Industry experts say the online money cannot be defined as a cryptocurrency due to the way it is mined. Critics say Ripple should not be included o
Industry experts say the online money cannot be defined as a cryptocurrency due to the way it is mined.
Critics say Ripple should not be included on sites such as CoinMarketCap as it is misleading.
Litecoin creator Charlie Lee said: “XRP is NOT a crypto-currency.”
Bitcoins are created through miners who run code that validate transactions and keeps the currency secure.
Mining is the processing of transactions in the digital currency system, in which the records of current bitcoin transactions, known as a block, are added to the record of past transactions, known as the blockchain.
Ripple’s setup has no miners, as all 100billion coins were created when the network launched in 2012. The creators kept 20bn for themselves and gave the rest to the company in charge of Ripple, called Ripple Labs.
Ripple also requires a more specific computer to validate transactions, and needs the computer to identify itself and obtain permission to participate in the network. On the other hand bitcoin allows any computer to join.
This system means that the company controlling Ripple has a large amount of control over it meaning it is not decentralised. Decentralisation is the process of distributing or dispersing power away from a central location or authority. Bitcoin is decentralised.
Ripple’s main aim is to become a “bridge currency” that financial institutions use to settle cross-border payments faster and more cheaply. Ripple can settle up to 1,000 transactions per second where as bitcoin can only handle seven.
So far both American Express and Santander have partnered with Ripple to speed up cross-border payments between the US and the UK by using blockchain technology.
Demand for the next cryptocurrency success story to follow bitcoin has pushed the price to highs of $2.04.