DIFFERENCES

The main distinction stands in the ventures’ objectives. While Ripple deals with transfers between financial institutions, Stellar’s focus is on the low-cost transactions between currencies in less developed countries via its native asset, the Lumen (XLM). Ripple’s mission is to substitute common monetary transfer procedures, such as SWIFT and encourage banks to use and buy XRP in exchange for lower costs, higher speed and omission of a third party, and to tackle the present liquidity issues.

Secondly, the way consensus is reached differs from a blockchain, as Ripple uses “Proof-of-Correctness” and Stellar the “Stellar Consensus protocol” to validate transactions through nodes. From this stems the matter of being a centralized vs decentralized network, Ripple is the former since it has a previously endorsed index of nodes to trust. On the contrary, Stellar does not have a chief agency specifying a list, but the network is based on shared trust, and consensus and is being built by nodes that join in. Stellar is therefore able to cope with the limitations of traditional banking.

Whilst Stellar is supported by a non-profit, Ripple is generally considered to be profit-based because of its focus on financial institutions, and its XRP is deflationary as the amount will eventually decrease owing to the fact that XRP disappears once it is spent.