Stellar runs a network of decentralized servers with a distributed ledger. Stellar, on the other hand, was created with the idea of allowing its users to transfer their assets and money globally, and the main focus is to provide service to the unbanked, usually from developing countries.
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Ripple only works with established banking and financial institutions to upgrade and modernize their cross-border transfer technologies. Ripple, on the other hand, cannot be mined or joined unless you are a financial institution or a member of a payment network system. Since Stellar works on a blockchain consensus protocol and has open membership, anyone can join this network since there are no specific requirements nor special permissions. While Stellar is an open blockchain platform, Ripple is closed and centralized. There are, however, some significant differences between them. So it appears that Stellar and Ripple have a lot in common, which is understandable given that both projects are led by the same person. Moreover, both Ripple and Stellar were so similar to the point that they used the same protocol during their early days, until Stellar got its own Stellar Consensus Protocol (SCP) and its own cryptocurrency called Lumen (XLM). Just like Ripple, which was founded a few years earlier, Stellar was created to be a payment technology that could connect various financial institutions and reduce both the time and cost needed for cross-border transfers. It was founded in 2014 by Jed McCaleb, who is known today to the crypto world as a co-founder of Ripple and founder of crypto exchange Mt.Gox. So what else should you know about Stellar? Moreover, Stellar already has quite a few digital tokens that are pegged to different currencies, like Peru’s Sol, Chilean’s Peso, digital Euro, and some of the projects are still in the making. So basically, it is carved to create fiat-pegged stable coins.įor instance, a widely known stablecoin USDC has one of the versions that is built on the Stellar network. What does that mean? That means that everyone who holds a digital version of a traditional currency can treat it like traditional money since it can be exchanged for the same amount in the end. All that leads to the fact that you estimate a 1:1 relationship between a traditional fiat currency and its digital counterpart. And when this digital token of the US dollar is given back to you, you redeem it in turn for one of the traditional dollars that you have in your deposit. You can also use Stellar’s network to buy digital versions of fiat currencies, which is a useful alternative for people in countries where the national currency is weak and they want to save in a different currency.įor instance, if you issue a digital version of a fiat currency, say USD, and someone brings you a traditional dollar, you’ll give them your digital token. Stellar apps and third-party services that operate as network anchors make it simple for users to send money to others, regardless of where they live. To put it simply, Stellar works with any type of money: it can be used to transfer a digital representation of the USD, Euro, British pound, Bitcoin, Ethereum, or any other currency out there. Stellar is an open-source payment technology that, according to the development team, makes it possible to “create, send and trade digital representations of all forms of money”, and all the world’s financial systems “can work together on a single network”.
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