Although cryptocurrency has been around for nearly a decade, it’s still a relatively new (and often complex) for many people. Most of us have heard of Bitcoin and even digital currency like Namecoin, Litecoin, and Ripple.
While most cryptocurrency is designed to work the same and has similar features, Ripple is unique. In this article, we will briefly discuss the basics of cryptocurrency, introduce Ripple, talk about how to mine Ripple, and point out how it differs from other digital currency.
A Quick Look At Cryptocurrency and Mining
Before you can learn how to mine Ripple, it’s important to make sure that you understand what cryptocurrency is and how it works. Cryptocurrency, which is often
referred to as digital or virtual currency, is a unique and secure way to make payments without relying on a third party (bank or credit card company).
The first, and perhaps the best-known digital currency, is Bitcoin, which was launched in 2009. While there are thousands of different cryptocurrencies available today, Bitcoin continues to lead the way with over 17 million bitcoins in circulation (which makes up more than half of the total value of cryptocurrencies). More people choose cryptocurrency as a form of payment because:
- Storing money is easy in an online wallet
- Transactions are anonymous, secure, and fast
- Minimal processing fees
Although digital currency is often more protected than paper money, and an anonymous way to make transactions, it’s important to note that there is always the threat of losing digital currency; if an account gets wiped out, digital funds are lost forever.
For many people who are new to cryptocurrency, “mining” can be a little difficult to understand.
Bitcoin and other cryptocurrencies utilize blockchain technology, which is an online ledger that stores all the transactions. Blockchain is secure, decentralized, and cannot be altered, so by default every transaction is encrypted; this creates a “block.” After a certain
number of transactions takes place and recorded, the block is added to a chain
To create a new block, it must be verified by the ledger which makes this technology difficult to hack (making cryptocurrency more secure). “Miners” are in charge of verifying the transactions in the ledger, which consists of figuring out the encryption; encryption is much like a complex math problem or puzzle.
Miners earn coins after verifying the transaction, which increases the supply of coins. Essentially, mining for coins (or verifying transactions in the blockchain) will produce more cryptocurrency.
While everyone can become a miner, you need to have specialized hardware, graphics cards, and CPU to mine for cryptocurrency successfully. If you have a Windows or Linux computer, mining software typically works better than on a non-Windows system.
A Closer Look At Ripple
Now that we’ve discussed the basics of cryptocurrency and what mining is in the world of digital currency, it’s time to take a closer look at Ripple. Like Bitcoin, Ripple has gained in popularity and is one of the top digital currencies besides Bitcoin.
Ripple was founded by Ripple Labs and launched in 2012. Ripple, which has its own cryptocurrency, XRP, is known for its digital payment network which includes payment settlement and asset exchange. While Rippe is considered a cryptocurrency, some argue that it’s not (we’ll explain this a little later in the article).
The Differences Between Ripple and Bitcoin
Although Bitcoin and Ripple are both unique and secure ways to make digital payments, the two are quite different. Since cryptocurrency can be difficult to understand, we’ll try to explain the differences in “real world” terms.
Let’s start with Bitcoin. A bitcoin user can use the digital currency in place of U.S. dollars. Not only can you use bitcoins in place of money, but bitcoins can also be used for trading or investments.
Remember, as we already mentioned before, bitcoins eliminate the need for banks or “middlemen” and allow for anonymous transactions.
Ripple’s payment system allows for global use and is often a popular way to move money internationally quickly without paying for high processing fees. With Ripple, “real” money can be converted and transferred to XRP tokens instantly; no excessive wait time or loss during the exchange.
Like bitcoin, Ripple transactions must be verified and authenticated by the network before someone can receive the XRP tokens. The tokens can then be converted to any currency or remain as part of the Ripple network. Ripple is becoming increasingly popular due to minimal transaction fees and time.
While Bitcoin relies on blockchain to verify transactions, Ripple uses a consensus mechanism through a network of servers to validate and verify transactions; this speeds up the process without relying on miners to solve encryption and confirm the transaction.
Since miners are not part of the Ripple’s transaction process, we’re faced with the question of “how to mine Ripple?” and the short answer is that you cannot mine Ripple.
Why Can’t We Mine Ripple?
Unlike Bitcoin, Ripple doesn’t fluctuate, and there’s no room for growth. When Ripple was launched, it had 100 billion XRP tokens available immediately. While the tokens have decreased somewhat, there are still billions of XRP tokens available, and the majority of them are owned and stored at Ripple Labs.
Since XRP tokens cannot be mined, many people don’t consider it to be a cryptocurrency; whether or not you agree depends on how you define digital currency. If you define cryptocurrency as digital money that is used quickly and securely online, then you might consider Ripple as a cryptocurrency.
If you think only consider cryptocurrency as digital money that increases with mining, then Ripple doesn’t fit the cryptocurrency definition.
While some cryptocurrency users may be confused or disappointed by the lack of XRP mining, it’s important to note that Ripple was never intended to be like Bitcoin and similar crypto coins. XRP was never designed to be an investment like Bitcoin, but the main focus of Ripple Labs was to move money quickly and “hassle-free” online.
Banks, Bitcoin, and Ripple
One of the notable differences and reasons why people are drawn to Bitcoin is because it doesn’t require a “middleman” like a bank to make a transaction. Rather than leaving financial institutions out of the transaction process, Ripple Labs wants to make banks part of the process and many prominent institutions, like American Express, are already participating.
Many cryptocurrency experts speculate that financial institutions will eventually try to regulate Bitcoin and other digital currency, but Ripple is less likely to run into potential issues since it already works with banks.
Is Ripple The Cryptocurrency For You?
Now that we’ve discussed some of the main differences between Ripple and cryptocurrency like Bitcoin, you might be wondering if it’s the digital currency best suited for you.
If you enjoy mining for cryptocurrency or wanted to learn how, Ripple is not (and will not) be the cryptocurrency for you. Unless Ripple Labs completely changes their plan and use for XRP, there will never be the opportunity to create more XRP tokens.
Another thing to consider is how and why you’re interested in using cryptocurrency. If you want to make secure transactions quickly and with minimal fees, particularly when moving money globally, Ripple may be a better option over other crypto coins.
If you want to keep financial institutions away from your money and you don’t like the thought of regulation and control, Bitcoin and other similar cryptocurrency is best-suited for you.
The Future of Ripple
Since Ripple cannot be mined, the future of the unique cryptocurrency is unclear. Even though Bitcoin will eventually run out, it’s likely to outlast XRP tokens, as long as miners keep “cracking” encryptions. Mining has a strong following for various reasons, from hobbies to investments, that Bitcoin is likely to grow and stay at the top.
Controlling Ripple may either extend its life or limit how much we actually see and use. Currently, there is a little more than 50 billion Ripple in an escrow account. According to Ripple Labs, it should take between 14 and 18 years to go through the Ripple in escrow.
While both Bitcoin and Ripple are well-designed cryptocurrencies, their differences keep them divided among digital currency users.
Featured Image via Pixabay