In the start of the article, let me tell you that the coins are knowns as Stellar Lumens(XLM) and XRP (XRP). The networks are known as Ripple and Stellar. We will use the term “Ripple” and “Stellar” in this article for coins because most of the people use these terms for coins in the cryptocurrency community. They help people in across border transactions, and they are the two most renowned cryptocurrencies.
However, they have lots of differences apart from the main purpose of facilitating the transactions across borders.
Stellar Vs Ripple – Target Users
The big difference between these two cryptocurrencies is their target markets.
In short, we can say that the Ripple targets the banks while the Stellar targets the people who don’t have the bank accounts and these are nearly 2 billion people worldwide.
As most of you know, banks transfer a lot of money every year. When banks move their funds across borders, they have to pay a huge sum of money as fees. We can estimate that banks transfer funds every year in billions and trillions that includes the transferring of funds between banks and customers transferring the funds from one bank to another.
If banks start transferring their funds in cryptocurrency. They can have a cryptocurrency in multi-billion dollars.
However, Stellar is a bit different. The main purpose of Stellar is to give services to those people that can’t afford the bank account or in simple words. You can say, “they don’t use it”. Majority of people use bank accounts in western countries.
But, as we discussed earlier, there are nearly two billion people in the world without banks accounts. They can’t use the financial services like transferring money, saving accounts, checking accounts, loans and credit lines.
The focus with Stellar is to provide financial service to these people without a bank account. The fees on Stellar is also less than the normal banks.
Stellar Vs Ripple – Level of Decentralisation
Level of decentralisation is also a very important factor about cryptocurrency. Ripple and Stellar are both reasonably decentralised currencies, but Ripple is a bit more centralised than Stellar because of two reasons.
- People who can take part in consensus(mining) must be institutional holders.
- The wallet of Jed McCaleb was locked when he stopped working in the company.
So these two points are against the basic principles of cryptocurrency, which is decentralisation, and these are the two issues which cryptocurrency is trying to solve.
So Stellar is leading if we consider decentralisation of the network.
Stellar Vs Ripple – Decentralisation of Tokens
Decentralisation of tokens is also one of the main characteristics of cryptocurrency. No one will like the cryptocurrency that can influence most of the cryptocurrency that is available. They can easily dump the cryptocurrency and dump the price with this much control.
59% of the coins are under Ripple’s control that can be obtained, whereas 30% of the remaining XLM is under Stellar’s control. None of them has done a good job when it comes to decentralising the tokens. But 30% is strongly preferable than 59%. So clearly, the winner is Stellar.
Inflation has the greatest impact on prices above all else. Ripple has an established XRP supply. Not only does XRP have a fixed supply, but it also has a decreasing quantity each year because Ripple has agreed to charge all transaction fees. This means that due to the low supply to the market, Ripple’s price could rise during overtime.
Stellar is a little different. XLM supply increases by 1% annually. This means that demand must increase by at least 1% annually to raise prices.
Stellar is losing when it comes to its inflation plan. Ripple’s decline in supply means that as demand increases, its price rises.
Stellar Vs Ripple – Extra Features
Ripple and Stellar both provide fast transfers with minimum fees but the benefits you cannot get the benefits from Ripple that you will get from Stellar.
Stellar has a feature of smart contracts which can be programmed into the coin automatically. This is extremely useful in buying and selling in businesses. Secondly, smart contracts can be programmed easily as compare to other smart contracts.
Lastly, You can grow your own cryptocurrency in Stellar and can launch an initial coin offering from it. In this aspect, it’s very identical to Ethereum. Because of these three factors, we are giving Stellar the upper hand in this category. It’s a far more useful cryptocurrency than Ripple.
So, that covers the variations between Stellar and Ripple 2020. These coins are not as unique as they seem, but they do possess some unique features. The biggest contrast is in currency decentralisation and inflationary and deflationary policies.
As stated previously, we are giving Ripple the edge when it comes to long-term investment. Yet Stellar is likely to stay here – it will remain smaller than Ripple in the near future.