Cryptocurrency space has over 1500 listed tokens, and many believe the actual number could be way larger than that, however among the hundreds of digital assets, only Bitcoin and Ethereum are not considered as security for the level of decentralization that their respective network posses.
According to the definition given by the SEC, only those crypto which has the necessary amount of decentralization on their network can be deemed as independent entities and the security laws do not apply to them.
Decentralization as a concept does make a lot of sense given, it promises an equal opportunity to everyone and shares the authoritarian power among peers. Having said that, decentralization also has certain limitations, where the distribution of power result in scalability issues, as it is pretty evident with the Bitcoin network.
So, the obvious question is what kind of cryptocurrency has a better future? Something like Ripple which has centralization in its consensus to help the network become extremely fast and scalable or something like Bitcoin, which is completely decentralized but facing a tough time with the scalability. We will look into various aspects of both the networks and see what we can conclude from it.
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Bitcoin and The Scalability Debate
Satoshi Nakamoto, the pseudo-anonymous creator of Bitcoin launched it back in 2009 and promised a decentralized financial system which is cheap, fast and secure. Bitcoin did prove to be fast and cheap when compared to the traditional players like Visa and MasterCard. But, as time progressed and more people flocked to the Bitcoin Blockchain, its network could not scale as per the demand and number of users.
Bitcoin started to lag behind in the game with many new cryptocurrencies coming into the decentralized space, and by the time it realized the issue with its protocol, people already had better options to choose.
After years of brainstorming the Bitcoin core team came up with an off-chain solution called the Lightning network(LN), which is still under development. However, despite LN being promoted by some of the heavyweights of the crypto space, the off-chain solutions do not seem to be convincing for the majority.
Many have complained about the complexities in the network, the level of centralization and the technical limitations which might create more problem for the Bitcoin network than the solutions it was expecting the Lightning network to provide.
Other suggestions to improve the scalability and make Bitcoin network the choice for international payements include reducing the block size, which is not really supported by many. Overall, even though many claims that the Lightning Network once fully developed would be able to help the Bitcoin network to scale better, but the chances of that looks quite dim as of now.
So, decentralization does make Bitcoin a true cryptocurrency but it also creates a lot of issues in the long run. People won’t stick to the network just for being a veteran and crusader of the Distributed Ledger Technology. If they have a better option they would go for that.
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Ripple and Its Security Tag Concerns
Ripple has been making exponential progress in terms of mass adoption and its X rapid network is being implemented by hundreds of banks across the world, with many more looking to join hands. But, the decentralized space is quite skeptical of the Ripple network mainly because of its control over the supply of their XRP token.
Many say Ripple behaves more like a traditional stock than a cryptocurrency and it is also facing a lawsuit over the status of being deemed as security. However, that cannot deny the fact that Ripple network is extremely fast and the transaction fee is negligible even when we compare it with other cryptocurrencies.
To give you a perspective, the centralized payment portals like Visa and MasterCard can take up to 3-5 days to process a transaction, and if the amount is big the time can extend even more. On the contrary, Bitcoin Takes around 4860 seconds to process the same transaction, and Ripple would transact the same amount in a mere 4 seconds!
Yes, 4 second and the transaction fee for ripple is almost negligible, while Bitcoin transaction fee is quite low when compared to Visa, but quite high when compared to Ripple.
Ripple does have a certain level of centralization in its consensus to ensure better scalability and lightning fast speed, but the database is still decentralized to ensure transparency.
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So Which is Better?
We must focus on the idea and the motive behind the formation of cryptocurrencies, it was to end the monopoly of banks who used to charge us a bomb in transaction fee while taking weeks to process our money. The problem was with the authority and not the system. Its the people running the system who makes it complex and rot for their own gains.
As a consumer, if Ripple promises to transact my money faster than other networks with almost no fee, I would definitely prefer it over the other available ones. The product does not sell because of the principles, but what it offers to the consumer.
Bitcoin did its part of making people understand that they should be in control of their money, but that does not necessarily mean people would stick to it, when better options are available only because of the principles, I mean there would be a certain section which would religiously stick to it, but masses do not really care about the technology or principles if they are getting the better option.
Mind you out of hundreds of altcoins only Ethereum and Bitcoin is not deemed as security, while rest still falls under that bracket, so pointing fingers at ripple would not make much sense unless all the others make their network decentralized enough.
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