By Max Bibeau | USA

Many people in the cryptocurrency community aren’t exactly fond of Ripple, for a large variety of reasons. I already wrote an article about some of the many problems with Ripple, which you can read HERE.

So yes, Ripple has many problems. But it does aim to solve a pretty critical problem in the banking world, namely the high fees that bank transfers can incur. However, many critics argue that Ripple goes about solving that problem in an inefficient way that undermines the purpose and potential of the blockchain.

One member of the Ripple developer team saw the same problems that critics did. So in 2011, programmer Jed McCaleb left the Ripple developer team and used Ripple’s existing code to create Stellar. McCaleb hopes to use the blockchain to provide banks with the solution they need, all while staying true to his goals of decentralization.

The differences between Ripple and Stellar are small but critical. First, Stellar addresses one of the largest criticisms of Ripple – its centralization. While Ripple is a for-profit company, working with banks to achieve its goals, Stellar is a non-profit organization, that simply works on the Stellar network. Ripple owns XRP, while Stellar only works on developing the network that is XLM. Also, Stellar solves another big problem users saw within Ripple – frozen assets. McCaleb’s own $1 Million in Ripple assets were frozen as he left the company in 2011, so he knows firsthand the frustration that comes with not being able to control your funds. He made it a priority to build protections against this in the Stellar network he created.

Stellar, using Lumens (XLM) as its native asset, specifically serves as a method of quickly and cheaply sending value around the world, where it can be transferred into the local fiat money. For example, if I want to send $100 overseas, I could easily be charged upwards of 10% in banking fees. However, the Stellar network works around this masterfully. To simplify the process as much as possible, say I send $100 to the overseas bank, which then accepts the Stellar transaction. Then, my $100 is credited to a pool account while it searches for the best exchange rate through the Stellar network. Once my $100 is exchanged to the local currency, it is credited to the overseas bank which then transfers it to the specific account I wished to send money too. And the best part? This entire process takes place in 2-5 seconds, and costs around .00001 Stellar Lumens, currently valued at around $0.0000047.

Obviously Stellar has some incredible use cases, from everyday business transactions overseas to individuals sending remittances back home. It could be critical in financially connecting both economies and people around the world.

The cryptocurrency also has an inflation mechanism, built into the Stellar network. It works by adding Lumens to the network at a rate of 1% a year. Instead of injecting the inflated tokens into big banking partners like Ripple is doing, the Stellar network has a built-in voting system that injects the new tokens into the accounts with the highest number of votes. Every week, Lumens are distributed to every account that gets more than 0.05% of votes within the network. Everybody that holds Lumens potentially has a number of votes equivalent to the amount of Lumens they hold, at a 1:1 ratio. The Lumens from the inflation pool are distributed depending on the percentage of votes each account receives. For example, if an account receives 1% of overall votes, it receives 1% of the inflation pool. Lumens from transaction fees are included in the inflation pool. You can read more about the inflation mechanism of Stellar directly from the nonprofit’s page HERE.

For these many reasons, Stellar is superior to Ripple. It is currently valued at around $0.47 and can be bought on Binance.com or most other major exchanges. You can read more about Stellar from the organization’s website, Stellar.org.