XRP and Bitcoin are both digital currencies, but they differ significantly in their purpose, underlying technology, transaction mechanisms, and overall design philosophy.

Purpose and Use Case:
Bitcoin was created as a decentralized digital currency to serve as an alternative to traditional fiat money. Its primary focus is enabling peer-to-peer transactions and acting as a store of value. XRP, on the other hand, was designed by Ripple Labs specifically for fast, low-cost international payments and currency exchange between financial institutions. While Bitcoin aims to replace banks, XRP seeks to work with them to improve cross-border money transfers.

Transaction Speed and Cost:
One of the most notable differences is transaction efficiency. Bitcoin transactions can take several minutes or longer and incur relatively high fees, especially during network congestion. XRP transactions, by contrast, are typically settled in seconds and cost just a fraction of a cent. This makes XRP particularly appealing for high-volume financial transactions and real-time settlement needs.

Consensus Mechanism:
Bitcoin relies on a proof-of-work (PoW) system, where miners solve complex mathematical problems to validate transactions and secure the network. This process is energy-intensive and time-consuming. XRP does not use mining. Instead, it operates on the Ripple Protocol Consensus Algorithm (RPCA), which relies on a group of trusted validators to agree on the order and validity of transactions. This makes XRP more energy-efficient and scalable but also introduces a degree of centralization, since Ripple Labs initially controlled a large portion of the XRP supply and validator nodes.

Supply and Distribution:
Bitcoin has a maximum supply of 21 million coins, with new coins being gradually released through mining. XRP has a total supply of 100 billion tokens, most of which were created at once and distributed by Ripple Labs. While Bitcoin’s scarcity is a core aspect of its value proposition, XRP’s pre-mined nature and centralized distribution have sparked debates over decentralization and control.

In essence, How does XRP differ from Bitcoin? in that it prioritizes speed, cost-efficiency, and integration with the financial industry, while Bitcoin focuses on decentralization, security, and long-term value storage.