Several of the Ripple developers were part of the core Bitcoin development team in the early days, and when they launched Ripple they made several improvements to fix what they saw as fundamental flaws in the bitcoin protocol:
- Faster payment system – Ripple supports transaction confirmation in several seconds, whereas Bitcoin is typically 30 – 60 minutes.
- Better governance – Ripple has a strong sponsor which provides an effective balance of transparency, developer support, and leadership. In contrast, Bitcoin is run by unknown pool of mining operators (“The Mining Oligarchy”) and decision-making tends to be political due to lack of structure.
- No block chain bloat problem – At present the Bitcoin block chain is 20 GB and growing; it is not clear what will happen once we hit a 100 GB or 200 GB blockchain. The Bitcoin devs are already limiting the inclusion of transaction meta data, by limiting OP_RETURN from 80 bytes to 40 bytes, which limits the use of the bitcoin protocol for smart contracts. In contrast, Ripple uses a consensus mechanism and holds running balances, mitigating this issue. Many of the smartest devs in the space see the Ripple approach as the most elegant and scalable.
- No control by an oligarchy. One of the reasons Bitcoin does not fix its problems it that a fix requires the buy-in of miners. Miners are the firms who validate Bitcoin transactions and mine new Bitcoins. Because of economies of scale, there are less the 12 major mining pools left of which 70% of mining is done by three pools. These pools will not update the bitcoin protocol in ways that hurt their investment in mining equipment.
- Use of energy for mining. Bitcoin mining has horrible environmental issues around it’s use of electric power needed to mine.
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