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.
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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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Tags: blockchainrippleStellar
It's clear from the article's breakdown of Stellar and Ripple that these two blockchain platforms are revolutionizing financial systems in distinct ways. As someone deeply entrenched in the world of blockchain and cryptocurrencies, I can offer insights into both Stellar and Ripple based on their core concepts, technological underpinnings, and practical applications.
Stellar: Stellar emerged in 2014 under the guidance of Jed McCaleb, who had prior involvement with Ripple. It operates as a non-profit entity through the Stellar Development Foundation, emphasizing a decentralized network to facilitate faster and cheaper cross-border money transfers. The platform's native currency, Stellar Lumens (XLM), serves as a means to expedite transactions at significantly low costs, a fraction of a dollar per transaction.
The Stellar Consensus Protocol (SCP) sets it apart, steering clear of energy-intensive mining methods. This approach allows for simultaneous handling of a large number of transactions at reduced expenses. Stellar targets not just big financial institutions but also aims to assist average users and focuses on providing financial solutions to developing countries.
Ripple: Ripple, established in 2013 as "Ripplepay" and later rebranded, operates as a private company using the Ripple Protocol Consensus Algorithm (RPCA). Its main objective is simplifying global money transfers by eliminating intermediaries. XRP, Ripple's native coin, facilitates cost-effective international currency transfers, attracting both individuals and businesses aiming to circumvent high conversion and processing fees.
Ripple's distinct approach involves collaboration with financial institutions, with partnerships already established with significant banking entities like American Express, Santander, and UBS, along with tie-ups with alternative payment services such as Western Union and MoneyGram.
Key Differences:
- Validator Rewards: Both networks reward validators with native coins (XRP for Ripple and XLM for Stellar).
- Platform Accessibility: Stellar allows anyone to build on it, while Ripple functions as a self-contained platform.
- Target Audience: Stellar targets individuals and developers, whereas Ripple focuses on forging partnerships with financial institutions.
- Consensus Mechanisms: While both avoid energy-intensive mining, they differ in their consensus mechanisms (SCP for Stellar, RPCA for Ripple).
- Entity Structure: Stellar operates as a non-profit entity, whereas Ripple functions as a private company.
Conclusion: Determining a clear winner between Stellar and Ripple is challenging as they cater to different user bases. Stellar boasts broader potential for various use cases due to its open accessibility for application development. In contrast, Ripple's established partnerships with banks and financial giants instill a sense of security for institutions adopting its platform. Choosing between them hinges on aligning your objectives and priorities within the realm of blockchain-based financial solutions.
The article serves as an insightful guide for those exploring these blockchain solutions, stressing the need for individual research and caution due to the inherent risks associated with cryptocurrencies.
