Is XLM the Next XRP? A Deep Dive into Their Rivalry

The introduction of cryptocurrency has changed the landscape of financial transactions, from depending on central institutions for processing transactions to a decentralized approach to financial asset investment, crypto has made everything easier and more secure than ever before.

With several cryptocurrencies available, XLM and XRP serve as the leading players in the platform, both offering exclusive features and capabilities to stand out among the rest. Providing streamlined interbank settlements, XRP has partnered with major financial sectors, on the other hand, a decentralized approach and financial inclusivity have attracted many business firms to XLM. 

What is XLM?

XLM is the native token of Stellar, a decentralized platform enabling financial services for everyone providing fast, secure, and low-cost transactions. Launched in 2024, stellar aims to facilitate international transactions by eliminating high-cost barriers. The decentralized approach and financial inclusivity have made the platform usable to small business firms and individual users. 

Features of XLM

• XLM enables fast, secure, and low-cost international transactions. 
• XLM operates on a distributed ledger called blockchain technology using a consensus mechanism known as Stellar consensus protocol. 
• The ability to accommodate various currencies within the system allows seamless transactions of fiat currencies with digital assets and vice versa. 
• By prioritizing financial inclusivity, the stellar platform helps everyone access decentralized financial services, eliminating the limitations of money and demography.
• By using ‘Trustlines’, a two-party agreement that enables the conduct of transactions without the actual transfer of money, the token ensures speed and efficiency within the network. 
• The burning mechanism utilized on the XLM tokens increases the scarcity, raising the demand and value. 
• Stellar distributes large amounts of free XLM tokens through airdrops for individual users and business firms as a widespread adoption strategy.

How does XLM work?

XLM’s decentralized platform, Stellar enables the exchange of money and digital assets among different parties. It uses a blockchain network to record and confirm transactions across nodes, called a Stellar blockchain network, enabling faster, more secure, and low-cost international transactions. XLM also serves the purpose of incentivizing node participation and funding new projects in the Stellar platform. 

Benefits and Drawbacks of XLM

Benefits	Drawbacks
No barrier cross border transactions.	Small circulating supply.
High-speed transactions.	Financial inclusivity is less appealing to large business firms.
Low transaction fees.	Regulatory issues affect the value.
Multi-signature security	Competition from other cryptocurrencies like XRP.

What is XRP?

XRP is the native token of Ripple aimed at creating fast, low-cost cross-border transactions eliminating the hurdles of cost and time associated with conventional financial institutions. XRP operates on an XRP ledger which can operate independently of the Ripple Lab. Unlike many other coins, XRP is not mined through cryptographic techniques, instead, all the tokens are generated during the time of the Ripple payment network launch. XRP allows financial institutions to quickly convert fiat currencies before transferring them to international banks. 

Features of XRP

• XRP uses the XRP ledger, a decentralized cryptographic ledger to promote fast, and low-cost cross-border transactions. 
• By utilizing XRP ledger consensus protocol, XRP offers scalability and smoothness in payments, each transaction can be processed within 3 to 5 seconds. 
• The ability to control and maintain fast and high-volume transactions without affecting performance makes XRP handle high transaction throughput. 
• The inbuilt decentralized exchange allows the exchange and transaction of any asset issued in the XRP platform.
• No tokens were mined, entire tokens were created at the time of the launch of the Ripple payment network.
• The platform in which XRP operates is not fully decentralized, they can control the servers accessing the platform.

How does XRP work?

The transactions are processed using the Ripple protocol consensus algorithm, by comparing the transaction records and verifying them until a consensus is reached, XRP  allows 1500 transactions per second. It is used as a bridge currency to transfer fiat currencies across national borders. It allows a path for crypto exchange, either a direct currency exchange or using XRP as an intermediate to offer much cheaper and swift transactions.

Benefits and Drawbacks of XRP

Benefits	Drawbacks
High transaction speed.	Lacks proper tokenomics.
Low transaction fees.	Regulatory uncertainty affects price stability.
Less prone to market fluctuations.	Contradicts the fully decentralized nature of crypto tokens.
Used by major financial institutions.	Using of ripple’s technology without using XRP tokens limits the utility and hence the price.
Minimal energy consumption.	Increased competition.

Why XLM is said the next XRP?

Stellar, the blockchain network of XLM is one of the most popular blockchain networks, developed by Gavin Wood, a co-founder of its current competitor, Ripple. When Ripple aims to serve institutions to send money globally at low cost, Stellar facilitates financial inclusivity to everyone, both aiming to disrupt the payment industry. 

The price of XLM is surged to heights in the past few years. The ongoing crypto bull run and the reducing fear and greed index are marked as the main reasons for the increasing value. 

However, the existing overbought market conditions can lead to a potential bearish reversal.

XLM v/s XRP

Similarities	Differences
Both XRP and XLM are developed to facilitate cross-border payments.	XRP is backed by a private company, making it a centralized platform. On the other hand, XLM is a fully decentralized platform.
Both XRP and XLM offer swift, secure, and cheap transactions.	XRP prioritizes cost efficiency for promoting international transactions while XML emphasizes cost reduction for promoting financial inclusivity.
Integrated by many technological companies and financial institutions.	All tokens of XRP are created at the time of the launch of the Ripple network, whereas XLM tokens are gradually released through airdrops and initial coin offerings.
	XRP uses the Ripple protocol consensus algorithm, on the other hand, XLM utilizesthe  Stellar consensus protocol.

Final Thoughts

XLM and XRP have created significant revolutions in the crypto industry. XLM has addressed the issue of high-cost transactions that can’t be afforded by small business firms and individual users and provided financial inclusivity within the platform, making transactions cost-effective. On the other hand, XRP aims to promote international transactions with low cost and higher speed transactions. Developed by the same person, their varying path highlights the broader use cases of blockchain platforms.