During the last few months, Proof-of-Work (PoW) cryptocurrencies have been experiencing some issues such as 51% attacks. This is the case of Ethereum Classic (ETC) a top 20 digital asset that has been affected by this kind of attack. However, other networks such as Ripple continue to expand decentralizing their network even more.
XRP has been attacked for being a centralized digital asset. However, the cryptocurrency was able to overcome these critics and become the second largest digital asset in the market. However, XRP has still a long way for taking Bitcoin’s position as the largest cryptocurrency.
This is something difficult because Bitcoin (BTC) was the first cryptocurrency to be released to the market. XRP was launched a few years after, thus, it has fewer chances of becoming the most popular digital asset. Bitcoin has been using the PoW algorithm to verify transactions and keep the network secure. However, this process could eventually become obsolete as rewards drop for miners.
Every 210,000 blocks miners will be receiving fewer Bitcoins for their work. Unless Bitcoin price grows, they will eventually leave the market. Miners are located all over the world, but a large majority is currently in China, which is something that could heavily affect Bitcoin’s network in the future.
In general, Bitcoin mining activities were very profitable when the asset was close to its all-time highs back in December 2017. Several companies decided to set up mining farms and start mining Bitcoin. This resulted in the centralization of the industry in just a few hands. ASIC miners used to process Bitcoin transactions are very expensive and can be acquired in bulk just by a few companies.
XRP uses Distributed Agreement Protocol, also known as Consensus Protocol. In this way, XRP avoids the problem of double spending in a much more efficient way than Bitcoin does. The distributed agreement protocol works with validators that control that the network is operating in a healthy way.
80% of XRP validators must support and vote for a change during a period of two weeks before it goes into effect. This is a better way to improve the network compared to Bitcoin or other cryptocurrencies in the market. If the change is not agreed by these validators, then it will not go into effect.
If validators want to disrupt the normal flow of transactions in the XRP ledger, users would have to agree on a new list that would allow the network to be operative.
David Schwartz, the Chief Technology Officer (CTO) at Ripple, commented about this issue:
“This has never been a problem for any blockchain in the past, and it’s required by every blockchain when previous agreements fail to be sufficient. Decentralized systems fundamentally allow interoperation only among people who continue to agree on a large number of things.”
He went on saying that the XRP has the lack of incentives for this situation to happen. Honest participants want the network to properly work and have all the interest aligned.
In this way, XRP looks better suited than other PoW networks to resist attacks by collusion or other bad actors. Furthermore, XRP is able to process more than 1500 per second while Bitcoin or Ethereum (ETH) could just support 16 transactions per second (TPS). Finally, the fees paid for transaction BTC and ETH are much larger than XRP.
Ripple is also growing in the market. It has reached more than 200 companies working on top of the RippleNet. Additionally, there are new products such as xRapid that are going to be embraced by financial institutions and banking firms to make cross-border payments in a much easier and cheaper way.
At the time of writing, XRP has a market capitalization of $31.56 billion, this is half of the market cap that Bitcoin has ($62.19 billion). According to Yahoo Finance, XRP has a price per coin of $0.31 while Bitcoin is being traded around $3,550.