Cryptocurrency All-in-One For Dummies. Peter Kent
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Ethereum
Ranked number two based on coin market cap as of 2021, Ethereum is another major cryptocurrency. As of September 2021, its market cap is around $465 billion.
Brief Ethereum background
Compared to Bitcoin, Ethereum is a pretty young currency; Russian-American Vitalik Buterin proposed it in 2013. It’s almost five years younger than Bitcoin, which in the cryptoworld is still a big deal.
Ethereum uses the old Bitcoin’s wisdom and philosophy, but it has a different purpose and capability. According to its website, www.ethereum.org, “Ethereum is a decentralized platform that runs smart contracts.” Chapter 2 of this minibook explains that smart contracts allow people to create agreements without a middleman. Ethereum creates these smart contracts by employing the same blockchain technology as Bitcoin. Just as Bitcoin’s blockchain and network validate Bitcoin ownership, Ethereum’s blockchain validates smart contracts, which the encoded rules execute.
Ethereum versus Bitcoin
The main difference between Ethereum and Bitcoin is that Ethereum wants to be the place users go to execute their decentralized applications. In fact, its goal is to be a sort of massive, decentralized computer that executes smart contracts. That’s why many other cryptocurrencies can run on the Ethereum platform. The Ethereum blockchain forms a decentralized network where these programs can be executed.
Bitcoin is different in this sense. Its platform gets the miners to compete and solve complicated blockchain math problems. The first one who solves the problem is the winner and gets rewarded. But miners can use Ethereum’s platform as a co-working space to create their own products. They get compensated for providing the infrastructure so that inventors can cook their own new types of products. Book 6 covers cryptocurrency mining.
https://entethalliance.org/.
Ethereum characteristics
Here are some main attributes of Ethereum:
Ethereum’s token symbol for investors is ETH.
Ethereum is mineable.
Coin creation occurs through proof of work (PoW).
Transaction time can be as little as 14 seconds, although it can go higher based on confirmation requirements.
Transactions aren’t fully anonymous.
Ethereum is more decentralized than Bitcoin.
Mining Ethereum requires less wasted energy than Bitcoin mining does.
www.cryptocompare.com/mining/calculator/eth?HashingPower=20&HashingUnit=MH%2Fs&PowerConsumption=140&CostPerkWh=0.12&MiningPoolFee=1.
Ripple
For most of 2018, Ripple was the third-largest cryptocurrency by market cap, at around $19 billion. However, during the first half of 2021, Ripple’s market cap hovered at around $30 billion but dropped to sixth place in the ever-changing market cap listings. As of this writing, Cardano, Tether, Ethereum, and Bitcoin have larger market caps, but these rating orders can change overnight!
Some Ripple background
The idea of Ripple actually goes all the way back to 2004. That’s way before Satoshi and Bitcoin. In 2004, Ryan Fugger founded a company called RipplePay. According to https://blog.bitmex.com/the-ripple-story/, the idea behind the protocol was a “peer-to-peer trust network of financial relations that would replace banks.”
By 2011, Ripple’s target demographic started paying attention to Bitcoin, which was just becoming popular and was doing a better job as a peer-to-peer payment network than Ripple. Ripple’s architecture started to shift when an early Bitcoin pioneer, Jed McCaleb, joined the Ripple network in May 2011. Others joined the Ripple bandwagon as time went by.
Finally, Ripple’s XRP, a cryptocurrency that also acts as a digital payment network for financial institutions, was released in 2012, according to their website, https://ripple.com/xrp/. Like many other cryptocurrencies, XRP is based on a public chain of cryptographic signatures. That being said, Ripple is very different from traditional cryptos like Bitcoin and even Ethereum.
Ripple versus Bitcoin
Here are some of the key differences between these two cryptocurrencies.
Ownership and decentralization: Bitcoin is not owned by any particular person or entity, and Bitcoin the cryptocurrency is pretty much the same as Bitcoin the open-source platform. That’s why Bitcoin is highly decentralized and open source, and owned by a community that agrees on changes. This setup can make upgrades tough and is why Bitcoin has had a ton of forks (hard and soft; see Chapter 2 of this minibook) in its history.By contrast, Ripple is a private company called Ripple Labs, with offices all over the world. Ripple’s digital asset (cryptocurrency) is called XRP and is also owned by Ripple Labs. The company constantly looks to please everyone (especially its partners) and come up with consensus, which can allow for faster upgrades. It has an amendment system with which the developers seek consensus before making changes to the network. In most cases, if an amendment receives 80 percent support for two weeks, it comes into effect, and all future ledgers must support it. Basically, Ripple is a democracy that tries to avoid hard forks and nasty splits! You can find out more about Ripple and its most recent updates at https://ripple.com/.