XRP vs XLM: What New Crypto Investors Should Know

Ripple (XRP) and Stellar (XLM) are two valuable cryptocurrencies that support the transfer of currency between parties and borders.
But while Stellar is open to the public, Ripple is mainly for banks and financial institutions. Both of these have similar mechanisms for operation, as they take little time to transfer and have little to no fees. The inflation and deflation points are also different between the two, with XRP being deflationary and XLM being inflationary.
XRP and XLM are altcoins that focus on managing cross-border transactions. XLM is available mainly to those who don’t have access to traditional banking functions. XRP is for people who do business with banks. These two currencies are different in many ways, but you’ll also find in this brief guide that they have a few similarities.

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XRP or XLM? Which is the Better?

How Does XRP Work?

Ripple or XRP was introduced in 2012 as a cryptocurrency written in the C language. The currency uses a global blockchain that allows people worldwide to complete payments with each other. For reference, Ripple is the company behind the blockchain, while XRP is the cryptocurrency.
The Ripple system lets people complete XRP transactions faster with minimal transaction fees. XRP resolves the problems surrounding traditional cross-border payments, including slow transaction speeds and high fees.
XRP uses a permission ledger for access. The log means that only those who can be identified under specific points can access the blockchain. The system limits XRP access to banks and other financial entities, ensuring the security of the network.

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How Does XLM Work?

Stellar or XLM is a cryptocurrency formed by the Stellar Development Foundation. Released in 2014 and also featuring an API code using the C programming language, Stellar allows people to transfer fiat currencies as digital money. Users can complete transactions with their preferred fiat currencies. Stellar is the company behind the system, while XLM or Lumens is the cryptocurrency.
But what makes Stellar different from Ripple is that Stellar is accessible to people who don’t have access to banking. It works for people in less-developed countries that don’t have the same banking structures compared to more economically developed countries. The network takes one’s fiat currency and converts it to XLM or Lumens, which convert to the recipient’s currency.
The design is highly accessible and does not require someone to have to enter a bank to use it. The permissionless blockchain makes it possible for people to access the network and start trading in moments. The universal nature of XLM also ensures that people can trade the currency without having to worry about physically transferring specific fiat currencies to others that might not be readily available for trade.

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What Makes XRP and XLM Different?

Accessibility

Both platforms have an interesting background. Jed McCaleb co-founded Ripple in 2012 as a platform designed for banks to access. But in 2014, McCaleb co-formed Stellar to focus on providing an open approach to banking. The method of operation that Ripple and Stellar use are similar, but it is the difference in accessibility that stands out.
Stellar is an open-source platform, meaning anyone can access the system. But Ripple requires people to receive permission to use it, meaning only banks and other financial groups can use the blockchain.

Inflation and Deflation

XRP is a deflationary currency, meaning the purchasing power of the currency will likely increase as time goes on, due to its increasing scarcity. This is because XRP’s transaction fees are burned, or permanently removed from circulation. Meanwhile, Stellar has a fixed annual inflation rate of 1 percent. The inflation helps ensure people who can access XLM can continue to receive a decent value for the currency as inflation progresses worldwide.

Distributed Points

XLM was distributed to the public upon release, with more than 90 percent of the currency going to the public. At least half of the XRP tokens are owned by the currency’s founders. They are aiming to regulate the XLM system and ensure its continued functionality.

What Makes XRP and XLM Similar?

Coin Limits

Both XRP and XLM have limits to how many coins are available. Mining is not available for either cryptocurrency, as all coins available are already minted. XRP features a maximum supply of 100 billion coins, while XLM has 50 billion. About half of each is in circulation as of October 2021.

Fees

The two networks also feature little to no fees. The minimal transaction fees points to each cryptocurrency’s intended purpose: to help people transfer fiat currencies securely, with minimal cost. Transaction costs are consistently lower than equivalent fiat currencies.

Transaction Time

The transaction time for each currency is relatively minimal. It takes about five to ten seconds to complete a transaction. The design helps people transfer funds quickly, which is better than what people get out of traditional bank transfers.

Side-by-Side Comparison of XRP and XLM

Ripple and Stellar are both useful when transferring money across borders. But the two still have some substantial differences, even if they were both created by the same person. Here’s a comparison of these two options.

Feature	XRP	Stellar

Formation	2012	2014
Founder	Jed McCaleb	Jed McCaleb
General Purpose	To transfer funds between borders	To transfer funds between borders
Accessibility	For banks and other professional institutions	To the general public
What Influences the Value?	Deflation	Inflation
Maximum Available Supply	100 billion	50 billion
Who Is it Distributed To?	Mostly controlled by the founders	The public hold a vast majority of it

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