Even though cryptocurrency values have hiccupped a bit in recent months, they're still the top-performing asset class since the beginning of 2017 by a mile! Having begun last year with an aggregate market cap of $17.7 billion, the combined market cap of all digital currencies as of March 26 was just over $303 billion. That's better than a 1,600% gain in just shy of 15 months.

While bitcoin is often credited with leading the charge higher, the past six months have been all about the emergence of other cryptocurrencies from its shadow. One such virtual currency that has sprung into the limelight is San Francisco-based Ripple and its XRP token.

A physical silver Ripple coin surrounded by circuitry representing blockchain.

The symbol for Ripple. Image source: Getty Images.

Ripple makes a splash

Last year, Ripple surged higher by more than 35,500%, making it easily one of the top performers among all cryptocurrencies. Its run higher has been directly correlated to the company forging a number of partnerships for its XRP token and/or its blockchain -- the digital ledger underpinning most cryptocurrencies that's responsible for logging all transactions without the need for a bank.

Ripple got its big break in mid-November when it was announced that it had partnered with American Express (NYSE:AXP) and Banco Santander in a real-world cross-border payment test. Under the terms of this test, American Express users making non-card payments with AmEx FX International to U.K. Santander accounts will have those payments processed over Ripple's blockchain and settled almost instantly. Ripple, which focuses solely on financial institutions, has suggested that its average processing time is around four seconds. Compared to the wait of up to five business days that can occur under the current banking system, Ripple offers financial institutions a game-changing solution with its blockchain.

Similarly, its token is proving useful in luring potential enterprise customers. In January, Ripple announced a partnership with money-transfer service MoneyGram International (NASDAQ:MGI) that would test its XRP token within the xRapid platform, which helps financial institutions that have on-demand remittance needs. In effect, MoneyGram could pilot the use of XRP as an intermediary currency when moving funds across borders. For example, sending money between the U.S. and Mexico could be seamless and occur within seconds if those funds were converted from dollars to XRP, and then from XRP into pesos. If successful, MoneyGram may soon have a major competitive advantage.

In total, Ripple has landed five brand-name partnerships, and it is regularly expanding bank access to its RippleNet system. 

A person using a smartphone to send money all over the globe.

Image source: Getty Images.

Beware the mighty Ethereum, right?

With over 1,600 investable cryptocurrencies, competition abounds, even for a niche-focused virtual currency like Ripple. Quite a few folks would probably surmise that Ethereum is the biggest threat to Ripple's success -- and a strong case can be made for such an idea.

Ethereum's blockchain technology is currently being tested by 200 global organizations via the Enterprise Ethereum Alliance in a variety of industries, including banking. If there is solace for Ripple, it's that Ethereum's blockchain hits on currency and noncurrency aspects, so it doesn't have that same laser focus on financial institutions that Ripple has.

However, Ethereum brings countless partnerships, proven scalability, and smart contracts to the table. Smart contracts are protocols that aid in the verification, facilitation, and enforcement of a contract. Think of them as the customizable aspect of a digital and legally binding contract. These smart contracts are a big reason the Ethereum network is so popular. 

But, what if I told you that Ethereum isn't actually the greatest threat to Ripple? Instead, that title should rightly go to Stellar.

Introducing Stellar, the most direct competitor to Ripple

In their early days, Stellar and Ripple were a lot alike, namely because Jed McCaleb helped found both cryptocurrencies. Today, however, there are marked differences, even though Stellar occupies a similar niche in targeting financial services, as does Ripple.

A physical silver Stellar Lumens coins.

The Stellar Lumens symbol. Image source: Getty Images.

Stellar's biggest break came in October when IBM (NYSE:IBM) announced that it had partnered with Stellar and KlickEx in the South Pacific region to expedite payment processing in the cross-border setting. Using IBM's blockchain and Stellar's Lumens token (the XLM), IBM aimed to speed up validation and settlement times at 12 regional banks. While we've witnessed numerous blockchain partnerships in the financial services space, we've seen very few willing to use the native cryptocurrencies, as IBM chose to do with Stellar's Lumens. 

Both Stellar and Ripple bring exceptionally fast and inexpensive transaction processing to the table. Ripple's transactions cost just a fraction of a penny and can be settled within seconds, while Stellar claims an average settlement time of two to five seconds, with 100,000 transactions costing just $0.01. Comparably, transactions on Ethereum's blockchain take longer and cost much more. 

The Stellar Development Foundation is also run as a nonprofit that aims to resolve the lack of access people all around the globe have to banking. In addition to securing digital identities, blockchain technology offers the ability for the underbanked population to exchange virtual currency without traditional bank accounts. Comparably, Ripple is a for-profit organization that's primarily focused on securing deals with large financial institutions. That's not to say Stellar isn't focusing on what it can do for big businesses, so much as to point out the variances between their nonprofit and for-profit approaches.

Where Stellar could really stand out and give Ripple a run for its money (pun intended) is in regard to its decentralization. Though it's somewhat argumentative, Ripple's network is considered to be far more centralized than Stellar, even though the Stellar Development Foundation also controls a majority of Lumens. As noted by the website Invest in Blockchain, Ripple faced backlash in 2015 when founder McCaleb left the company and his funds were frozen. This drew attention to the fact that Ripple's controlling members could put the kibosh on anything they didn't like, which is the opposite of the decentralization that's at the heart of crypto use. Stellar hasn't faced nearly the same backlash from the crypto community. 

While it's really anyone's guess which virtual token will fare better -- the XRP or XLM -- Ripple investors had better keep a close eye on Stellar.

Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool is short shares of IBM, but has no position in any cryptocurrencies mentioned. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy.