Similar to Bitcoin, Ripple has been seeing an astronomical rise in price over the past couple weeks. In fact, only a few days ago its price rose 70% in just 24 hours. Many traders are anticipating an announcement by the Ripple team which would ultimately lock up millions in XRP to instill confidence in the project.
Today the company announced its plans to place 55 billion XRP into a transparently managed escrow account– providing greater market transparency and certainty about current and future XRP supply.
Using its recently launched Escrow feature, Ripple will cryptographically lock up 55 billion XRP, which will be released for its use 1B at a time on a monthly basis. Any unused XRP will be placed back into the escrow queue at the end of the month. This adds another layer of stability to the market by regulating the supply and demand. By giving investors a predictable supply schedule, Ripple is removing any question or concern about large-scale sale of XRP that could drive prices down.
According to coinmarketcap, Ripple’s market cap is at a whopping $12 billion. That is more than 40% of Bitcoin’s market cap which is at $28.6 billion. However, keep in mind that compared to Bitcoin which has 16.3 million coins in circulation, Ripple has over 38 billion coins in circulation. So, even though a single Ripple costs 32 cents, the sheer amount of coins in circulation inflates the market cap to a massive number.
Ripple is different in the sense that it appeals to more traditional financial institutions, its protocol has been adopted by a variety of banks in different countries. Unlike Bitcoin, Ripple doesn’t use the traditional proof of work algorithm, instead it uses an iterative consensus process, which is unique to Ripple.
Furthermore, Ripple acts as a decentralized currency exchange, so if someone wants to sell their XRP, while they can use traditional means like an exchange, they can also use the Ripple network to exchange the currency. Ripple is also non mineable, and the coins are distributed by a third party. This creates somewhat of a misconception that Ripple is a centralized permissioned ledger, however that is not true. While Ripple has its differences from Bitcoin, the ledger is fully public and can be used by anybody.
Both Bitcoin and Ripple have their places in the cryptocurrency ecosystem, but it seems that the appeal that Ripple has towards traditional financial institutions is a big advantage it has over Bitcoin. Whether this recent price rise is a bubble in the making is up for debate, one thing is for certain though, Ripple is not going away anytime soon, especially after the team locks up millions to instill confidence for investors and their clients.
Dislaimer: This is not trading advice, this article is for educational purposes only. If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.