Stellar or Ripple: which coin should you invest in?
Stellar and Ripple: two cryptocurrencies that can seem very similar. Ripple has a larger market cap, but Stellar has a lot of advantages of its own. Why should you choose XLM over XRP? Here are a few reasons!
Even though Ripple is no.4 on the CoinMarketCap list of the largest crypto coins (with $1.3 billion) and Stellar is only no. 14 with $500 million, we still believe that XLM will win out in the end. That’s also why we created a wallet for lumens, not for Ripple. And if you were to ask us which crypto to buy right now, we’d suggest Stellar.
There are many reasons why we believe that Stellar is a superior project and a better investment. But before we get to them, let’s remember one thing: they were both created — rather, co-created — by the same person, Jed McCaleb. Ripple was launched in 2012, but a few years later McCaleb began to get disappointed with where the project was going, so he went his separate way to create Stellar.
Now we’ve got history out of the way, let’s talk about the differences.
Who is it for? In a few words: XRP is for banks, XLM is for people. Actually, Ripple is a protocol that’s completely separate from the coin XRP. Those 100+ financial institutions that the company works with don’t even use XRP, but just the protocol, in order to facilitate cross-border transfers between different banks.
Lumens was designed as digital money for the unbanked — for those 1.5 billion people who don’t have bank accounts. It’s easy to create tokenized versions of fiat currencies on the Stellar blockchain, too. In the future, people in Africa, Asia, the Americas, etc. will be able to send money almost instantly, almost for free using Stellar. We feel it’s a stronger use case that corresponds better to the purpose of cryptocurrency than what Ripple does.
Can you launch dApps with it? Stellar supports smart contracts, so you can create any sort of decentralized application with this blockchain, just like on Ethereum. But Ripple doesn’t have a smart contract functionality, it’s just a protocol for sending money. So Ripple will never become a massive decentralized ecosystem — but Stellar can.
What’s the consensus model? Both XRP and XML use unique consensus protocols that are very different from Proof-of-Work and Proof-of-Stake. However, since Stellar’s protocol came later, it built on the one used by Ripple and improved it. It was actually designed by a famous MIT professor. It’s sort of a next-generation consensus model compared to XRP.
How decentralized is it? It’s a well-known fact that Ripple is highly centralized. The company decides which financial institutions in its network can participate in the consensus. Simple users like you and us would never be able to play a role. By contrast, anyone can take part in the consensus on the Stellar blockchain.
Yet another aspect of this issue is the control over coins. Ripple as a company controls over 60% of all XRP, and it can sell them as it finds fit. When Jed McCaleb left the company, his holdings were actually frozen, and this caused an uproar in the crypto community. The Stellar Foundation used to control more than 80% of all coins, but then they burned a huge part of their reserves several months ago, so that now the company controls only about 30%.
This last point about centralization is the fundamental reason why many analysts worry about XRP’s long-term prospects. It’s been growing due to a boost from Bitcoin, but it doesn’t have many internal growth drivers. If there’s a new downturn in the crypto market, or if the Ripple management conducts yet another sell-off, the price can fall sharply.
On the other hand, Stellar has lots of reasons to grow, such as new partnerships and the sheer fact that it’s so undervalued. In the past couple of months the price of XLM surged faster than Bitcoin, Ethereum and almost any other coin from the top 10.
Therefore, our forecast is that XLM will keep growing. As for Ripple, we’re not so sure. We don’t want to give any investment advice, but if you have any lumens in your XLMwallet, you should definitely leave them there. By the end of 2020, you may be able to get a good profit, while XRP might eventually lose a lot of what it’s gained since March.
Do you agree with our analysis? Share your opinion in the comments!
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