Traditional finance was blown apart when Bitcoin emerged in 2009, prompting a surge of other blockchains and projects attempting to find unique ways to alter the face of the financial industry. Two of these excitable financial solutions are Stella and Ripple, which are typically grouped together – but is this entirely accurate? Throughout this article, we’ll take a quick look at Stellar and Ripple and determine whether there’s a winner.
What Is Stellar?
Stellar was introduced by Jed McCaleb in 2014 – after having a hand in launching Ripple. The Stellar Development Foundation is responsible for running the service, and it acts as a non-profit organization – otherwise, it would defeat the point of decentralized networks. The native currency for this blockchain is Stella Lumens (XLM) and the primary goal is pretty much the same as Ripple – to make money transfers cheaper and faster.
Stellar operates using the Stellar Consensus Protocol (SCP), which doesn’t involve heavy energy consumption caused by mining. This operation technique means large numbers of transactions can be handled simultaneously and at a lower cost.
Stell Lumens is a highly recognized blockchain project on the crypto market, and it’s well worth investing in. If you’re interested, check out CryptoEQ’s Stellar report.
Who Is Stellar Used By?
Anyone looking to make quick and cheap transactions, regardless of international borders, can use the Stellar platform. Additionally, developers looking to build lending platforms, digital wallets, and payment processors can do so using the Stellar blockchain, which is open source.
The platform itself works like SWIFT but uses XLM as the intermediary instead of USD. By using a native coin, the platform can process transactions at lightning speeds, and it only costs a lowly 0.00001XLM to make transactions. In case you were wondering, this is just a fraction of a dollar, which is an absolute steal.
Stellar’s target audience is the average user, as opposed to big banks. In particular, it works hard to provide financial solutions to developing countries. When Stellar calls itself a not-for-profit organization, it means its aim is to provide help instead of rake in a profit.
What Is Ripple?
Ripple was introduced in 2013 under the name “Ripplepay”, back when blockchain technology had only been around for five years. The change in name came from a sale, which saw the platform be led by Arthur Britto, David Schwartz, and Jed McCaleb, who drove the platform to become an open-ledger for the finance industry.
Ripple is a private company built using the Ripple Protocol Consensus Algorithm (RPCA), which was used to establish the “Internet of Value” – as it’s known now. The primary aim of Ripple has always been to make life simpler for people sending money around the world.
The native coin for Ripple is XRP, and there are 100 billion in existence. The decentralized nature of Ripple allows it to eliminate the middleman, making it a much cheaper option for sending currencies internationally. Eventually, Ripple aims to be a trusted ledger that supports any currency.
Who Is Ripple Used By?
Anyone can use Ripple, whether it be for personal or business use. For example, businesses can leverage Ripple as an effective way of paying wages for foreign employees – without the need to pay extortionate conversion and processing fees. In taking aims at a competitor, Ripple targets SWIFT, which allows cheaper bank transfers – the aim here is to promote a speedier transaction (seconds).
Ripple has already seen wide adoption, with banking giants American Express, Santander, and UBS already using Ripple; more banks are trialing the service. As well as this, Ripple has partnered with alternative payment services including Western Union and MoneyGram.
Key Differences
Stellar and Ripple are two highly effective blockchains with subtle differences, but here are a few examples for you:
- Both networks reward validators with native coins (XRP or XLM depending on the chain).
- Stellar allows anyone to build over it, while Ripple is a self-contained platform.
- Stellar targets individuals while Ripple is attempting to team with financial institutions.
- Both blockchains avoid mining and high energy consumption but have different consensus mechanisms.
- Stellar is a non-profit entity, while Ripple is a private company.
The Decision
Stellar and Ripple both aim to solve problems surrounding international payments and high transaction speeds/costs, but they approach them in different ways. Stellar has more potential in regard to use cases, as anyone can leverage the network to build applications. However, Ripple will likely feel more secure to banks because they’ve already onboarded a small number. Deciding on a clear winner is near impossible, as they both appeal to different audiences. At the end of the day, the blockchain you choose to back will depend on your own motivations and goals – more research will help you reach a conclusion.
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