Is Ethereum Technology Far Superior to Ripple, As Claimed?

Todd Nesnick
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Ethereum and Ripple are two of the most promising projects in the blockchain space, but they seem to be at the opposite end of the spectrum, assuming completely different roles. To be more precise, Ethereum enables the creation of smart contracts and decentralized applications, while Ripple targets financial institutions, providing a more convenient (and infallible) payment processing experience. You can purchase both through a cryptocurrency exchange. And if you want to learn how to buy Ethereum or Ripple, plenty of guides will make you an expert in the shortest possible time.

In what follows, we’ll take a closer look at Ethereum and Ripple to understand how they compare to one another.

Ethereum

The existence of Ethereum finds its roots in Bitcoin, created as a result of the Great Financial Crisis of 2008-2009. Even if Bitcoin was launched in 2009, it represents the culmination of decades of attempts to create a peer-to-peer virtual currency. Bitcoin is merely a currency and store of value, while Ethereum is an open-source, distributed software platform. Vitalik Buterin first described Ethereum in a proposal in 2013 when he advanced the idea of adding a scripting language for programming for Bitcoin. Since Ethereum is a decentralized blockchain platform, nobody can mess around with the network, explaining why so many developers want to latch onto the chain.

Key features of Ethereum include:

  • Smart contracts & dApps: Ethereum didn’t invent smart contracts, but it brought them to life. The language is Turing-complete, which means it supports an extensive set of computational instructions. Smart contracts can be used for multi-signature accounts, encoding financial agreements, providing a third party, or storage. dApps are the blockchain-based equivalents of traditional apps. They’re deployed on the Ethereum network and use the blockchain for data storage.
  • Ether cryptocurrency: Ethereum is the name that often comes up in discussions. When you hear someone talking about Ethereum’s price, they’re actually referring to Ether. You can send Ether without any intermediaries to anyone, anywhere, anytime. The native token is divisible by 18 decimal places, so you can purchase fractions of the coin.
  • Proof of Stake consensus algorithm: Ethereum transitioned to Proof of Stake in 2022 because it carries a lesser risk of a major attack and is less energy-intensive. The upcoming updates will add a new level of scalability to Ethereum, so it’s worth following the evolution of the world’s computer.
  • Average of 30 TPS: As far as processing speed is concerned, Ethereum can process roughly 30 transactions per second, which is insufficient for global adoption. The solution to address this shortcoming is danksharding, which is expected to increase Ethereum’s TPS to around 100,000. Data blobs can be sent and attached to blocks.

Ripple

Ripple was introduced in 2012 by Ripple Labs in response to Bitcoin technology, providing banks with a faster, more cost-effective option for conducting cross-border transactions. Ripple is an updated SWIFT system version that powers international money and security transfers. Payments are enabled via XRP, the native token used by Ripple. The aim of Ripple is to lay the foundation of a network that empowers as many transactions as possible at the same time. XRP transactions are less expensive compared to standard money transfer methods and can be completed in seconds, not hours or days. Similar to other cryptocurrencies, Ripple is considered volatile.

Key features of Ripple include:

  • No blockchain: The Ripple network doesn’t run on a blockchain. It operates on the XRP Ledger, powered by a network of nodes. For this reason, it doesn’t rely on mining to mint new tokens or validate transactions. Validating nodes authenticate transactions by carrying out polls, so Ripple doesn’t extend as much energy. Servers are either run by individuals or banks. As opposed to most cryptocurrencies, XRP is pre-mined, with a minimum token supply of 100 billion.
  • On-demand liquidity: Ripple consistently increases XRP liquidity to build a robust market. It launched a liquidity hub called xRapid to bridge the gap between crypto and fiat money, reducing the cost of operations on high-volume transactions. Payments into emerging markets don’t require pre-funded local currency accounts.
  • Ripple protocol consensus algorithm: It’s applied every few seconds by all nodes to maintain correctness, agreement, and utility. When consensus is reached, the ledger is considered closed; the last closed ledger maintained by all nodes in the network is identical. Ripple’s validating servers rely on a HashTree, a mechanism for reaching consensus that works by comparing a single value derived from summarizing the ledger’s data. Unlike a Proof of Work blockchain, Ripple doesn’t compare all the data.
  • Average of 1,500-3,500 TPS: Ripple can reach approximately 3,500 transactions per second, settling them in three to five seconds. It’s faster than other cryptocurrencies. A major challenge for blockchain innovators has been maintaining high transaction speed, decentralization, and security concomitantly. Ripple only charges 0.0003$ per transaction. Ripple’s current configuration could support 50,000 transactions per second.

So, Which One Is Better?

The bottom line is that both Ripple and Ethereum play important roles in the crypto ecosystem, having several use cases besides a good store of value. They have their advantages and disadvantages, so the choice between Ethereum and Ripple comes down to the user’s needs and preferences. Ethereum has witnessed a surge in popularity owing to the development of decentralized finance, NFTs, and dApps, while Ripple has become an integral part of the financial system, traded across international exchanges. It can’t be, therefore, argued that one’s performance is better than the other, as Ethereum and Ripple have unique value propositions enticing investors.

Until now, Ethereum has outperformed Ripple. Many are of the opinion that Ripple will outperform Ethereum in the upcoming years. ChatGPT, an AI chatbot that leveraged natural language processing to create human-like dialogue, said that prediction is a hopeless enterprise because the performance of cryptocurrencies is influenced by several factors, including but not limited to technological developments, regulatory decisions, market demand, and macroeconomic factors, to name a few. To summarize, ChatGPT failed to offer an explicit answer. The future of cryptocurrency is blurred, and the only way to tame uncertainty is to create a contingency plan.