Ripple and Stellar Lumens are two blockchain projects considered to be very similar in many ways. They’re also thought to be each other’s more direct competitors both within the cryptosphere and outside of it, in the traditional financial world. In this article, we’ll explain how they’re alike and how they differ.
Let’s start with the more general, maybe less significant similarities. The technology in both projects is alike, and not just because they are both blockchains. As a matter of fact, it used to be identical because Stellar Lumens started out as a Ripple fork. The reason for that is in other of the similarities they share: Jed McCaleb.
The man who created the eDonkey network was involved in Ripple’s Foundation. He then left that project behind to start Stellar Lumens. The last generic similarity is in the use case both projects pursue.
Ripple has been almost wholly focused, since its inception, in tackling the problem of settling international money transfers quickly and cheaply. It’s in the project’s DNA. Stellar Lumens wasn’t born with such a clear purpose in mind, it instead was supposed to be a general purpose cryptocurrency and blockchain, but over the last few months, it’s also adopted the same use case as a priority. This is why they’re considered close competitors, they both want to solve the same problem using their own blockchain technologies.
Ripple is a private company based in California. Its blockchain infrastructure includes XRP, a digital currency, which has been successful enough to become the world’s third-largest by market capitalization.
Ripple’s project, however, is not just about its own blockchain and token. The company also develops software solutions that banks and remittance services can use to eliminate all or most of the friction in international transfers.
Also, it has a robust entrepreneurial leadership that seeks very aggressively to find strategic partners all over the world. More than 200 banks of all kinds and countries are either testing or using Ripple’s technology, some of them are also using Ripple’s XRP currency and, on average, a new bank jumps in Ripple’s wagon every week.
Stellar Lumens (XLM)
The Stellar Lumens blockchain project is supported by the Stellar Development Foundation which, unlike Ripple, is a nonprofit organization. The project’s currency is called Lumen (XLM). It’s been around since 2014, and its primary purpose nowadays is, like Ripple’s to facilitate cross-border transactions.
The project’s founder serves as the Foundation’s chief technological officer.
Stellar also seeks to recruit as many users for its payments technology, but it’s a new player compared to Ripple, so it’s been slower to secure meaningful strategic partnerships. With one exception: IBM.
Big Blue has chosen Stellar as the blockchain network it will use to develop all its blockchain projects. This is a massive hit for Stellar, and if you remember what IBM’s partnerships did to corporations like Microsoft or Intel, you can see why this could matter very much in how the story develops.
Ripple vs. Stellar Lumens
Both projects have strengths. According to experts, Ripple’s technology and the network is superior to Stellar’s. Also, Ripple has been around for a longer time, which has enabled it to have an advantage over Stellar. Another advantage in Ripple is that its cryptocurrency is already in the world’s top 3, while Stellar is the only 9th.
Stellar, on the other hand, is supposed to be a more versatile blockchain. Being a nonprofit organization also gives it something of an advantage because it seems more transparent for some institutions and individuals. And, of course, it has IBM’s support, which could go a really long way.
In the end, the only factor that will decide which of both projects manages to dominate the international transfers market will be adoption. Not the technology nor currency stability nor capitalization. Ripple’s technology could be the preferred option, but if IBM’s influence makes Stellar Lumens a more popular choice among the world’s banks, then Stellar could win the race, even if XLM remains volatile and with a relatively low market capitalization.
It’s too early to decide who will be the winner. It could even be unnecessary to choose a winner because this market is so vast that there’s plenty of room for both projects to do well without getting in each other’s way. But we’ll have to wait and see.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.