• Fri. Jun 21st, 2024

Cross-Border Payments Solution: Which Is Better – Ripple Or Stellar?

Steve Kornacki

BySteve Kornacki

Oct 27, 2023

The rivalry between Ripple and Stellar is similar to a sibling rivalry but in the world of cryptocurrency. However, a closer look reveals subtle differences between these two cross-border payment networks.

While both platforms share a common founder and a mission to streamline international payments, their target audiences and objectives diverge significantly. This guide looks into these distinctive features.

Ripple Vs. Stellar Overview

At first glance, Ripple and Stellar appear to offer the same proposition: swift, low-fee, and energy-efficient international transactions. Furthermore, their network architecture exhibits striking similarities, with some observers claiming that Stellar is a derivation of Ripple’s original platform.

However, the distinction between platforms became more visible over time. Ripple aimed to revolutionize cross-border transactions by collaborating with established financial institutions.

In contrast, Stellar, founded two years after Ripple by the same Jed McCaleb, prioritized inclusivity, aiming to provide financial services, particularly remittance payments, for unbanked populations globally.

Ripple’s Payment Solution Approach

Ripple introduced the Ripple Protocol Consensus Algorithm (RPCA) to expedite secure transaction validations, sidestepping the conventional Proof-of-Work consensus mechanism. Ripple’s strategic approach of partnering with leading financial institutions, such as American Express, aimed to modernize and accelerate international money transfers.

However, this approach has been marred with centralization and XRP supply issues.

Stellar’s Payment Solution Approach

In contrast, Stellar leveraged blockchain technology for the benefit of the unbanked. This strategy distinguishes it from Ripple’s payment solution system.

XLM, the platform’s native token, fueled the Stellar Consensus Protocol (SCP) to achieve fast and cost-effective fiat currency transfers without reliance on a central authority. Furthermore, Recent developments, like the Soroban platform, indicate Stellar’s move towards greater utility, enabling DeFi applications and a wider array of financial transactions.

Key Similarities

Nevertheless, Ripple and Stellar, despite their unique trajectories, share fundamental attributes.

Shared Beginnings

The fact that Jed McCaleb co-founded both Ripple and Stellar is a significant commonality. While McCaleb co-founded Ripple, his evolving vision for a more inclusive financial system led to the birth of Stellar. This shared founder provides a strong foundation for their similarities.

Distributed Ledger Technology

At their core, both Ripple and Stellar rely on distributed ledger technology. Their transactions are recorded across multiple nodes, enhancing security and transparency. This foundation is crucial for ensuring the integrity and trustworthiness of their respective networks.

Unique Consensus Mechanisms

Ripple and Stellar have engineered their consensus mechanisms that are scalable and energy-efficient. These mechanisms form the backbone of their networks, ensuring that transactions are verified and validated securely.

Cross-Border Transactions

The primary goal of both Ripple and Stellar is to improve cross-border transactions. They aim to make these transactions faster, more affordable, and transparent, solving a critical pain point in the realm of international finance.

Key Differences

While Ripple and Stellar share a common founder and a commitment to transforming international payments, they have distinctly different approaches and target audiences.

Target Stakeholders

Ripple’s primary focus has been on partnering with established financial institutions to optimize cross-border transactions. In contrast, Stellar has taken a more inclusive approach, aiming to provide solutions for the unbanked on a global scale. This key difference in target stakeholders underscores their contrasting philosophies.

Partnership Strategy

In alignment with their distinct visions, XRP and XLM have pursued different partnership strategies. Ripple has sought alliances with established financial institutions and banking providers, exemplified by partnerships with entities like Santander.

On the other hand, Stellar has chosen to collaborate with platforms that share similar goals, as typified by its partnership with Moneygram.

Profit Vs. Non-Profit Model

Ripple operates with a for-profit model through its company, Ripple Labs. In contrast, Stellar operates under a non-profit model through the Stellar Development Foundation. This difference in operating models reflects their respective missions.

Legal Situations

Ripple Labs, led by CEO Brad Garlinghouse, has been engaged in a prolonged legal battle with the U.S. Securities and Exchange Commission (SEC).

This legal dispute has had significant implications for XRP’s growth and development. In contrast, Stellar has not faced a comparable level of regulatory scrutiny, providing it with a different legal landscape.

Approach To Smart Contracts

Stellar is actively working to incorporate smart contract compatibility into its network through the Soroban platform. In contrast, Ripple has largely steered clear of providing support for smart contracts.

Blockchain Performance

Ripple’s XRP Ledger boasts impressively quick transaction confirmation times, while Stellar confirms transactions within a similarly swift timeframe. Their respective transaction-handling capacities are competitive, ensuring they outperform traditional banking systems and other cryptocurrencies.


Ripple’s XRP and Stellar’s XLM exhibit distinct tokenomic structures reflecting their unique visions and operational strategies. Meanwhile, recent adjustments have led to differences in total and circulating supply, influencing their market capitalization.

Final Thoughts

Stellar’s integration of smart contract technology and its smaller market cap hint at greater growth potential. However, Ripple’s established reputation and potential resolution of legal challenges position it as an attractive option for financial institutions seeking blockchain solutions.

While they perform admirably in practice, their unique visions and goals should guide the choice for each individual or institution.

Steve Kornacki

Steve Kornacki

Steve Kornacki, a respected author at Big Trends Signals, uses his deep online trading acumen to create comprehensive guides and balanced reviews, empowering traders in their digital pursuits.

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