Need a place to buy XRP? Check out Uphold: https://www.jakeclaver.com/go/uphold
In this video, we dive deep into the fascinating world of XRP and XLM to explore how Ripple and Stellar are reshaping global finance. From Ripple's partnerships with banking giants to Stellar's mission to bring financial inclusion to the unbanked, we break it all down for you.
In this video, we dive deep into the fascinating world of XRP and XLM to explore how Ripple and Stellar are reshaping global finance. From Ripple's partnerships with banking giants to Stellar's mission to bring financial inclusion to the unbanked, we break it all down for you.
Category
🛠️
LifestyleTranscript
00:00Let's break down XRP and XLM, and by the end of this video, you're going to know how these two big players could rewrite the rules of finance.
00:09So let's take it back to 2012.
00:12Bitcoin was trading at just $13, and most people assumed it was just magical internet money.
00:18But one person, Jed McCaleb, envisioned a different future.
00:21After selling his exchange, Mt. Gox, he had a bigger vision.
00:25To make international money transfers as simple as sending an email.
00:29This concept resulted in the birth of Ripple, XRP, and the XRP Ledger.
00:35But here's where things get interesting.
00:37Just two years later, Jed quits Ripple and launches Stellar, XLM, and Hyperledger.
00:43For some reason, he goes the other way, but you'll find out why that matters later.
00:49But let's start with Ripple.
00:50So, Ripple has an amazing tale.
00:52Consider the present international banking system.
00:55It's old, rusty, crappy, costs a lot of money to send money over it.
01:02That's what SWIFT is.
01:03SWIFT hasn't been upgraded since the 1970s.
01:06And Ripple examined this system and concluded they could do it better.
01:10When a bank wants to send money overseas using traditional methods,
01:13first, the bank has to pre-fund accounts in that opposite country, right?
01:18And they're going to have to hold that counterparty's currency.
01:20These are called Nostro-Vostro accounts.
01:23And that locks up about $27 trillion in the current banking system,
01:28holding counterparty currencies that may be hyperinflating,
01:31which most people don't want to do.
01:33This is where Ripple comes in.
01:35Ripple uses XRP and completely removes the need for that.
01:38So banks can move money quickly using their technology,
01:41and it eliminates those Nostro-Vostro accounts,
01:44freeing up $27 trillion around the world that banks can use for other reasons.
01:51XRP's transactions settle in just three to five seconds.
01:54It costs less than a penny to send a million dollars.
01:56Compare that to Bitcoin's 10-minute and traditional banking systems of three to five days.
02:02While Bitcoin can send five to ten transactions per second,
02:07the XRP ledger can process up to 1,500 transactions per second.
02:12Now let's get technical, but I promise to keep things simple for you, okay?
02:15So Ripple uses something called a consensus protocol.
02:19Consider it like an extremely efficient voting method.
02:22Instead of using miners to solve complicated math problems,
02:26like Bitcoin does, Ripple uses validators to vote on transactions.
02:30And this is why some people call it a banker's coin.
02:33And it's also why banks like it.
02:36We can't discuss Ripple without addressing the elephant in the room.
02:39The SEC case.
02:40This was filed in December of 2020.
02:42The SEC came after Ripple,
02:45alleging that XRP was an unregistered security.
02:48However, as you know,
02:49the judge ruled that XRP was not a security when offered to retail investors.
02:53And with a new administration taking office,
02:55the market believes that this case will be resolved very shortly,
02:59which could push price of XRP much, much higher
03:03and open the way for additional institutional adoption.
03:07Now let's talk about Stellar.
03:08While Ripple was battling the SEC in court,
03:11Stellar took a completely different path.
03:13Their mission is designed for banking the unbanked,
03:17bringing financial services to the 1.7 billion people
03:20who've never had a bank account.
03:22That's what really sets Stellar apart.
03:24It emphasizes on financial inclusion.
03:28Imagine you're a worker in the United States
03:29trying to send money back to your home in the Philippines.
03:32Okay?
03:33Fees for standard service might be as high as 10%.
03:36You're going to work a whole month
03:38just to pay the fees to send money back to your family.
03:41Stellar allows you to transmit the same money
03:44for a fraction of a cent.
03:46And it gets there in seconds, not days.
03:49Stellar's technology uses something very similar
03:51called the Stellar Consensus Protocol,
03:54which is like a more democratic version of Ripple's system.
03:59Instead of relying on a few trusted validators,
04:03Stellar allows anyone to participate in transaction validation.
04:07But here's the clever part.
04:08Participants choose who they trust,
04:12creating what they call trust circles.
04:15It's like having multiple groups of friends
04:17vouching for transactions
04:18instead of just one central authority.
04:21Now let me show you the difference in real life
04:23as these things play out.
04:24So Ripple has partnered with over 300 financial institutions,
04:28including giants like Santander and Bank of America.
04:31They're even working with central banks on digital currencies,
04:33which is huge.
04:34Meanwhile, Stellar has been quietly revolutionizing
04:38remittance and microfinance.
04:41They partnered with MoneyGram
04:43to use a stablecoin-based payment bridge
04:47while they're working with Ukraine
04:50on their digital currency project.
04:52Different approach, equally impressive results.
04:55Looking ahead, both projects are positioning themselves
04:58for different versions of the future.
05:00Ripple is betting on institutional adoption,
05:02working with central banks,
05:04digital currencies,
05:06and interbank settlement.
05:07Their recent SEC victory puts them
05:09in a prime position
05:10to expand their banking partnerships here in the U.S.
05:14Now, Stellar is focusing on becoming
05:16a major platform for tokenized assets
05:18and retail cross-border payments.
05:21They're building what they call
05:22the Internet of Value,
05:24a network where money moves as freely
05:26as information does today.
05:28If you believe traditional financial institutions
05:30will continue to dominate
05:31and just need better technology,
05:33Ripple is probably the winner.
05:35For Ripple, they just want those systems
05:37to be faster, cheaper, and work better.
05:40While, if you believe in financial democratization,
05:43then it's probably a better bet
05:44to bet on XLM, Stellar,
05:46and that might be more aligned with your vision.
05:49They're not trying to replace banks,
05:50they're just trying to make them an option
05:52for everyday people
05:53instead of the main thing that they use.
05:55So look, whether you're on Team XRP
05:57or Team XLM,
05:59one thing's clear,
06:00the way we move money is changing forever.
06:03So drop a comment with your thoughts below.
06:05Are you betting on institutional adoption with Ripple?
06:07Or do you believe Stellar's vision
06:09of financial inclusion is the way to go?
06:11If you found value in this breakdown,
06:13you know what to do.
06:14Smash that like button, subscribe,
06:15and we'll see you on the next one.
06:27I'll see you on the next one.