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Ripple and Bitcoin are both cryptocurrencies. However, there are some important distinctions that need to be made between the two crypto’s.

Ripple has been on the market for some time now. It was originally designed to meet the need for an independent currency that could manage the direct transfer of money, a little like Paypal does now. In 2014 it began to be used as an app that allowed users to transfer money between each other, but that no longer exists.

Since then the Ripple protocol has been adopted by a number of leading names in banking to facilitate currency transactions. For example, in 2015 Fidor Bank started using Ripple to implement a real-time money transfer network.

So can I trade Ripple?

Ripple is now a company that owns XRP, which is the fourth most traded cybercurrency. Like Bitcoin, RippleĀ has picked up in value since the beginning of the year. At the start of 2017, XRP was valued at the $250 million mark, It is now worth over $9 billion. At a x36 appreciation in value, that is not to be scoffed at.

So when we talk about Ripple, we really mean XRP, its currency.

Why are Ripple and Bitcoin different?

Ripple is considered by some to be the more respectable cousin of Bitcoin. This is because it is controlled by an actual company, is used by a lot of big banks for their own transactions, deals can be reversed, and identities can be known. Many proponents of Bitcoin see Ripple as still too much a part of the establishment for their purposes.

On the other side of the coin – if you forgive the pun – Ripple’s XRP ledger is independent. It will continue to exist and will continue to be traded even if the company Ripple went bust tomorrow. This is the important distinction to make between Ripple and XRP.

Is Ripple really a cryptocurrency then?

If you take the word ‘crypto’ literally, namely secret, or hidden, then no, Ripple is not a classic cryptocurrency. According to Ripple CEO Brad Garlinghouse, Ripple needs to operate within the banking sector, and with that come laws and regulations which require an element of disclosure. Regulated banks are forbidden to handle currency transactions where the parties are anonymous. It is a non-starter.

So how do Ripple and Bitcoin compare?

XRP has been developed to meet the high volumes and efficiency required by banks. While it takes about four hours to settle a Bitcoin trade, Ripple settles in less than four seconds. Ripple can handle 1500 transactions in a second, Bitcoin is slowed down by its proof of work framework which limits its performance in volume terms. One of the big questions still unanswered by the Bitcoin infrastructure is how it will cope if there is a sudden sell-off with many investors seeking the exit at the same time.

Where can I trade Ripple?

XRP can be traded with many of the existing forex brokers, but not all currently quote it, so it is best to ask your broker. Specialist brokers of cryptocurrencies also exist, but if you are an active forex trader you will want stick with the well-regulated names.

For more information on the exploding market for cybercurrencies, our team has put together a guide on trading Bitcoin and competing currencies. You can download a copy here.

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Stuart Fieldhouse

Stuart Fieldhouse has spent over 20 years in journalism and financial communications, including six years as a wealth management correspondent for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong.

Stuart has worked as head of content at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Stuart continues to work with hedge funds, private banks, stock exchanges and other financial institutions on their communications, data and marketing requirements.

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