Key Takeaways
- Both XRP and XLM are promising cryptocurrencies with unique advantages.
- XRP is often associated with its potential role in cross-border payments, while XLM aims to make financial services more inclusive, targeting individuals and small businesses.
- Investors should carefully consider their risk tolerance and investment goals before deciding.
While Bitcoin (BTC) may have paved the way for alternative payment systems, there are now countless digital currencies available for investors to choose from.
Two of the most prominent currencies are XRP and XLM, both co-founded by Jed McCaleb. This article will discuss the similarities and differences between these cryptocurrencies and help investors determine which one to choose based on their respective use cases, market dominance, and potential risks and rewards.
XRP vs. XLM: Similarities And Differences
XRP was created in 2012, while XLM was created in 2014. Both tokens attempt to revolutionize banking and payments in the 21st century, as most banking technologies used today are analog and outdated, dating back to the 1970s.
XRP focuses more on facilitating business-to-business transactions, while XLM is trying to solve issues for the world’s unbanked population. Despite their differing focuses, the two token projects offer breakneck and cheap transfer speeds, making them attractive options for businesses and individuals.
Both Payment Systems Are ISO 20022 Certified
In addition, both payment systems are ISO 20022 certified, meaning they have been standardized and deemed fit for global financial systems. This is a significant accomplishment for both currencies, as it proves they can meet the demands of the modern economic world.
Developments
Despite the SEC lawsuit against Ripple Labs four years ago, the company has not stopped developing the XRP Ledger (XRPL). For example, The XRP Ledger has implemented various upgrades to improve its transaction capacity and speed, making it suitable for handling more significant transactions. Moreover, this also includes support for additional asset types, decentralized exchanges (DEXs), and smart contracts. Lastly, the XRP community has remained active and supportive, contributing to the development and growth of the ecosystem.
Also Read: Automated Market Maker (AMM) Is Now Live On The XRP Ledger (XRPL)
The same could be said for XLM as well! The network has been focused on enhancing its ability to connect with other blockchains and traditional financial systems, facilitating seamless cross-border payments. It is also worth mentioning that the Stellar Development Foundation (SDF) has introduced smart contract functionality for XLM, allowing for more complex applications on the platform.
Also Read: What Is Stellar (XLM)? All You Need To Know About It
Verdict: XRP Or XLM?
Like other cryptocurrencies, XRP and XLM have experienced significant fluctuations. Investors often compare the two when evaluating potential investments in the crypto market, as both coins share similar goals but have distinct differences in their target markets, organizations, and distribution models.
Now, the question remains: Which crypto is the better investment, XRP or XLM? It is worth noting that both have good use cases and significant potential.
However, XRP has the most dominance in market capitalization and what it is trying to solve regarding bank partnerships and overall outlook. This is not to say that XLM is not a good investment, as it also has a great team and solid potential.
Regarding the risk and reward ratio, XRP has become more favorable following the resolution of the Ripple vs. SEC lawsuit in early August 2024. The case outcome will significantly impact the future of XRP and its use in the financial world. However, investors must also consider the risks involved in XRP, such as future regulatory challenges and market volatility.
Final Thoughts
Both XRP and XLM have the potential to revolutionize the payments industry. They both offer fast and cheap transfer speeds and have significant use cases. However, XRP has the edge regarding market dominance and potential, while XLM is focused on solving issues for the unbanked population.
Investors should weigh the potential risks and rewards when deciding which crypto to invest in. Ultimately, both cryptocurrencies have strengths and weaknesses, and investors must carefully consider their individual goals and risk tolerance when making investment decisions.
