Stellar has been in the news as it’s partner IBM entered into a partnership with 6 banks. These banks will utilise Stellar’s XLM to issue stable coins and for cross-border remittance payments. However, a Reddit user has raised a question asking ‘Why did IBM go with Stellar instead of XRP?’
Stellar and Ripple have always been competitors, however, XRP has had the upper hand for the longest time from partnerships to market caps. The twist is that both cryptocurrencies were created by the same person. Ripple was created in 2012 by David Schwarz, Jed McCaleb and Chris Larson.
In 2014, Stellar Lumens was created by Jed McCaleb who was a part of the team that created Ripple. Most often, people think that Stellar is a fork of Ripple.
Although a digital currency, most persons have accused Ripple of been a bankers cryptocurrency and not decentralised. Ripple’s currency XRP is used by banks utilising its technology. XRP helps provide liquidity between two different currencies. Also Stellar allows funds to be sent quickly and cheaply however, Stellar focuses on developing countries and allowing cross border transactions with little or no charges. Also, Stellars cryptocurrency Lumens (XLM) can directly exchange two fiat currencies or utilise the XLM in bridging them together.
Why Stellar (XLM)?
While we could go on and on about the similarities and differences between XRP and XLM, we need to know why IBM chose Stellar over Ripple. IBM had announced the official launch of IBM Blockchain World Wire which is supposed to be a simple model for cross border payments. The project will be using the Stellar protocol and IBM has this to say, “It reduces intermediaries and allows users to accelerate settlement time often in seconds by transmitting monetary value in the form of digital assets, commonly known as cryptocurrencies or stable coins.”
What exactly attracted IBM, the simplicity of the Stellar network or its reduced transaction fees? IBM will have to reveal that aspect to us. However, IBM says that it is the network operator while Stellar is at the protocol level.
So far, the IBM Blockchain World Wire, “has enabled payment locations in 72 countries, with 47 currencies and 44 banking endpoints,” and will expand its payment network globally as it gains regulatory approval from more countries.
Benefits For Stellar (XLM)
However, Stellar poses a threat to Ripple as this partnership will see Stellar accepted as payments solution in more than 50 countries. As it stands the partnership has garnered a lot of attention for XLM as the partnership announcement came with a surged in price by as much as 11% early Monday morning. In a matter of hours, the price of XLM moved from $0.108 to $0.118.
While the battle for global payment coverage continues, the partnership between Stellar and IBM is a welcome development for the cryptocurrency.
Do you think IBM should have picked Ripple over Stellar? Share your opinion with me in the comment box.