Ripple vs. Stellar: Fighting For The ‘Ultimate Transfer Medium’ Title

Ripple and Stellar share a lot of things, one of which is their founder, Jed McCaleb. McCaleb was a co-founder at Ripple after he left the infamous crypto exchange, Mt. Gox. He teamed up with Ripple’s current executive chairman Chris Larsen and together, the two visionaries transformed the funds transfer industry with Ripple. However, in 2014 McCaleb left and founded Stellar, a direct competitor to Ripple amidst rumors of bad blood between him and Larsen.

Since then, Stellar has found great success and is currently the eighth most valuable crypto with a market cap of over $7.7 billion. Having originally been based on Ripple’s protocol, the Stellar team gradually made several changes to the critical consensus code effectively making Stellar a whole different project.

The two companies are run very differently. For one, Ripple is a for-profit company which makes money from its banking software solutions. It also gets to sell the huge stash of XRP in a cryptographically coordinated manner to source for funds which it uses to finance operations and spearhead research. Stellar, on the other hand, is run by the Stellar Development Foundation, a non-profit organization. The organization finances its operations through selling the 5% supply of lumens which it set aside for this purpose. It also accepts donations from the general public which is subjected to tax. Stellar has also received capital infusion from some corporate donors including Stripe and BlackRock.

While the organizational structure of the two companies is significantly different, their target market is quite similar. Ripple targets banking institutions as well as payment services providers with the CEO, Brad Garlinghouse revealing in an interview that the company is currently enlisting at least one bank a week. Its products include xVia, xCurrent and xRapid which bring down the time taken to transfer funds from 5 days to just four seconds while also bringing down the costs associated to a negligible number.

Stellar also facilitates cross-border funds transfer, but it focuses on using its platform to promote financial inclusion and as it states on its website, “expand access to low-cost financial services to fight poverty and maximize individual potential.” Last year, it partnered with IBM which will see its platform being used by a number of banks for cross-border funds transfers.

Will there be a winner in the Ripple vs. Stellar supremacy battle? Ripple has the edge and this is reflected in its market capitalization which is five times bigger than Stellar’s. Ripple currently works with some of the biggest banks globally including Santander, BBVA, UBS and Standard Chartered and has continued to add even more banks and payment providers. Stellar, with its focus on humanitarian causes, also has a substantial market potential to exploit and while it may not match up to Ripple’s capitalization or volume, it still has a huge potential to succeed.


To Top