Blockchain is a revolutionary concept that is not only disrupting the fintech space but also various other industries including software development. Businesses have now started to explore the capabilities of blockchain by building blockchain applications and hence the demand for blockchain development platforms is steadily increasing.

So how can you select the ideal blockchain platform for your business?

The answers to these questions could, inter alia, depend on the following factors:

• Do you require blockchain in the first place? (such as to automate a predictable, repeatable process or connecting multiple stakeholders into one process)
• How does the product fit into the existing workflow?
• What Blockchain Consensus Protocol does the platform use to achieve consensus?
• Does the platform support smart contracts functionality?

 
We hope to cover these aspects and more in our upcoming blogs, but this article delves deeper into two types of blockchain platforms that are particularly relevant from the perspective of securities tokens – Ethereum and Stellar.

To those who have been in the blockchain industry for a while now, Ethereum’s name is synonymous with platform development, the creation of custom tokens, and the launch of crowdfunding campaigns through Security Token Offerings (STOs).

In contrast, another platform which remains highly usable in the real world and has unfortunately not seen the same level of adoption and fame as Ethereum, is Stellar.

Stellar, which is primarily a payment solution platform that also doubles as a development solution, has been in operation for a few years now.

Since both platforms share the purpose of development solutions, let’s go ahead and take a look at how similar they really are, what sets them apart from each other, and if one is really better than the other when it comes to an overall value proposition.

1. Flexibility:

If you are a business looking to develop more complex smart contracts, then Ethereum should be a viable option as Ethereum’s smart contracts are Turing complete, meaning anybody can develop complex applications on Ethereum without limitations. 

On the other hand, if you are looking to develop and launch basic applications and tokens - the simplicity, speed and cost effectiveness of Stellar is best suitable.

2. Security:

The Ethereum’s Turing complete programming capabilities produce the code that’s less auditable and is at a higher risk of exploitable vulnerabilities. 

Stellar’s smart contracts are simple and less flexible along with the implementation of various authentication constraints and encryptions. This makes operating with Stellar smart contracts safe and secure.

3. Compliance:

A major difference between Stellar and Ethereum is KYC/AML compliance.

Arrangements can be done such that tokens built on the Stellar blockchain will only be traded between KYC/AML approved addresses. Stellar has a provision where accounts proven to be owned by a terrorist are frozen.

On the other hand, Ethereum linked ConsenSys has announced the launch of a compliance system that enables ETH and ETH based tokens to analyse crypto trades to remain KYC/AML compliant.

ConsenSys is led by Ethereum’s co-founder, Joe Lubin, aiming to keep watch for illegal activities on these platforms to prevent a possible shutdown by the government or interference for not being compliant.

4. Liquidity:

In case of Ethereum, there are more than enough ERC20 competent wallets and exchanges to launch, store and trade these tokens.

Start-ups don’t have to rely on 3rd party exchanges to list their tokens as Stellar has its own built-in Distributed Exchange (DEX) where all native tokens can be listed and available to trade since Day 1 of their STO.

5. Scalability:

The average settlement time for Stellar transactions is 5 seconds in comparison to 3-4 minutes for Ethereum transactions. The transaction fee on the Stellar network is considerably small when compared to that on the Ethereum network as well.

Thus, Ethereum and Stellar both remain as exemplary solutions in their respective segments and it all comes down to the kind of tokens and the unique features in terms of functionality, security and scalability that they have to offer as both blockchains are differentiated enough to co-exist and attract different types of token issuers.