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Beyond Bitcoin


ripple coin

writer icon Roy van de Sande     ISB   |   Business & Investment     🕐 22. May. 2018


When it comes to total market value, no other eCurrency comes close to the total value of Bitcoin. How do Bitcoin's competitors manage to differentiate themselves from other currencies, stay relevant, and make an increase in value? 


Today, eCurrencies have a great impact on society, in particular when it comes to making payments online. The question is whether eCurrencies have a sustainable future ahead of them, or if they are a lucrative bubble waiting to burst.

Stellar

Stellar is a company whose core concept involves transferring money from your bank account to an online account. This makes it possible to pay for online services that are compatible with Stellar. One perceived advantage is that Stellar offers the possibility to trade different types of currencies with other Stellar users. 


For example, if a person from the United States wanted to get Euros on their Stellar account, they could trade their US Dollars in exchange for Euros. This works for many other currencies in the world, including cryptocurrencies. However, there is a cost involved. To be able to make a transaction you must pay a fee, using so-called Lumens (XLM on the cryptocurrency market), Stellar's own cryptocurrency. 


Pay to use the currency

For each transaction made through Stellar, there is a fee of, on average, 0.00001 Lumen. This comes down to about 400 000 transactions per 1 USD. Stellar states that this cost for each transaction has been added in order to prevent malicious over-flooding of the system, known as a DoS attack. They argue that the low cost quickly becomes a high price when multiplied to the levels needed to sustain a DoS attack, and that the price serves as a deterrent.


Ripple

Ripple is very similar to Stellar. They have created an online network for transactions between different companies using different currencies. Yet, whilst Stellar is usable for everyone, Ripple's service is more exclusive as the service is provided to banks and payment providers.


According to Ripple, Bitcoin can handle three to six transactions per second, whilst their own currency (XRP) handles up to 15 000 transactions per second, as of 15 July 2017. This allows users of Ripple to process larger transactions much quicker than other eCurrencies. Each transaction with Ripple only takes 4 seconds, compared to a transaction with Bitcoin which can take up to an hour. 


Ethereum

Something completely different from both Ripple and Stellar is Ethereum. One of the concepts of Ethereum is to be able to invest, much in the same way as popular crowdfunding website Kickstarter. A contributor has the option to invest a portion of their Ethereum in a project. Their money will be held by what their website describes as a contract. 


A form of crowdfunding

This contract has an expiry date which is connected to a goal proposed by the borrower. An example of a goal could be getting a product ready for launch. If upon reaching the expiry date, the goal is met, then the Ethereum is deemed to have been successfully invested. In the case of the goal not being met, the Ethereum is released back to the contributor. Ethereum believes that this creates risk-free investment opportunities.


Core differences between them
Each of the afore-mentioned eCurrencies provides a unique service, made possible due to the infrastructure that the internet provides. One of the reasons they can co-exist is the fact that they each have a different core purpose. It remains to be seen if each and every one of these eCurrencies has a sustainable future ahead of them. Yet, as long as they continue to provide a useful service and explore new options for currency used in global transactions, eCurrencies may actually be here to stay. 




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