What makes them alike?
That does it for the similarities, allowing us to move onto the interesting part – differences. Stellar Lumens (XLM) and Ripple (XRP) offer distinct approaches to solving one task.Ripple was created as a project capable of solving the main international transfer problems by lowering the commissions and reducing the amount of time spent on payment processes, where the basic idea for Stellar is correcting Ripple’s shortcomings.
XRP was founded as a corporate solution, making Ripple a completely closed corporate network managed solely by Ripple labs. They also own 60% of XRP issued tokens.
Stellar, however, is an open and decentralized project where the development team keeps only 5% of XLM tokens. Decentralization is the main difference and a great advantage of Stellar.
There was a time when Stellar was considered Ripple’s fork. That was until Stellar’s team found an error in Ripple’s code, wrote a new one, branded it and launched the project from scratch. Now Stellar and Ripple don’t have a common chain.
XRP operates on the Ripple Protocol Consensus (RPC), which transfers transactions only to so-called “trusted” nodes. Ripple, in fact, has a whole list of “trusted nodes” that is quite difficult to get on. Turns out, the XRP token owners are not considered members of the Ripple network until they are a part of the coveted list.
XLM is based on Stellar Consensus Protocol (SCP). Instead of using blocks to record the nodes after reaching consensus, they prefer “quorum”. Stellar Lumens uses XLM tokens to confirm transactions in network bridges upon converting and transacting any currency. Ripple does not even consider using XRP tokens, except for the payments when liquidity is required.
In comparison to Stellar, Ripple can boast of more than 150 large banks and financial institutions that have already joined the network. They target financial organizations rather than individuals, so being just the latter won’t get you into the network. Yet, even though Ripple’s marketing forces are stronger, Stellar is not losing ground. Jed McCaleb, the founder of Ripple, who left the project, took XML under his wing. Moreso, Ripple was not the only one to have partnered up with large companies. For example, IBM helps the team work not only in Europe, but also in the “third world” countries. And last but not least, Stellar allows ICO conduction, a feature gladly used by Mobius Network.
All that said, even though XRP is great, XLM is not inferior.