Not all cryptocurrencies are created equal. Don’t tell that to investors in XRP, though. In the last month the currency owned by Ripple, a company that bills itself as using blockchain technology to build the payment system of the future, soared in price by a whopping 700 percent. XRP’s overall value pushed up to nearly $150 billion and briefly made Chris Larsen, Ripple’s cofounder, one of the richest people on the planet.

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The exuberance was fueled, at least in part, by a belief that anyone buying up XRP was getting in on the next Bitcoin. But for some it could end up as a very expensive lesson that what they bought into is a different animal altogether.

To begin with, Bitcoin relies on a network of “miners” running code that validates transactions and keeps the currency secure. Bitcoins are released as rewards for this mining and act as an incentive to keep the network running (see "What Bitcoin Is, and Why It Matters"). In Ripple’s setup there are no miners; all 100 billion coins of XRP that exist were created when the network launched in 2012. Its creators kept 20 billion and gave the rest to the company. Since then, Ripple has been “methodically” distributing tokens to clients, but it still holds nearly 50 billion in an escrow account.

That’s not all. Ripple uses a novel consensus algorithm (PDF) to validate transactions, and it recommends that clients use a list of identified, trusted participants to validate their transactions. This stands in stark contrast to Bitcoin, where anyone can become a miner.