2020: The war between Bitcoin and Ripple starts.

2020: The war between Bitcoin and Ripple starts.

In the left corner: Bitcoin (BTC); in the right corner: Ripple (XRP)! Let's rumble!

Before we make our analysis, let's get a closer look at our contestants.

Our first contestant, Bitcoin, operates on a public blockchain, a ledger that supports a digital currency called Bitcoin, used for payment for goods and services. Bitcoin is therefore primarily known for its Bitcoin cryptocurrency (BTC). Bitcoin is based on the blockchain concept, a public ledger of verified transactions and record-keeping. Miners verify the transactions and add them to the Bitcoin blockchain. Miners also find new Bitcoins as a reward for doing all that work.

While Bitcoin transaction confirmations may take a few minutes with high transaction costs, Ripple transactions are confirmed within seconds at very low costs. BTC has a total supply of 21 million crypto coins, and Ripple has a total of 100 billion pre-mined crypto coins.

Bitcoin uses a proof of work system and mining for releasing new BTC tokens, while all of the XRP tokens are pre-mined.

The crypto coin release mechanism is different for both BTC and XRP. While bitcoins are released and added to the network when the miners find them, a smart contract controls the release of XRP.

A total of 55 billion XRP tokens are kept in an escrow account, and each month a maximum of 1 billion tokens are set to be released as governed by an in-built smart contract. Any unused portion of the XRP in a particular month will be shifted back to the escrow account. This mechanism ensures that there will be no possibility of misuse due to an oversupply of XRP crypto coins, and it will take many years before all the crypto coins will be available.

Ripple is a technology that is mainly known for its digital payment network and protocol. Though Ripple also has its own cryptocurrency XRP, it is mainly a payment settlement, asset exchange, and remittance system that works more like SWIFT, a service for international money and security transfers that is used by a network of banks and financial intermediaries.

Instead of using the blockchain mining concept, Ripple uses a unique distributed consensus mechanism through a network of servers to validate transactions. By conducting a poll, the servers or nodes on the network decide by consensus about the validity and authenticity of the transaction. This enables almost instant confirmations without any central authority, which helps to keep Ripple decentralized and yet faster and reliable.

While the Bitcoin network is accused of being energy-hungry due to its mining system, the Ripple system consumes negligible power owing to its mining-free mechanism.

Similar to the bitcoin transaction processing fee, XRP transactions are charged. Each time a transaction is performed on the Ripple network, a small amount of XRP is charged to the user. The primary use for Ripple XRP is for facilitating the transfer of other assets, though a limited number of merchants also accept it for payments in a way similar to accepting bitcoins.

While bitcoin is being increasingly used by individuals and organizations as a virtual currency, the Ripple payment system is finding use by banks. A consortium of 61 Japanese banks, in addition to a few other global banks like American Express, Santander, and Fidor Bank, are testing the implementation of Ripple’s payment system.

Who will win the fight? Or can there be two winners?

Although I believe both projects have their own use-cases, Bitcoin being digital gold or gold 2.0, and Ripple being the bank's primarily crypto project, it is likely that the banks who control our monetary and banking system will do anything they can to make sure that they can stay in power of the supply of money. This gives Ripple a slight advantage.

Central banks will not use Bitcoin, they will create CBDC's or Central Bank Digital Currencies. Ripple might replace the SWIFT system, as it is much faster and it can be centralized and monitored, much like SWIFT today.

Retail banks who create money by fractional reserve banking will be subject to the decisionmaking by central banks and also adopt Ripple (XRP). Ripple will be a bridge between the old and new systems, from fiat to digital fiat. From SWIFT to Ripple.

And there lies the problem: if the CBDC's that will be launched in 2020 have no maximum coin supply, they will function in a similar way as the current fiat currencies do. Central Banks will be able to create extra supply or destroy (burn) supply. You can, therefore, expect that CBDC's are subject to inflation, just as the USD, the EURO, the YUAN, and all other currencies are today.

This gives room for Bitcoin, which will have only a maximum supply of 21.000.000 BTC ever, giving it gold-like characteristics. Today, especially in the West, where people have access to finance and credit, Bitcoin is a speculative asset and a store of value. In poor countries however it is being used as money.

In the third world, people have no access to banking, no ability to get credit, no land or property rights, no healthcare, and no proper government management, as for all these things you need a financial system that offers financial inclusion. They also lack the knowledge to manage this financial architecture, since there have never been institutions like in the West. For these people, Bitcoin is a solution. For them, a smartphone gives them access to financial products and currencies and they do use Bitcoin.

I conclude that the West will likely have an upgrade that pushes us from SWIFT to Ripple or a similar system and into an era of more government monitoring of our personal and private financial transactions. This is not good news.

The third world will thrive if the blockchain-based and cryptocurrency projects create proper financial architectures, allowing people to have the same rights as we do in the West. They don't need to build financial 'buildings', they can skip that phase and directly enter the new era.

So my advice, which is not investment advice, but my personal opinion is to take a good look at both projects.

They are both gonna be around for a long time to come!


Specialized in monetary economics and history, gold standards and cryptocurrencies' potential for a new financial system, I offer a much needed background for investors.


In this blog I will offer insights in the history of central banking, the goldstandard, fiat currencies, blockchain, Bitcoin and lots more, all in an effort to explain these subjects in a for normal people understandable language.

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