Broadly speaking, cryptocurrency projects focus on two different use cases. On one side, we have cryptos focused on enabling payments. This goes back to Bitcoin, the pioneer cryptocurrency, and extends to a lot of other projects, like XRP. You can also compare, for example, SHIB vs XRP, two tokens focused on payments, but with different goals and backgrounds.
On the other hand, we have networks that create an ecosystem of decentralized applications (DApps), as well as the very applications that run on them. This set of projects goes back to Ethereum, the blockchain that introduced smart contracts. And we can count Avalanche as one of the leading projects in this field.
What Is Avalanche (AVAX)?
Avalanche is one of the strongest Ethereum competitors in the market. It was launched in 2020, at a time when Ethereum’s network was dealing with congestion and high fees. The goal of Avalanche is to offer a highly scalable blockchain that can numerous s and DApps while maintaining low fees and fast transaction times.
It can process up to 6,500 transactions per second, with operations becoming valid in just three seconds. To do so, it leverages a particular infrastructure consisting of three interconnected chains. One processes smart contracts, another one focuses on trades and transactions, while the other coordinates validators.
Each chain working separately ensures that the network as a whole can have a higher throughput. You can compare AVAX and XRP because, while they’re not entirely similar, they reach comparable throughputs.
What Is Ripple (XRP)?
Ripple has been around since 2012, and it has always been among the top cryptos. Its main goal is to provide a decentralized alternative to traditional cross-border payment systems. However, the defining trait of Ripple is its focus on institutional customers and partners. It can be used, of course, by individuals. But it thrives with the adoption of banks and fintech apps. For example, it was used by payment gateway MoneyGram for two years. Also, banks like Santander or J.P. Morgan have integrated the blockchain into their services.
An advantage of Ripple over traditional payment gateways is the higher throughput. For example, transactions only take three seconds to be validated, no matter the distance between the two parties. Moreover, the average fee is less than a cent, and the network can process over 1,500 transactions per second.
Technology Comparison: AVAX vs XRP
Both AVAX and XRP employ consensus mechanisms that are similar to what is known as Proof-of-Stake (PoS). However, each method is particular to its specific blockchain. Avalanche implements the Avalanche Consensus, where small sets of validators check a group of transactions and then consult other validators. This process is repeated until all nodes agree on the same valid transactions.
Ripple created the Ripple Consensus Protocol, which also draws from PoS mechanisms. In this method, nodes vote on the validity of each transaction and then reach a consensus about which ones are valid throughout the network. This process, of course, is automated, and takes place in only a few seconds, to ensure a high transaction speed.
Market Performance and Investment Outlook
Avalanche and Ripple are among the most valued coins in the crypto market. XRP ranks #7, with a market capitalization of $30.2 billion. AVAX is five spots below, ranking #12 with a capitalization of $10.5 billion. In of daily trading volume, the difference is much higher. While AVAX has a daily volume of $273 million, XRP is over $1 billion above, with a $1.2 billion daily volume.
However, in of price performance, AVAX has had a better year. Since October 2023, when the latest bull run started, it has grown 171%, while XRP is only 7% above its last year’s price. Weighing one against the other, XRP seems like a better investment option, but AVAX is likely to yield higher gains in the long term.
AVAX or XRP: Which Should You Pick?
Each of these cryptocurrencies is different. We can’t think of them strictly as investment options. In order to evaluate their potential, we must know related data like use cases, adoption, and key features. Ripple, for example, is a well-established project, and that can give investors assurance regarding its future. But Avalanche focuses on DApps, one of the most popular use cases in crypto nowadays. So, in the end, it depends on what you prefer and what strikes your attention.
