23 Jun, 2023

XLM vs XRP: What is the Best for Cross-Border Transactions?

xlm vs xrp


It’s almost impossible not to have come across Ripple (XRP). Regardless of your engagement with the crypto sphere, the Securities and Exchange Commission’s case against Ripple should ring a bell. Stellar (XLM) is a competitor to Ripple with similar services. This comparison between the projects will focus on how XLM vs. XRP is redefining global payment systems.

Like Ripple/XRP, Stellar is a fully decentralized network aimed at institutions and individuals needing safe banking services. Although both networks are designed to fast-track international payments securely, they are fundamentally different products.


Since the dawn of crypto, it’s been marketed as the ultimate payment solution. Bitcoin, for example, is the P2P payment network that works beyond the borders. The problem is it takes so much time to validate transactions on the Bitcoin network that we may never see it become a mainstream currency. But it turned into a store of value for many investors.

XLM vs. XRP.

Regarding cross-border payments, financial institutions deal with much more volume than retail users. To solve this scalability problem, XRP Ledger came to life through the hands of David Schwartz, Arthur Britto, and Jed McCaleb. One of the founders, Jed McCaleb, branched out a few years later and formed Stellar, which aims to solve the same problem for a different audience.

Stellar Development Foundation vs Ripple Labs

You might’ve come here to learn about the tokens XRP and XLM. But what are the tokens without the teams behind them, right?

What is XLM?

Let’s start with XLM. As we’ve seen with many crypto projects, they get popular by their token name. The same happened with Stellar. XLM is the native token of the Stellar blockchain.

The open-source blockchain allows for easier participation. The power to protect oneself from local economic turmoil by operating outside the system makes XLM a very intriguing component of the crypto industry.

Stellar lumens XLM.
Stellar Lumens XLM.

African countries are at the top of the list regarding the unbanked population. These countries also face severe inflation, which sets back the economy for many years.

A big use case for the Stellar Lumens project is to help unbanked residents of these countries and, in return, the countries crawl out of the poverty hole.

What is XRP?

The idea to “provide a better alternative to Bitcoin” started with XRP Ledger. There is a common misconception that Ripple Labs created XRP. It’s not true.

The lifecycle of XRP started with XRP Ledger, the blockchain developed by the founders we mentioned earlier. The largest holder of XRP, Ripple was launched more than one year after the XRP Ledger. Interestingly, Jed McCaleb is one of the co-founders of Ripple too! This man seems to be everywhere!

Ripple XRP.
Ripple XRP.

2 Ripple wallets hold over 3 million XRP tokens, but Ripple is not the owner of XRPL. Instead, XRPL is a public blockchain powered by community developers.

Ripple’s job is to harness XRP Ledger’s power and translate it into “Business Impact powered by Crypto.” It’s trying to solve the dreaded scalability issues faced by financial institutions worldwide.

XRP is also a major crypto liquidity provider thanks to its treasury operations. Another upcoming use case for this company is CBDC, or central bank digital currency. However, the developments are halted due to regulatory concerns by the SEC. You must know the XRP vs SEC case by now.

XLM vs XRP: Key Protocol Differences

Now that you have a clear idea about XRP and XLM, let’s go into a little more technical depth to find the main differences between Stellar and Ripple.

The Long-Term Vision

Let’s start with what the Stellar Network and Ripple have in mind for the people in the long run.

Stellar launched to bring as many people under the banking umbrella as possible. It focuses on banks’ roles in developing and lesser developed countries.

Unbanked population map.
Unbanked population map.

Ripple, on the other hand, is focused more on the enterprise side of things. The XRPL blockchain could soon power central banks, treasuries, large business transactions, and CBDC. In this XRP vs XLM battle, XRP wins.

XLM vs XRP: Consensus Protocol

In case you’re not aware, consensus is one of the fundamental concepts of blockchain technology. We all trust blockchains because transactions only work when all participants reach a consensus. No single authority, such as a private company, has any control.

Interestingly, none of the projects in our discussion use the Proof-of-Work or Proof-of-Stake consensus methods.

Stellar uses the proprietary Stellar Consensus Protocol. A group of trusted nodes form a federation, and many federations form the network. Individual federations must validate every transaction before it’s recorded on the ledger. These federations also retain voting rights.

Ripple, on the other hand, uses the Ripple Protocol Consensus Algorithm (RPCA). Transactions are confirmed after multiple rounds of agreement between the nodes. The Ripple consensus ledger doesn’t rely on mining or staking, making the voting process a more efficient and low-cost option for financial institutions.

XLM vs XRP: Tokenomics

Tokenomics in Crytpo is concerned with how blockchain tokens are created, managed, and distributed. If you want to understand the economic impact of a project, a tokenomics deep dive is the first thing you need to do.

