Stellar Lumens (XLM) is a unique project that allows your money to move like air without the confinement of borders. It brings a one-stop solution to connect digital currency with fiat currency. XLM has already proven its potential by acquiring a ton of valuable partnerships under its belt. The technology is equipped with better privacy, lower transaction fees and speedy execution. Today, I will deep dive into Stellar Lumens and study its use case, competition and future price prediction –
What is Stellar Lumens?
Stellar Lumens is an open-source, decentralized, peer-to-peer network for currencies and payments that runs on blockchain technology. It facilitates the complete cycle of digital currency representation i.e creation process followed by buying, selling and sending digital currency (including fiat) across the globe. Making all the global currencies work together and operate under one network, that is Stellar.
Stellar was founded in 2014 by Jed McCaleb, the co-founder of Ripple Labs Inc. and former lawyer Joyce Kim. The reason for creating Stellar is to make the flow of money faster and easier across borders without the need for third-party approval i.e Banks.
A user does not have to go through the cumbersome process of opening an account, verifying identity, documents submission etc, just to send money to his family or friends living in a different part of the world while worrying about the transaction fee.
Moreover, the network is also useful in providing liquidity and financial services to users who do not have access to banking services.
Ripple XRP cryptocurrency is the closest competitor of Stellar Lumens
What is Stellar Development Foundation?
Stellar Development Foundation (SDF) is a non-profit organization that supports Stellar Lumens project. It plays a similar role as that of DFINITY foundation of ICP coin (Internet Computer). The foundation helps maintain the network by providing technical and fundamental support which includes working on business partnerships, marketing and expanding the reach of the network. Moreover, it also keeps a check on regulatory compliance by governing institutions.
What is Lumens XLM?
Lumens XLM is the currency of Stellar network. XLM powers the network by facilitating trade and transfer of any currency on the network. It also helps to safeguard the network against possible spam attacks by imposing a network fee per transaction.
In order to secure the network, every account on the network has to hold a minimum of 1 Lumen and every transaction is charged with a minimum fee of 0.00001 Lumen.
At the time to launch, 100 billion Lumens were created by the team. It was initially proposed to increase the supply by 1% every year for the next 5 years. However, after the community vote in 2019, the total supply of Lumens was reduced to 50 billion.
At the time of writing, 23 billion Lumens are in circulation and accessible to retail traders and the remaining 30 billion is kept by Stellar Development Foundation to support the network. No more Lumens will be created after the announcement of the final supply.
The maximum supply of Lumens XLM is capped at 50 billion
How Stellar works?
Unlike Ripple, Stellar is a completely decentralized network that works on Stellar Consensus protocol which uses Byzantine Fault Tolerance (explained in Solana Crypto SOL coin) to attain consensus. The network consists of a large number of data servers that are spread across various geographical locations and owned by different people or groups of companies.
Each server runs Stellar core software. The software holds the copy of the blockchain ledger and establishes contact with all the servers on the network to check and verify transactions taking place on the network.
Stellar blockchain confirms a transaction in 3-5 seconds
Stellar for a user:
Stellar network helps you get rid of the age-old SWIFT (global payment transfer system used by the banks) and enables an efficient and faster remittance at a fraction of cost. In order to interact with the network, it is mandatory to create an account by creating a wallet address. Once the address is created, public and private keys will be generated that helps you secure the transaction and your account.
It is mandatory to upload the wallet with a minimum of 1 Lumen which is used to pay for the transaction fee on the network. Then you have to upload funds to an anchor which is a system that holds the funds on Stellar blockchain and helps connect the blockchain with traditional banking rails so that all the world currencies can interoperate on a single platform.
Anchors are trusted financial institutions, fintech companies or money service businesses that helps issue fiat tokens and maintain processes that comply with regulatory procedures. Once you’re done uploading funds, the game is set. You can seamlessly transfer funds anytime, anywhere using Stellar Lumens.
Stellar Lumens vs Ripple:
Both projects are like siblings of the same parent with different goals in life but with similar foundations. Let’s compare them –
|Comparison Type||Stellar Lumens XLM||Ripple XRP|
|Target Audience||People, Retail users||Financial Institutions, Corporate|
|Total Supply||50 Billion||100 Billion|
Stellar Lumens Benefits:
ICO Compatible Platform:
One of the unique features of Stellar blockchain is its ability to host ICO on its network. However, the platform has yet to exploit this feature.
High Transaction Speed:
It takes just 3-5 seconds for the blockchain to confirm a transaction. Compared to Bitcoin (BTC) that takes a whopping 60 minutes to confirm a transaction.
Stellar team understands the importance of partnership. It was quick to onboard big players on its technology. The most notable partnership is with IBM since 2017. It worked with IBM and developed IBM’s World Wire, a global payment system that runs on its blockchain.
