Why Ripple Isn’t Considered As A 'Real' Cryptocurrency?
Why is Ripple not considered a cryptocurrency? The flaws in the crypto coin. Know more about Ripple
IMAGE SOURCE: GETTY IMAGES
What Is Ripple All About?
Drawing inspiration from Bitcoin the ancestor of all cryptocurrency is many other cryptocurrencies out there. As humanity’s first definition, Bitcoin was what it means to be a cryptocurrency whereas it was a complicated creature that relies on many special functions and components. For example, Bitcoin has a decentralized blockchain ledger, with millions of participants organizing and saving a record of the transactions. Together with cryptographic hashing, the traders use a system of public and private keys safeguarding the identities.
Miners, a supportive and incentivized community that keep everything running smoothly processes Bitcoin transactions. It also has a finite supply relevantly. Transact safely, store value and even speculate with these characteristics that have made it easy.
The relevant question is whether a cryptocurrency should exhibit each of the Bitcoin’s traits or can any kind of digital money be labeled as such? As most of the Bitcoin’s peers have generally stuck to the collective predecessor’s model, these are logical questions that haven’t often been asked.
Gaining popularity Ripple is a currency introduced after years of living in Bitcoin’s shadow that is bereft of interest from traders due to its traditional infrastructure making a great compromise between crypto and fiat money. The difference makes it refused to consider Ripple as a real cryptocurrency by the community.
Ripple: The Strange Hybrid
By standard definition, Ripple wasn’t designed to be a coin or a normal cryptocurrency. When Ripple omits the idea of XRP which comes as any kind of investment asset, it instead focuses on making blockchain as strong as possible, while Bitcoin and others are sure to give the value of coin equal priority with the security of network, speed, and applicability. This comes as a boon for the institutional entities that Ripple serves like American Express or Santander Bank. Ripple foundation created XRP to achieve this goal but tweaked the traditional component of cryptocurrency an almost unrecognizable state.
Miners Be Gone
With no mining and miners for Ripple, transactions are powered through a centralized blockchain making it more reliable and fast. As mining is a core tenet of most other cryptocurrencies, each uses its system to determine the power of miners. Like Bitcoin, some use proof- of- work but also proof –of- stake and proof- of- importance.
Miners are incentivized to process network transactions with the currency itself creating issues that the Ripple deems untenable in cryptocurrency. There should be no separate group with its special motivations for running the network as a solution built for big banks.
A problem Ripple cannot afford is while the idea has helped other cryptocurrencies to remain decentralized it has slowed them down. Taking it further from the standard, this lack of mining affects other aspects of Ripple as well.
Plugin The Printing Press
Miners are also rewarded with cryptocurrency besides processing transactions. As this is essentially how its created, Ripple’s exclusion of miners throws a wrench into the machinery in this regard. Though not finite and can be printed on-demand, it makes much more reliable for payment processing, money exchange, and institutional activities. It’s simply destroyed when it’s used.
With a stable nonvolatile character perfect for the biggest clients, the Ripple Foundation has already created 100 billion XRP currently in circulation. This, however, removes one of the biggest factors in terms of any true cryptocurrency which is the ability to accumulate and store value as only a deflationary asset can.
A Centralized Blockchain?
Even though getting access to the blockchain is tough, Ripple does have a wallet. While the retail participants aren’t supposed to have access it introduces risky strange elements into an otherwise sterile environment. The Ripple blockchain is not like those of others and isn’t open, but XRP can be safely stored and keep it using cryptography that protects the participants whereas the nodes protecting aren’t individuals but trusted operators who are registered in the Ripple network. Even though the advantages of a blockchain ledger is used, the closed ecosystem does make it more efficient.
Claiming to be trustless, Bitcoin just created a precarious house of cards whereby everyone has some incentive not to let it topple. As miners can still shut off computers and freeze network if they wanted to, but not with Ripple.
To Conclude Putting A Title On Ripple
The founders of Ripple recommend not using their creation as a currency for speculation as it isn’t one, just as many questions surround the Bitcoin cash. As ripple resembles a fintech platform more than anything else, it simply combined the best elements of fiat money and blockchain cryptocurrency.
Even though it is not a true cryptocurrency by standard definition, Ripple comes as the dividing line that separates the two distinct products that emerge from the cryptocurrency revolution mainly assets and solutions. Placing faith in a decentralized community, it serves as an investment along with deflationary properties of mining solution which are dispensed instead of creating the platforms that are technically cryptocurrency and not viewed as such traditionally.