Crypto — BTC, ETH or XRP?
The crypto currency market is starting to look like a sweet shop. So many different options, not quite sure what is what but you know you want to buy some.
So lets get into it. Which do you buy between Bitcoin, Etherium and Ripple? Obviously there are other options, but lets focus on these three for now.
Bitcoin is the OG crypto, it set the original standard for decentralised currency. The original aim of Bitcoin was to cut out the middle man (the financial institutions) and replace the traditional meaning of currency by removing control by the governments and central banks. It does this by using a technology referred to as the blockchain.
Lets skip to the stats, Bitcoin can process 3–5 transactions per second. It has a market cap of $200bn and it accounts for over 40% of the total market cap of ALL the 1500+ cryptos combined. That’s massive. If this was a game of monopoly, the other coins would have already flipped the board and stormed off by now.
The downside of Bitcoin is that its transaction fees are higher than it’s rather younger competitors, the same goes for it’s transaction time. Which leads us nicely to the next one on the list.
Ethereum is slightly faster than Bitcoin: it normally processes 10–15 transactions per second, while Bitcoin processes 3–5. At least, this is true for the current version of Ethereum. One of the big expectations in the market right now is that the upcoming 2.0 upgrade will provide faster transactions, among other things.
But the major point that separates Ethereum from Bitcoin are smart contracts — the term most closely associated with Ethereum blockchain. Smart contracts are digital contracts that have a variety of applications.
Etherium solves a problem that Bitcoin has. That is the way it allows miners to find Ether. Bitcoin has a proof of work system that basically means, whoever has the biggest most expensive computer will reap the reward of obtaining fractional bitcoins. Etherium have reacted to this problem, because it uses something called “Ethash”. Ethash was installed to prevent people from using expensive hardware called ASIC’s. This expensive hardware is what allowed Bitcoin miners to gain the advantage and what lead to just 4 mining pools controlling over 50% of the entire Bitcoin supply.
Ripple was considered the new kid on the block. Released in 2012 and is a blockchain driven platform that facilitates cross-border transactions at far lower costs and at far greater speeds than its fellow cryptos.
Unlike Bitcoin, Ripple is not trying to replace the traditional currency but rather be the link between traditional currencies, for example between the US Dollar and the Great British Pound. Ripple’s market cap stands at just over $35 bn, placing it third in the overall market cap behind Etherium (at $85 bn) and Bitcoin (at the time of writing).
I mentioned earlier that Ethereum can only process about 15 transactions per second. Well, Ripple XRP can process about 1,500 per second, which is significantly more than Ethereum!
At the moment, every bank in the world is currently using a financial intermediary called SWIFT, which allows banks to trade on an international basis. However, the SWIFT system is slow and expensive, meaning that Ripple is ideal for inter-bank transactions. Ripple could one day replace the current system.
It could be argued that Ripple has more realistic real world applications, it’s not trying to re-invent the wheel but rather work alongside it to innovate and improve it. It is not considered to be in true competition with either Bitcoin or Etherium. Therefore, if you’re already holding Etherium or Bitcoin and looking to diversify your crypto portfolio, Ripple is a great choice.
Bitcoin and Etherium are in direct competition to one day replace the tradition currency. Etherium have the faster transaction fees but are less widely used by merchants worldwide. Bitcoin is far more known and merchants in the marketplace are already accepting bitcoin as a currency, in fact some companies offer employees the chance to be paid in bitcoin rather than traditional currency. This is something that isn’t being done with Etherium.
In conclusion, I would have XRP (Ripple) in my portfolio along with either one of Etherium and Bitcoin. On paper, Etherium has the advantage but Bitcoin has the popularity right now.
Thanks for reading.