Stellar and Ripple May Offer More Use Cases
It all started around the time of Global Financial Crisis of 2008, when people began to lose faith in the traditional financial system. This time also happens to coincide with when Bitcoin was born. Maybe it was Bitcoin’s increased level of anonymity or perhaps the power to circumvent the traditional banking system that attracted people. Bitcoin, thus became a much sought-after alternative, and hence critical for so many different purposes. However, as with everything else, we did not think through the other potential uses of this technology. This is where Stellar and Ripple step in. Whereas Bitcoin stands for providing privacy, Stellar and Ripple offer other advantages.
Brighter Future of Stellar and Ripple
Many are only seeing Stellar and Ripple as alternatives to Bitcoin for a store of value. The prices of Ripple and Stellar will probably never be at Bitcoin’s level anytime soon for so many reasons. Nevertheless, the banking industry did not want to lose its grip on financial transactions. Therefore, they needed blockchain technology to work in their favor, and not against their global financial interests.
Big names in the financial industry know the importance of technology in a fast-evolving financial industry. These financial institutions understand the fact that when everything else is taking place at such great pace, humans cannot rely on the decades-old financial system for remitting funds. Given that Bitcoin transaction processing times are painfully slow and expensive, other major crypto-platforms seem to offer better alternatives.
Stellar’s whitepaper claims that international money transfers involving different fiat currencies can be conducted much more cost effectively compared to traditional methods used by banks. Additionally, confirmation times are said to be around three to five seconds, so it’s clearly faster than using conventional methods for international wires. Stellar’s goal is to serve the underserved and unbanked. This would mainly be individuals living in underdeveloped countries who don’t have access to a bank account.
Ripple company is more of a for-profit entity that wants to establish close links with banks. That’s why it relies on banks to approve transactions on its blockchain. Ripple’s payment processing algorithm also claims to deliver faster transaction times, but is more centralized in nature compared to Stellar.
Instead of thinking about Ripple and Stellar as adversaries, we must consider them as two cryptocurrencies complementing each other since they are both intended to serve a different type of market.
Strategic Partnerships – Vital to the Success of Any Cryptocurrency
One of the reasons why investors trust a cryptocurrency is because of the names backing it up. Stellar and Ripple are not short of the names supporting them. Take Ripple, for example, getting support from enterprise-level organizations like Santander and MoneyGram. The backing is more than just an endorsement. These brands consider Ripple to be a crypto-platform that has many practical use cases in real-world scenarios. These partnerships help foster the confidence necessary to invest in these futuristic mediums of exchange. Similarly, Stellar is no short of endorsements behind its idea. Some of the well-known organizations backing up the concept include Stripe, Deloitte, and IBM.
Legitimacy of the Financial Transactions
When we consider big cryptocurrencies with large crowds backing them up, the speed of the financial transactions is one primary. However, besides the speed, there are many other reasons for it. Financial industry and governments are not comfortable with the idea of anonymous transactions. They have their own valid reasons for not letting everyone use money without any trace. Stellar and Ripple seem to take care of the traceability issue.
Additionally, the financial industry is not happy with the slow SWIFT system, a traditional banking system to send money across borders). They want a better alternative to send and receive money in seconds and not days. Therefore, the speed of the transaction and the ability to trace its legitimacy are both important. The US Treasury estimates that SWIFT handles an estimated $5 trillion per day. However, instead of taking a few minutes, international transactions take days. Therefore, Stellar and Ripple legitimate use cases for international financial transactions, and also increase the speeds at which they are conducted.