The rise of Bitcoin in past years has shown how cryptocurrencies can work as an alternate avenue in exchange for traditional finance. Looking at the success and shortcomings of Bitcoin, many other cryptocurrencies backed by blockchain platforms started to emerge. Blockchain experts claim that Ripple and Stellar are those such blockchain platforms that ease up the prevailing conditions in cryptocurrency-based finance and payment mechanisms.
Here in this article, we will try to compare Ripple Vs Stellar and how they fare against each other.
What is Ripple?
Ripple is a blockchain platform first introduced in 2013 and was previously known as RipplePay. Jed McCaleb, David Schwartz, and Arthur Britto state that Ripple is a for-profit company and its aim is to let people send money globally in an easier way.
Ripple uses Ripple Protocol Consensus Algorithm (RPCA) to let people do cross-border payments in a cheaper way. The distributed ledger of Ripple focuses on using less energy than its counterparts for lack of any sort of mining mechanism. Instead, the validation of transactions is done through the consensus process that happens between network participants, and in this way, Ripple is able to process a large number of transactions in a faster way.
Ripple wants itself to become an alternative to the traditionally used SWIFT system, which is widely used by banks internationally, as the SWIFT mechanism consumes two or three days of time to settle an international payment. Ripple can do the same settlement of payment with its distributed ledger in a much shorter time, apart from that it has its own native token Ripple (XLM).
What is Stellar?
Stellar is an open-source decentralized protocol created to send and receive digital currency to fiat money across borders in a cheaper way. Well, Jed McCaleb didn’t stop after creating Ripple but created another gem by the name Stellar in 2014. The Stellar is run by Stellar Development Foundation which is a non-profit organization and its aim is similar to Ripple, but primarily serves individuals and small organizations which are left out by traditional financial organizations.
Stellar functions over its own Stellar Consensus Protocol (SCP), which uses it to validate transactions without any expensive hardware. Due to this Stellar is one of the most recognized projects around the world and it lets anyone build products meant for financial solutions. The Stellar network has its own’s native token by the name of Stellar Lumens (XLM) which is used to settle payments of individuals.
Ripple Vs Stellar: key differences and comparison
Here we are comparing two different sets of blockchain platforms, where the Ripple network offers low-cost cross-border payments in a faster way. While Stellar is a blockchain platform that lets anyone build a financial product over it, here both platforms have their respective cryptocurrencies that are used for rewarding the verifiers and payment of transaction fees.
- Ripple focuses on financial institutions like banks which use it to settle their intra-border transactions.
- Stellar focuses on individual users who wish to do fast cross-border transactions in a cheaper way.
- In Ripple there is no need to do mining, which mitigates the need to have power-hogging hardware, rather network participants validate a transaction using Trust-based Validation (TbV) mechanism to achieve a consensus.
- Likewise Stellar too is free from the hassles of mining and to achieve consensus it uses Federated Byzantine Agreement (FBA) mechanism.
- Ripple is a for-profit private company.
- Stellar is a non-profit purpose organization.
Conclusion
When we go on to compare Stellar and Ripple against each other, we see that both of them have their respective strengths. Stellar is more concerned about individuals who are neglected by traditional avenues of banks and financial institutions, whereas Ripple is focused on catering to financial institutions looking to revamp their remittance mechanism. Co-founder of Rejolut, Amit Kumar opines that those looking to develop a blockchain-based decentralized solution for payment remittance must seriously consider Stellar.
