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There’s no denying that Bitcoin has caused massive ripples in the money world. Its inception in 2009 sparked what could only be called a financial revolution, forever changing how we think about money.
Not long after, new coins began popping up, following in Bitcoin’s footsteps. These would become known as altcoins, and soon they numbered in the hundreds.
Inspired by Bitcoin, not all of them were its simple copies. A lot of them were designed with a different approach and philosophy, some even radically so.
Ripple could certainly be considered a part of the radically different crypto crowd, and it stands out even from other altcoins in a few ways. One of its most notable traits is its lightning-quick transaction time — a single XRP (Ripple currency) can be transferred from one place to another in 4 seconds!
Just for comparison, Bitcoin takes an average of one hour to confirm a transfer. The difference, as you can see, is massive.
So how can Ripple pull this off, and why does it matter?
Ripple vs. Bitcoin
Well, you should first get a better idea of just how different Ripple and Bitcoin truly are. In fact, they barely have any similarities outside of them both being cryptocurrencies, and having a limit in the total amount of coins that can ever exist.
The contrast between these two begins with the core ideas behind both of them because they were created to do two different things.
Bitcoin was made as an alternative to traditional fiat money, one that doesn’t rely on third-party entities like banks for its existence and propagation. Meanwhile, Ripple’s purpose is, in a way, the opposite — to help banks facilitate speedier transfers, especially on an international level.
While crypto transactions all work on the same principles, the magic behind Ripple’s rapid transaction rates has a lot to do with how it handles consensus.
PoW vs. UNL
Consensus, in a word, is a blockchain’s method through which crypto transactions are validated, and it exists as a defense measure against double spending.
Bitcoin calls its consensus “proof of work,” which is based around solving complex equations to prove you’ve put in the effort needed for verification. The process is also called “mining,” as doing it successfully rewards miners with Bitcoins, in addition to creating new coins.
The point is that mining takes loads of time and resources to carry out. This is why mining pools appeared. It is a way to brute-force one’s way through solving equations with raw computational power.
Ripple, however, takes another approach. It is not possible to mine this crypto coin. In fact, all 100 billion XRP coins have already been produced, but not all of them are in circulation yet.
Instead, Ripple relies on the so-called Unique Node List (UNL). In essence, this is a collection of trusted nodes that decide whether a transaction is valid or not through a vast majority vote.
So instead of devoting vast amounts of energy to create new data nodes, adding information becomes a comparatively simple matter of UNLs agreeing to accept said info.
This makes validations, and, in turn, transactions, much faster.
In the end, it’s precisely because of how different Ripple and Bitcoin were built that enables them to function so differently. After all, they were made with separate intentions in mind, so it only makes sense that they wouldn’t perform the same.
Infographic URL: https://bitcoinfy.net/crypto-transactions-and-mining/
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