Stellar Lumens is currently the top 6 cryptocurrency according to CoinMarketCap as of this writing. It has been gaining more and more momentum in terms of its closest competitor, Ripple.
Having said that, I am more bullish in Stellar Lumens for the long term as compared to Ripple and here are the reasons why:
- First of all, from the economics point of view, Stellar Lumens has a fewer circulating supply versus Ripple. According to CoinMarketCap, Stellar Lumens has a circulating supply of 18,771,751,050 XLM versus Ripple's circulating supply of 39,372,399,467 XRP. We all know the law of supply and demand in our economics class. The lesser the quantity and the more demand in it, the price will go up. If we assume the same demand for both Stellar Lumens and Ripple, chances are that Stellar Lumens' price will appreciate more since it has lesser amount of coins in its circulating supply than Ripple.
II. We talked about demand above. The next question is, what will drive the demand for Stellar Lumens? First is the major partnership with IBM. It's all over the news. IBM is definitely one of the most successful and one of the biggest IT companies in the world. Sure, Ripple also had announced a lot of partnerships, even more than what Stellar Lumens had. However, if you deep-dived on the products of Ripple, only a few companies are using XRP as most of the companies announced by Ripple in their partnership use xCurrent and xRapid, which are other products of Ripple.
In contrast, the Stellar foundation and IBM have been in a solid partnership for quite sometime now. Notable collaborations include the following:
- IBM working on a stable-coin that is built on the Stellar blockchain
- IBM winning a contract for a 5 year deal to develop blockchain solutions in collaboration with the Australian government
- Stellar Lumens steps the cross-border transaction game up with some intriguing news the last months. TransferTo announced its partnership with Stellar to boost international money transfer. This way, send & receive in over 70 countries will be completed very speedy and efficient.
III. Stellar Lumens has its own smart contract capability while Ripple does not have. Stellar's smart contract functionality is similar to Ethereum where developers can mint their own tokens. In addition, just like Ethereum, Stellar Lumens has its own decentralized exchange where you can trade all Stellar Lumens'-based tokens .
IV. Stellar Lumens' transaction fee is very minimal as compared to Ripple. For example, in Binance, although minimal, there is still difference in the fees of XLM versus XRP.
When withdrawing XLM from Binance, the transaction cost is only 0.1 XLM whereas when withdrawing XRP, it costs 0.25 XRP. The amount varies from one exchange to another but generally, XRP has a larger transaction fees as compared to XLM.
V. Stellar Lumens is one of the 5 coins that Coinbase is exploring to add in their platform.
VI. XRP is owned 60% by Ripple Labs, the company who developed Ripple. Stellar Lumens, on the other hand, only had 5% allocation to Stellar Development Foundation (SDF). This means that XRP is more centralized than XLM and more centralization means more control. If Ripple Labs decided to sell their majority share of XRP to convert it to fiat, then chances are that XRP's price will tremendously go down.
Currently, right now, XLM's price is catching up with XRP's price. As of this writing, XLM is trading at $0.22 while XRP is trading at $0.29 in Binance. The volume of trades, in Binance, is also higher in XLM as compared to XRP.