Stellar vs. Ripple – Which One Should You Choose?
Posted by Frank Gogol
Ripple and Stellar are two of the companies that offer cryptocurrency, and because they are not as popular as Ethereum or Bitcoin, you might not know a lot of things about them. However, upon reading about them, you notice some similarities, which makes it harder for you to choose between them. Fortunately, that is exactly what we are here for – to show you what makes the two of them different.
If you want to pick between Stellar vs. Ripple, all you have to do is read this post and get familiar with the things that set the companies apart from each other.
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Stellar vs. Ripple: Overview
Ripple and Stellar have similar blockchains, and because of that, many people end up comparing the two. They are two altcoins that have been around for more than 6 years. Back when one Bitcoin reached the level of $20,000, Stellar and Ripple also gained a lot of traction.
Both Stellar and Ripple have been founded by the same individual, Jed McCaleb. He collaborated with Ryan Fugger in order to make Ripple and XRP. Its goal was to become a crypto network that didn’t rely on the same energy-consuming process as Bitcoin. Later on, though, McCaleb and the rest of the team at Ripple started having major disagreements. As a result, McCaleb decided to leave. After that, together with Co-Founder Joyce Kim, McCaleb started Stellar in 2014.
Comparing Ripple and Stellar
In order to compare Stellar and Ripple, you need to understand them and their differences. Here are some details about both of them so that you can make an informed decision.
What Is Ripple?
Ripple is a network that uses the XRP token. It was created back in 2012 by Chris Larsen and Jed McCaleb. Ripple is the technology used, while XRP is the token. The crypto has the 3rd market capitalization with the XRP/USD price being $0.32.
Ripple allows banks to make transfers more easily and much faster. In general, people using Ripple can make international transfers that are completed in a matter of seconds, and the price is very low too. This is to prevent any cross-border payment system challenges, like high prices, inefficiency, and lack of speed.
No Third-Party Transfers Needed
The company uses distributed ledger technology. Because of this, there is no need for a third party to make the transfer possible. Transferring money across borders can happen quickly while cutting some costs in the process. On top of that, XRP can provide liquidity, which is great for banks.
Also, even though banks are the ones that use it the most and they are the target market, anyone is free to use Ripple as they wish. Even individuals who are passionate about cryptos can take advantage of the amazing technology.
What Is Stellar?
Stellar was founded by Jed McCaleb, one of the Ripple co-founders. The company was created in 2014. Its cryptocurrency is known as XLM or Lumens. Just like Ripple, Stellar is also very affordable and quick in making transfers, and it has a very similar coding. Since it was established by one of Ripple’s co-founders, this isn’t such a big surprise.
Stellar’s cryptocurrency is more accessible for the average individual. This is what makes it unique. Unlike Ripple that is more directed towards banks, Stellar is focusing more on people, especially those who live in parts of the world that are still developing. As such, people who live in rather poor areas of the planet will be able to interact with the global economy. Not only that, but the prices are not high either, so transactions will be easier for them to perform.
Direct fiat currency exchange is also possible thanks to the protocol that Stellar follows. Usually, the money of the sender is changed into Lumens, whereas Lumens is converted into the currency of the receiver.
One of the most obvious differences between the two is the fact that they have different algorithms. Not only that, but XRP coins are deflationary and Lumen coins are inflationary. Also, Stellar is not as centralized as Ripple.
Then, the two also have different target markets. As we mentioned earlier, Ripple is mostly directed towards banks. Banks are a very large market, after all, and they can bring a lot of money. Meanwhile, Stellar is focusing on individuals, particularly people from less-developed countries, giving unbanked people an opportunity to interact with the market at a global level. Because of that, Stellar likes to call itself “not for profit”. This is because it considers itself a platform that helps people rather than a platform that wants to make a profit.
Also, Stellar has a very experienced team, but it is much smaller compared to Ripple. They don’t focus on marketing as much as their competitors either. Ripple, on the other hand, is a very large organization and has way more capital raised. In the end, their target market is different, and it generates more capital as a result.
They are different, but they do share some similarities. Because of that, you may think that one of them would be enough. They are similar because:
- They both rely on distributed ledger technology
- Mining is not allowed on either of them and they both have private nodes
- Transactions are very fast and almost free, which is why they are so great for international transfers and payments
Still, they are two separate platforms with separate goals among other things.
Which Is the Right Crypto for You?
It may be hard to choose between Stellar or Ripple’s cryptos. But your decision should be based on the near-term SEC action outcome. XRP has been removed from some of the largest exchanges. As a result, exchanging the coin is something that will have more limitations, and there will be less volume potential as well.
Because an SEC lawsuit is ongoing, it will be much harder for XRP to reach its full potential. A lawsuit was filed against Ripple, which took place because Ripple sold 1.3 billion dollars of unregistered securities.
So, focusing on XLM may be the better decision, at least for 2021. Stellar will likely grow the platform more and more, and there will be more partnerships coming. Therefore, the coin may get more traction slowly but surely. When this happens, XLM may be more likely to attract investment.
Stellar and Ripple are both technologies with some great cryptocurrencies. XRP and XLM have gained more traction over the recent years, and XRP was the one that gained more capital overall. It is more focused on banks, while XLM targets individuals instead. But since there is an ongoing lawsuit involving Ripple right now, XRP may be affected, which may give XLM the chance to get one step ahead of it. If you want to invest in one of them, XLM may be the better option.
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