Stellar vs Ripple
Stellar and Ripple are both among the leaders in cryptocurrencies. Albeit being seemingly identical at a first glance, especially due to their focus on improving cross-border payments, there are features setting them apart. We will explore these in detail and provide an omnibus outlook on both.
Ripple is a financial payment network created to allow fast, inexpensive global transfer of money. It uses the XRP token, which serves as a bridge to accomplish this movement of currency. Stellar, on the other hand, aims to provide financial services to the unbanked and fix issues such as speed and scalability. The desire to help the people without access to financial institutions, mostly in third-world countries encouraged Jed McCaleb to leave Ripple after two years and become founder of Stellar in 2014.
DIFFERENCES
The main distinction stands in the ventures’ objectives. While Ripple deals with transfers between financial institutions, Stellar’s focus is on the low-cost transactions between currencies in less developed countries via its native asset, the Lumen (XLM). Ripple’s mission is to substitute common monetary transfer procedures, such as SWIFT and encourage banks to use and buy XRP in exchange for lower costs, higher speed and omission of a third party, and to tackle the present liquidity issues.
Secondly, the way consensus is reached differs from a blockchain, as Ripple uses “Proof-of-Correctness” and Stellar the “Stellar Consensus protocol” to validate transactions through nodes. From this stems the matter of being a centralized vs decentralized network, Ripple is the former since it has a previously endorsed index of nodes to trust. On the contrary, Stellar does not have a chief agency specifying a list, but the network is based on shared trust, and consensus and is being built by nodes that join in. Stellar is therefore able to cope with the limitations of traditional banking.
Whilst Stellar is supported by a non-profit, Ripple is generally considered to be profit-based because of its focus on financial institutions, and its XRP is deflationary as the amount will eventually decrease owing to the fact that XRP disappears once it is spent.
Both networks have cross-border payments and remittances among their principal objectives.
SIMILARITIES
Both networks have cross-border payments and remittances among their principal objectives. They do not permit the public to contribute to verify transactions, unlike Bitcoin and its miners. Moreover, the supply of the coin is in hands of the creators and they are able to amend the number circulating at any time. The ability to ensure fast and cheap transactions is due to the use of a distributed ledger in case of both currencies.
All things considered, it is important to recognise that Stellar, unlike Ripple, also serves as a multifaceted global asset-transfer marketplace on top of being a cross-asset payment platform and exchange. Although seemly related in their activity, Stellar’s focus on individuals looking for a secure and inexpensive way to exchange and transfer currency, and Ripple’s collaboration with banks and other financial institutions make their divergence more comprehensible.
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