When Ripple XRP launched in 2012, Aruther Britto simultaneously created the entire 100 billion XRP supply. 20% went to the founders, with the rest locked by Ripple. In 2017, it locked 55 billion XRP into multiple escrow accounts, releasing only 1 billion monthly. This makes XRP’s tokenomics very predictable.

XRP token distribution.
XRP token distribution.

Stellar started its journey with 100 billion XLM tokens. The developers capped the maximum supply at 105 billion and the maximum minting per year at 1%. Later, Stellar users voted to reduce the max supply to 50 billion. They achieved it by burning the excess tokens.

Stellar token distribution.
Stellar token distribution.

Blockchain Design and Target Audience

Ripple is a private company that only allows permission for banks and financial institutions to access the ledger. The idea is to create a valid alternative to SWIFT. However, the XRP Ledger blockchain is still public and allows developers to deploy decentralized apps.

Bitcoin is the center of blockchain technology.
Bitcoin is the center of blockchain technology.

Stellar is fully decentralized and provides financial services to both businesses and individuals. Users can transfer currencies beyond borders at a fraction of the cost of traditional systems. This is why Stellar labels itself “non-profit’.

XLM vs XRP: Where are They Alike

Although our comparison aims to show you the key differences between XLM and XRP, they’re alike in some areas, too.

XLM and XRP similarities.
XLM and XRP similarities.

In our experience, both are transaction processing payment providers globally. Both facilitate cross-border payments, confirm transactions, and cheaply handle international transfers. According to users, Stellar and Ripple can process 1,500 to 4,000 financial transactions per second.

Ripple XRP and Stellar have partnered with big-name technology companies and banks to handle large amounts of fiat currencies and digital assets.

Last but not least, both projects have Jed McCaleb as a key figure.

XLM vs. XRP: Which One is Better for Financial Institutions?

Financial institutions will always go for a more beneficial service. In the current state of things, Ripple XRP has the lead.

It’s a more established name in the crypto community. It has many international payments companies as partners. The market capitalization is massive compared to Stellar Lumens XLM.

Fiat currency and cards XLM.
Fiat currency and cards.

Although the transaction fees for Stellar Network and Ripple are the same, other financial institutions will likely opt for Ripple’s transaction processing service.

Then again, you have to keep the Ripple case in mind. When there are regulatory approval issues, potential risks are involved for partners and stakeholders.

How to Invest in XLM or XRP?

It’s best if you consult financial advisors before making any decision. We can’t offer investment advice. However, we can provide you with the key takeaways for these low-cost coins. Binance is the best exchange to buy or trade XRP and XLM.

Most Used
Tradable Coins
  • 600+
Payment Options
  • +3
  • 0.1 – 0.5%

More details

Binance is a great combination of low fees, deep liquidity and multiple cryptocurrencies and trading pairs. We have tested every aspect of it and it STILL holds its reign as the top exchange in the world. In our view, it is the perfect crypto exchange for both newbies and advanced traders alike.

  • Biggest exchange in the world.

  • Industry's lowest trading fees.

  • Advance trading options like leverage trading.

  • 600+ crypto options, 150+ for the US.

  • Lucrative on-site staking options.

  • Hiccups in account verification.

  • Less regulated than some competitors.

  • The corporate structure is not transparently.

You can also check out our best crypto exchange comparison before you start.

If you’re confident in your risk management abilities, follow the steps below.

Step 1: Create a Binance Account

Visit Binance.com. Locate the [Register] button. Or, you can choose the [Sign Up with Email or Phone] button from the middle of the screen.

Binance homepage.
Binance homepage.

You should land on a new page where you get to enter your email address or phone number. Do it and press [Next].

Sign up with email or phone.
Sign up by email or phone.

Step 2: Verify Your Account and Deposit

The next step is to verify your account by entering the code you received in your email or phone.

Verify email/phone with unique code.
Verify email/phone with a unique code.

Then, locate the [Deposit] button and click on it. You can use your credit card or direct bank transfer to buy crypto on Binance.

Deposit in your Binance account.
Deposit in your Binance account.

Step 3: Go to the Trade Section

When you go to the [Trade] section from your account interface and choose [Spot].

Go to Spot section.
Go to the Spot section.

After you click on ‘Spot,’ you should see the interface below. Search for XRP or XLM and choose the right currency pair.

Binance spot trading interface.
Binance spot trading interface.

Step 4: Buy XRP or XLM

You’re on the last step. We’re using XRP as an example. Enter how many XRP tokens you want to buy in the appropriate field. Click [Buy XRP] after everything checks out.

How to buy XRP.
How to buy XRP.

XLM vs. XRP: The Verdict

Now you know the ins and outs of how Stellar and Ripple designed their blockchains and what problems they plan to solve. We’ll let you judge who is creating a larger impact on the world banking system. XRP is already an established name among large financial companies. XLM is slowly catching up, intending to serve an even broader unbanked audience.