $21.5 billion
PriceBitcoin India rate today is around INR 38 lakhs/ coin1 ETH = nearly INR 1.3 lakhThe price of Ripple is around INR 35
Objective behind ProtocolTo 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. 
(all data as of the beginning of March 2021)

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 Bitcoin?

What is Ethereum?

What is Ripple (XRP)?

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

Who Created Bitcoin?

Bitcoin is the first application of the concept of "cryptocurrency," first articulated in 1998 on the cypherpunks mailing list by Wei Dai, who proposed a new form of money that relies on cryptography rather than a central authority to manage its creation and transactions. Satoshi Nakamoto published the initial Bitcoin specification and proof of concept on the cryptography mailing list in 2009. Satoshi exited the project in late 2010, with little information about himself available. Since then, the community has evolved, with numerous people working on Bitcoin. Satoshi's anonymity has sparked unfounded fears, many of which may be traced back to a misunderstanding of Bitcoin's open-source nature.

How To Buy Ripple Coin In India?

Here are the common steps by which you can buy Ripple (XRP) tokens in India at your trusted Crypto exchange, like WazirX.

  1. Select a trusted Crypto exchange, like WazirX, that supports the Ripple token.
  2. Create an account: You can create your account by providing personal information and complying with the KYC verification.
  3. Add funds to your account: Exchanges support various ways by which you can add funds to your account. You can do a bank transfer or a debit/ credit card.
  4. Buy Ripple (XRP): You can now easily trade Ripple (XRP).

Is Bitcoin Safe And Legal In India?

In 2020, the Supreme Court of India lifted the RBI’s restrictions on cryptocurrencies. According to the Supreme Court, the existence of Bitcoin or another cryptocurrency is unregulated but not unlawful. The verdict has greatly aided the world of digital money in the country. To put it another way, investing in Bitcoin is perfectly legal, and you may do so through various apps and traders.

What Is The Meaning Of Bitcoin?

Bitcoin is a type of cryptocurrency that was first introduced in January 2009. It is invented based on the key concepts and notions presented in a whitepaper by Satoshi Nakamoto, a mysterious and pseudonymous figure. The name of the individual or people who invented technology is yet unknown. Bitcoin promises reduced transaction fees than existing online payment methods, and a decentralized authority controls it, unlike government-issued currencies.

Can XRP Reach $100 Dollars?

To reach $100, XRP must climb 270 times. At $100, the market capitalization of XRP would be $5.1 trillion. If XRP rose at a 25% annual pace, it would take at least 26 years to hit $100.

What Are The Chances Of Bitcoin Crashing?

Two Yale University economists (Yukun Liu and Aleh Tsyvinski) produced research titled "Risks and Returns of Cryptocurrency" in 2018. They looked at the possibility of Bitcoin crashing to zero in a single day. The authors discovered that the chances of an undefined tragedy crashing Bitcoin to zero ranged from 0 percent to 1.3 percent and was around 0.4 percent at the time of publishing, using Bitcoin's history returns to determine its risk-neutral disaster probability. Others claim that because Bitcoin has no intrinsic value, it will inevitably crash to zero. On the other hand, Bitcoin advocates argue that the currency is backed by customer confidence and mathematics.

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.

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 Many Bitcoins Are There?

There are 18,730,931.25 Bitcoins in circulation as of June 2021. The total number of Bitcoins that would ever be there is just 21 million. On average, 144 blocks are mined every day, with 6.25 Bitcoins per block. The average number of new Bitcoins mined every day is 900, calculated by multiplying 144 by 6.25.

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.
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