Due to the similar manner in which their blockchains operate, many observers often compare Stellar and Ripple. And it is not by chance. Jed McCaleb played a role in establishing both of these companies. He worked with Ryan Fugger on Ripple and XRP before helping to establish Stellar. However, they parted ways due to some differences.

Background to Ripple

The XRP token is used by the Ripple network. It was established in 2012. The technology is called Ripple, while the token is called XRP. It is based on the distributed ledger model. As a result, no third party is required to facilitate the transfer. It has enabled the transfer of money across borders swiftly and at a reduced cost. As an added bonus for banks, XRP can offer liquidity.

The Securities and Exchange Commission is currently embroiled in a legal battle against Ripple Labs Inc on accusations of engaging in the illegal raising of funds. The SEC claims that the company and two of its executives raised more than $1.3 billion through unregistered security, XRP. As a result, there has been a long-running legal dispute over XRP, which has slowed the cryptocurrency’s growth.

XRP has a current market cap of $47.8 billion, ranking it as the 7th most valuable digital asset at the time of this writing.

Background to Stellar

The firm was founded in the year 2014. XLM, or Lumens, is the name of its cryptocurrency. Stellar, like Ripple, is a low-cost, high-speed payment network. As of the time of writing, Stellar is valued at $8.3 billion, making it the 25th most valuable cryptocurrency in the world.

Stellar’s money is more accessible to the common person. This is what makes it stand out from the rest of the pack. Stellar, in contrast to Ripple, is geared for individuals, particularly those in less developed regions of the world.

As a result, people living in some of the most impoverished regions of the world will have access to the global economy. In addition, the charges aren’t exorbitant, making transactions easier for them. Stellar’s technology allows for direct fiat money exchanges as well.

Comparing Ripple versus Stellar

  • Supply and demand

XRP is deflationary, and Lumen is inflationary. As part of its protocol, Stellar has an inflation program that is automatically activated. One percent (1%) of Stellar network charges circulate back into the system, resulting in an annual increase in XLM’s supply by 1%. In addition, Stellar’s concept is that the inflation process will guarantee currencies are spent rather than retained, thereby helping the network to better accomplish its intended job.

Ripple is deflationary. A minimum amount of XRP must be held in reserve in order to open a Ripple account. When a new account is opened, these reserve fees are essentially removed from circulation because accounts cannot be closed. In principle, the scarcity of XRP should rise as time goes on because a small bit of XRP gets burnt with each transaction.

  • Target market

Both platforms have distinct targets in mind. As previously stated, Ripple is primarily aimed at financial institutions. There is a lot of money to be made in the banking sector, after all. Stellar, on the other hand, focuses on individuals, particularly those from less-developed nations, enabling them to participate in the global economy in a better way.

  • Transaction mechanism

As both Ripple and Stellar were created to compete against SWIFT in terms of cost and speed, this is the most crucial factor in determining which coin wins.

Ripple uses a consensus ledger and a system of network servers to verify transactions in a similar manner as Stellar. One of the most notable aspects of XRP’s performance is its ability to execute 1,500 transactions per second.

Stellar utilizes a technology that speeds up transaction processing by allowing just trusted nodes for validating transactions, as opposed to the whole network. Because of its peer-to-peer nature, Stellar is fully decentralized when it comes to appointing trusted nodes in the network’s infrastructure. Even while many Ripple enthusiasts may opine that the Ripple network is decentralized, Ripple Labs has most of the nodes, which means that there is an authority in charge. This largely negates the principle of decentralization.


Stellar and Ripple are distinct, although there are some similarities between them. Even while one of them is sufficient, you may not realize it at first glance. The two are comparable in the following ways:

  • They are both built on distributed ledger technology.
  • There is no mining permitted on any of them, and each has its own private nodes.
  • Because of their high transaction speeds and extremely low cost, they are an excellent choice for many people and institutions in international money transfers.

In summary

The market potential for both Stellar and Ripple is enormous. In contrast to many of the most popular cryptocurrencies, which claim to be P2P payment systems, these two are focused on banking and personal-level financial services. Unlike Ripple, Stellar is more geared at people. However, XRP may be harmed by an SEC litigation now pending, giving XLM the opportunity to be one step ahead of it.