Before making an investment decision, it is essential to be aware of the advantages and disadvantages of both Bitcoin and XRP, and determine which one best fits your investment strategy and financial goals.
The primary use of XRP is to address the major challenges facing the global financial system, where banks and financial institutions spend hundreds of billions of dollars annually in fees to send and receive money. Transactions typically take days to settle, highlighting the urgent need for innovation in this area. XRP is designed to change this system by providing fast and secure transaction solutions between financial institutions at a fraction of the cost of traditional systems.
Although Bitcoin can be used in this context, it remains slow, expensive, and unable to scale as efficiently as the XRP network, which can process thousands of transactions per second, while the global Bitcoin network can only process seven transactions at a time.
XRP's core innovation lies in its design, which relies on a consensus algorithm rather than a mining mechanism, allowing for extremely fast transaction processing at very low costs. This makes it more suitable for cross-border financial transactions than Bitcoin, which relies on a slow, resource-intensive proof-of-work system. While Bitcoin is often considered a store of value, XRP was developed specifically to facilitate fast and secure transactions between banks and financial institutions, offering solutions that allow these institutions to reduce costs and improve efficiency in their international financial operations.
Thanks to these advantages, XRP is used by real-world institutions. Its associated network, RippleNet, is used worldwide. Considering that traditional systems cost banking institutions around the world $193 billion in fees last year, the potential for this opportunity is enormous.
If XRP manages to capture a significant portion of the market, the fees collected will be enormous. Furthermore, banks will need to purchase and hold XRP to be able to conduct transactions with it, which will lead to a supply shortage and further increase the token's value.