By the end of FY 2019. World Wire has already spread across 72 different countries supporting payments in 47 currencies. Stellar also obtained Shariah compliance certificate (from Gulf countries) for payments.
Adding cherry to the cake, the Ministry of Ukraine has chosen Stellar as a platform to build its own digital currency (CBDC). Check out Stellar Lumens partnerships in detail.
Stellar Smart Contract:
Stellar network has the ability to host smart contracts called Stellar Smart Contracts (SSC). Though it is limited in usage as compared to smart contracts developed on Ethereum. It combines transactions that have different constraints to execute the proposed outcome. Stellar Smart Contracts can be used to create escrow contracts for payments, ICO hosting, crowdfunding and many more.
Stellar Lumens Drawbacks:
Excessive Lumens XLM Holding:
As shared above. Out of the total supply of 50 billion Lumens XLM tokens, Stellar Development Foundation holds 30 billion or 60% of the total supply. This makes the game one-sided. What if Stellar decided to release all its tokens in one go? Thereby increasing the risk of devaluation.
No Financial Incentive:
It is mandatory for a user to hold a minimum of 1 Lumen on its network. Though it is an easy job, however, it fails to attract users since there’s no staking reward for holding XLM on the network like the rewards user receive while staking coins like Polkadot crypto (DOT), Avalanche Crypto (AVAX) or Polygon MATIC Coin.
Under Utilized Features:
Stellar has failed to market and use its inbuilt features which includes ICO hosting platform and implementing Stellar Smart Contracts. It has limited itself to be known as a platform that assists currency transfer and nothing more.
Despite the SEC lawsuit, Ripple XRP is already leading in the adoption race and price level when compared to XLM. Lumens has already fallen behind Ethereum in the smart contract space. All these factors clubbed with the launch of third-generation blockchains poses a great threat to Stellar existence.
Stellar Lumens Price:
Please check the latest Stellar Lumens price, shared below –
Stellar Lumens Price Prediction:
Launched in 2014 by the co-founder of Ripple Labs, Stellar Lumens addressed the real-world problem faced by the users and came up with the solution of faster cross-border payments, easy remittance with the lowest fee and time.
It also established a noteworthy partnership with IBM and the government of Ukraine that helped strengthen the use case of Stellar network. However, it failed to work on its add-on features that may have helped in expanding its ecosystem.
It has missed the first-mover advantage of becoming a platform known for hosting ICO, crowdfunding and smart contracts. Missing these sweet spots has limited it to a payment network that helps faster remittance and cross border payments with the ability to create tokenized assets only.
Adding insult to injury, the price level never hit the expected $1 mark since the launch of Lumen XLM. It reached the peak price level in 2018 at $0.87 per token, post which the price remained consolidated below $0.50 to date.
On the brighter side. XLM mimics the price action of Bitcoin, which makes it a desirable currency to invest in the bull market. It has long shied away from hitting the $1 mark. However, if the speculations around bitcoin hitting $100K turns out to be true, it’s comfortable to say, XLM will surpass $1 mark with ease. Until then, expect the price to consolidate within the range of $0.50-$0.80.
Where to Buy Stellar Lumens?
Lumens XLM coin can be easily bought on all the leading cryptocurrency exchanges that include Coinbase and Binance. Moreover, users can also purchase it from exchanges like Poloniex and Bittrex Global.
If you’re an Indian user who wishes to purchase XLM with INR. You can use WazirX platform to buy XLM or any other digital currency of your interest.
Is Stellar Lumens worth investing in?
By now, you must have clearly understood the use case of XLM coin on Stellar blockchain. XLM is the fuel of the network. The success of XLM rests with the adoption of Stellar blockchain. Stellar has put a lot of effort in the past and brought in strong partnerships. However, it is facing stiff competition in the presence of Ripple and other blockchains like Ethereum.
Though it has a real-world use case, that too looks limited in scope since the project was unable to built and expand its ecosystem. The volatility of the XLM token is somewhat average when compared to its nearest competitor i.e Ripple. This makes it more stable hence the possibility of a massive jump in price is low to none.
If you’re looking to invest in a less volatile cryptocurrency that can give steady profit over a period of time then XLM is the currency for you else if you’re looking for a project with a similar use case with more volatility then go with Ripple XRP cryptocurrency.
This completes my review of Stellar Lumes XLM coin with price prediction. In the next post I will cover Harmony ONE coin and COSMOS Crypto (ATOM coin) If you like the post, please share and educate your friends. Do remember to subscribe to my YouTube channel for more informative content, released every week.
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
An MBA in Marketing. Paras have a decade long experience in the corporate world. He is done with office politics and corporate life, therefore decided to move on and jumped on building Katoch Tubes. He is a crypto fanatic and has the vision to bring cryptocurrency knowledge to every household in the simplest form possible using the power of internet. His area of expertise includes online marketplace, cryptocurrency and content strategy. Reach out to him on Twitter & YouTube.