The cryptocurrency market has several thousand digital coins in the crypto space, but more than half don’t offer any unique value proposition. Bitcoin and Ethereum are dear to many, but there are other coins catching pace to replace the dominant position held by Bitcoin and Ethereum. Of all other digital currencies, the two worth discussing and considering for investment in 2022 are Dogecoin and Ripple. Both are different and similar in many ways, and to make informed buying decisions, one has to be aware of both.
As Ripple and Dogecoin are increasingly gaining investors’ attention, it is worth discussing their commonalities and differences. They’re both built using blockchain technology, are available in most crypto exchanges, and are used as a means of value exchange. So if you own Dogecoin, you can use it to conduct everyday retail transactions or cash it out by trading it when the Dogecoin price in INR hits a high.
You can also trade Ripple, but its use case is very different from Dogecoin. If you’re recently considering investing in any of these coins, it is worth knowing the basics and some crucial information about both. So let’s head straight to understanding what Dogecoin and Ripple exactly are.
Ripple: The Banker’s Cryptocurrency
XRP or Ripple is quite different from other cryptocurrencies. It was created exclusively for financial institutions worldwide to make international fund transfers affordable, secure, and faster. Ripple’s native currency, XRP, is created and launched by Ripple Labs, which means no other person can mine XRP. Since Ripple creates and circulates its currency, many have raised concerns that XRP is not really decentralized – a claim often refuted by Ripple Labs. Ripple aims to compete with SWIFT by filling the gaps the latter has. At present, the services of Ripple Labs are being used by financial institutions in more than 55 countries, and this number is expected to grow.
Transactions & Speed
Unlike Bitcoin, Ethereum, and other notable cryptocurrencies, Ripple doesn’t rely on mining/proof-of-work to validate its transactions. It rather uses a consensus ledger along with a series of approved and verified network servers to validate all XRP transactions. Ripple’s transaction validation method has resulted in high transaction speed. It can process around 1,500 transactions per second, and its transaction cost is also reasonably low.
Supply & Demand
To open a wallet for Ripple, investors will have to add an XRP reserve taken out of circulation. It implies that with every account or wallet opened, XRP will continue to become scarce. And the scarce a currency is, the more valuable it becomes in the market. It should be noted that every XRP token is burned after the related transactions are made, contributing further to the scarcity.
Up to 1 billion XRP tokens are made available by Ripple Labs every month in the Ripple ecosystem to facilitate business activities on the network. Any left-out token is added back to escrow. This very mechanism has drawn criticism from people regarding the extent of control Ripple Labs has over the system, but the company has managed to weather the storm.
Considering Ripple’s launch year, the cryptocurrency has performed extremely well over the years. If you’re recently looking to invest in a cryptocurrency with real-life utility, Ripple is your go-to digital currency. In fact, the current Ripple price in India is a steal deal. You might want to add it to your portfolio before its prices increase exponentially.
Dogecoin: The Memer’s Coin
Launched with the aim to poke fun at the rapidly growing altcoins, Dogecoin has come an incredibly long way in establishing itself as one of the most desired cryptocurrencies. This meme-inspired coin has the image of Shiba Inu, a Japanese breed dog, as its mascot. Despite its casual launch, Dogecoin is now touted as a legit cryptocurrency having a strong infrastructure. It is much faster, and transaction costs are lower than the likes of Bitcoin. It uses Scrypt, an algorithm used by Litecoin, for its proof-of-work consensus mechanism.
Transactions & Speed
Dogecoin relies on the Proof-of-Work system, which many consider dated and less scalable. When it comes to transaction speeds, Dogecoin can’t match up to Ripple. While Ripple can process around 1,500 transactions per second, Dogecoin can only process 40-70 transactions per second. Dogecoin’s transaction verification method is also very resource-intensive, proving to be a negative point for Dogecoin in the near future.
Supply & Demand
Unlike cryptocurrencies like Bitcoin or Litecoin, Dogecoin does not have an inbuilt deflationary mechanism. In a bid to mimic FIAT currency, it ended up becoming an inflationary coin with no upper cap set on the total number of coins to be minted. However, there is a cap of 5 billion on the number of coins that can be put in circulation every year. Rather than creating scarcity, there will always be enough coins needed by people to conduct daily retail transactions.
From a technical standpoint, Dogecoin doesn’t set many pulses racing. In reality, its success is entirely dependent on the hype and community following the coin has built over the years. If you want to invest in a coin that doesn’t depend entirely on the hype generated by the public, Dogecoin might not be for you.
Ripple Vs. Dogecoin: Where to Invest?
When viewed from a real-life utility aspect, Ripple is way ahead of Dogecoin. But one cannot overlook the fact that DOGE has made many of its early investors rich by wild price trends on a positive side. Investment is always a personal choice, and not every investor has the same goals and risk appetite. Hence, if you want to make an informed investment decision, consider and compare all the points projected above to understand the coins better. Once you gain clarity, you can decide whether you want to invest in Dogecoin or Ripple.