Bitcoin has been in the news a lot recently due to its topping $20,000 and then crashing to where it is today at around $15,000. But if you started with Bitcoin several years ago, or even in early 2017, you’ve still gotten a great return, but perhaps not the best return you can get when you look at Bitcoin vs Ripple.
Bitcoin vs Ripple valuation
Ripple, which started 2017 at $0.006523 and a market capitalization of around $237M, now has a price of $2.93 apiece and a market cap of $113.5 billion. That’s roughly a 450x increase in a year. But that’s not the only reason you should be comparing Bitcoin vs Ripple. Just this week alone, Ripple is up another 120%, while Bitcoin is down 1.81%.
Ripple technology
The technology behind Ripple is a little different than Bitcoin, which means faster transaction turnaround. Bitcoin transactions can take from 10 minutes up to an hour during heavy traffic. Ripple takes several seconds. Ripple is still a blockchain cryptocurrency. It just works differently.
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
Additionally, Ripple was created with banking in mind. Chris Larsen and Jed McCaleb created Ripple in 2012 with an eye on it being used for inter-bank settlements. It was created with digital payments specifically in mind and has recently seen some success in that area, as it has formed partnerships with American Express and UBS, among other financial firms.
Ripple’s rapid growth
Perhaps because Ripple is being looked at by banking and financial institutions as a replacement for inter-bank processing, Ripple has been ripping up the charts and gained 120% this week. It’s now the second-largest cryptocurrency based on its overall value. That means it has crossed the 39,000% growth threshold.
The reason banks are looking at Ripple is partly because of its speed of transaction processing. Currently, inter-bank payments can take days to complete, and their cost is relatively high by comparison. Low-value transactions that have a high-volume, think that in-app micro-payments bog down banking networks and don’t net them much in terms of fees because of the small value per transaction. This makes them undesirable for banks to process as it costs them more energy to move the money than what they gain in the long run.
That’s where Ripple comes in. The quoted transaction times range in the 2-4 second range, and it’s relatively cheap in terms of fees. This has drawn the attention of big financial institutions like American Express and Santander (UK), which partnered with Ripple for cross-border (U.S.-U.K.) payments via blockchain technology. AmEx business customers making payments via the FXIP – FX International Payments – system will have their transaction processed through RippleNet. This allows U.S. business customers to make traceable, non-card payments to Santander bank accounts in the U.K.
Bitcoin vs. Ripple in terms of confidence
Many in the finance world believe that Bitcoin is extremely overvalued, and it has even been called the “definition of a bubble,” by Credit Suisse CEO Tidjane Thiam. JPMorgan Chase CEO Jamie Dimon joined his skepticism, calling bitcoin a fraud in October. He was specifically talking about the market value of Bitcoin, not the blockchain technology it’s based on, which he believes is solid. He even openly admitted that JPMorgan Chase is using blockchain technology.
Ripple, on the other hand, is being welcomed with open arms by the banking industry, and just last month, it was chosen by a new Japanese credit card consortium as the blockchain technology they would begin to use. It’s also been announced that banks in South Korea are also looking at it as a new solution. Ripple is controlled by a single company based in San Francisco, and and it is not mined. Upon its initial creation, 100 billion Ripple coins were created, although currently only about 38 billion of those coins are in circulation currently. Ripple is only able to release 1 billion coins per month.
The rapid value fluctuations in Bitcoin only work to erode confidence in it as a viable currency or investment opportunity. Meanwhile, Ripple is going about things differently, with more of a business model aimed at working with the global financial system instead of attempting to circumvent it. Ripple is being listed on global digital asset exchanges like Bitso, itbank, BuyBitcoin and more.
They also set up an escrow account with 55 billion Ripple coins, which is why they can only release 1 billion coins per month. Any of those coins that are not sold at the end of the month then return to the escrow queue. That means there is more stability in the Ripple price because the market cannot simply be flooded with 55 billion coins all at once. The minimum amount of time it could take to release those 55 billion coins is four years.
Ripple is aiming to be the de facto cross-border money transfer service for the entire global financial industry. It’s been making inroads into that industry in leaps and bounds, and the developer has been taking steps to assuage any fear of an unpredictable price for its coins. This all adds up to Ripple being a far less risky investment than Bitcoin. All of the strategic partnerships that Ripple has been making only work to strengthen it and solidify its place in the market. Now, it’s up to you to decide where you want to grow your money: Bitcoin vs Ripple.
