Ripple was created in 2012 by American programmers David Schwarz and Jed McCaleb, with Chris Larson aiding in the business side of things. The project has its own cryptocurrency called XRP, which has the third highest market capitalization out of all cryptocurrencies. There is often confusion about the difference between Ripple and XRP, so let me clear things up and then move to the Stellar vs Ripple battle.
Ripple is the name of the company that is developing the software technology. This technology is powered by Ripple’s native cryptocurrency – XRP.
The Ripple technology was created to allow banks to transfer money internationally in just a few seconds, at practically no cost. The reason the founders decided to build it was because the current cross-border payments system is slow, expensive and inefficient.
This industry is huge, with an estimated $150 trillion being transferred between international banks every year. However, most of these transactions go through a centralized organization called SWIFT.
Sending payments through SWIFT can sometimes take days before it reaches the receiving bank, especially if less popular currencies are used. SWIFT also need to use correspondent banks, which helps connect both the sender and receiver to the network.
Every third party that is involved in the transaction charges their own commission, which is why it costs banks so much to send money overseas.
However, the Ripple system uses something called distributed ledger technology, which allows banks to bypass third parties and instead trade bank-to-bank.
The XRP cryptocurrency can also be used by banks using the Ripple technology, as it helps provide liquidity between two different currencies. In total, there will be 100 billion XRP coins issued, with the Ripple team holding almost 60% of this supply.
It is important to remember that although the Ripple protocol is being targeted to the banking industry, it can be used by anyone to send and receive funds, wallet-to-wallet.
So, now that you know what both Ripple and XRP are, the next part of my Stellar Lumens vs Ripple guide is going to give you an overview of Stellar Lumens!
Stellar Lumens was created two years later in 2014 by Jed McCaleb, who was a co-founder of Ripple. Just like I mentioned earlier, where there is a difference between Ripple and XRP, there is also a difference between Stellar and Lumens!
Stellar is the technology that allows funds to be sent and received quickly and cheaply. Stellar also uses a distributed ledger protocol to process transactions and its code is very similar to Ripple’s. In fact, lots of people think that it is a fork of Ripple, however, the Stellar Lumens developers say that it is not. So, the Stellar vs Ripple is already starting.
Lumens is the cryptocurrency that supports the Stellar technology and it is sometimes called XLM, which is its ticker symbol. Lumens has done very well since it was released and it is now a strong multi-billion dollar top 10 cryptocurrency.
Although Stellar can also be used by banks, the team are aiming their protocol towards the developing world. The idea is that by using Stellar, everyday citizens and organizations from poorer countries will be able to transfer money internationally at practically no charge, in just a few seconds.
The Stellar protocol can also exchange two fiat currencies directly if there is enough activity, however, if this isn’t possible it can just use Lumens to bridge the two together.