Stellar Cryptocurrency: A Worthwhile Investment?

Stellar Lumens (XLM) is a cryptocurrency that has been around since 2014. It is a blockchain-based technology that supports the XLM cryptocurrency. It aims to simplify cross-border payments and transactions at a drastically reduced cost. Stellar was founded by Jed McCaleb, who also co-founded Ripple, and its native cryptocurrency was initially called Lumens (XLM). Stellar has a strong team behind it and solves an important real-world problem -- the high costs of making international payments. It has a number of big partnerships, including MoneyGram, Circle, and IBM. Stellar has gained popularity among investors and is currently ranked as the 24th largest digital asset in the world. Its price has been volatile, with an all-time high of $0.9381 in January 2018, and it is currently trading at around $0.122. There are varying predictions for the future price of XLM, with some analysts predicting it will reach $1 by the end of 2025, while others are more bullish, expecting it to reach $50 by the end of 2030. Overall, Stellar Lumens has strong fundamentals and a dedicated team, making it a good investment option for those looking to invest in the cryptocurrency space.

Stellar's performance in 2020

Stellar Lumens (XLM) is a cryptocurrency that gained popularity during the 2017 crypto hype bubble, rising to become one of the top ten cryptocurrencies by market cap. However, due to poor performance during the cryptocurrency bear market over the past two years, it has since lost its place in the top ten.

In 2020, Stellar Lumens' price remained low throughout most of the year, hovering around $0.10. On 21 November, the price broke back through the $0.10 barrier, and the cryptocurrency went on a journey of growth, staying in the $0.10-$0.20 range for the remainder of the year and closing the year at $0.1284.

This strong performance in 2020 renewed investor hopes that XLM may achieve some of the price predictions made by experts in the past.

The pros and cons of investing in Stellar

Pros

• Stellar is a well-established cryptocurrency project, having been around since 2014.
• Stellar is a money-transfer platform that aims to help the world's financial systems work together on a single network.
• Stellar lets people send money anywhere, whether it's dollars, Bitcoin (BTC), or euros.
• Stellar is a remittance and money transfer platform, designed to make it easy to send money anywhere in the world quickly and cheaply.
• Stellar has a strong team behind it and solves an important real-world problem -- the high costs of making international payments.
• Stellar has a number of big partnerships, including MoneyGram, Circle (the company behind USDC), and IBM.
• Stellar is an innovative technology that is helping all financial systems run on a single network as well as settling cross-border payments in a short time.
• Stellar is an open-source technology that can settle cross-border payments, be used to build central bank digital currencies, and has the feature of a smart contract that can build decentralized applications.
• Stellar has targeted developing economies in helping provide easy financial assistance to the unbanked in those countries.
• Stellar is extremely safe.
• Stellar is a good investment based on our predictions. After taking into consideration the technical analysis and expected Stellar price prediction, it can be said that long-term investment would result in considerable profit for the investors.

Cons

• Stellar is not a sexy programmable crypto like Ethereum (ETH) or Solana (SOL).
• The rise of Central Bank Digital Currencies (CBDCs) and stablecoins could undermine the benefits of the Stellar platform.
• Increased cryptocurrency regulation is a concern for many digital assets. Ripple, a project that's very similar to Stellar, is in the midst of a legal battle with the SEC over whether it is a security or a crypto.
• In the short term, Stellar might suffer if stricter controls are introduced.
• Stellar is currently free from any cases regarding XLMs being used as securities. However, if it were to be deemed a security, it would have to be registered with the SEC and follow rules around reporting and trading.
• Stellar is currently trading below $1.
• Stellar is extremely risky.

Stellar's potential for future growth

Stellar Lumens (XLM) has been described as a good investment option, with the potential for future growth. Here are some reasons why Stellar has the potential for future growth:

Major Upgrades

Stellar's major upgrades have improved the flexibility of the interaction between the Stellar Core and Stellar-based applications. The upgrade that took effect on March 1, 2020, and future upgrades could open up the network to more innovative solutions. If more decentralized applications, non-fungible token (NFT) platforms, and XLM integrations are successful, this may lead to a massive increase in the price of Stellar.

Open-Source Nature

Stellar is an open-source network that can settle cross-border payments, facilitate the creation of central bank digital currencies (CBDCs), and build smart contract applications. This versatility provides a wide range of use cases for the network, increasing its potential for growth.

Strong Partnerships

Stellar has established partnerships with well-known centralized institutions such as Deloitte, International Business Machines, Tempo Money Transfer, Coins.ph, TransferTo, and Flutterwave, which have utilized Stellar's network for their software solutions. Additionally, Stellar has partnered with the Ukrainian government to develop a digital national currency, positioning itself as a leader in the CBDC space.

DeFi Integration

Stellar's novel token, XLM, will be used to create XLM-backed tokens that can be used on decentralized applications, such as the lending platform Uniswap (UNI). This integration with decentralized finance (DeFi) could drive further adoption and increase the price of Stellar.

Smart Contract Support

Stellar supports smart contracts on its network, which can be used to build decentralized applications. This feature enhances the functionality and flexibility of the network, making it more attractive to developers and users.

High Transaction Speed

Stellar's Stellar Consensus Protocol (SCP) enables the network to process 1,000 to 5,000 transactions per second, making it faster than many other blockchains. This high transaction speed improves the user experience and makes Stellar a more attractive option for cross-border payments.

Strong Development Team

Stellar was founded by Jed McCaleb, a pioneer in the cryptocurrency space, who also co-founded Ripple. The Stellar Development Foundation, a non-profit organization, supports the network and the cryptocurrency. The team's expertise and industry connections contribute to Stellar's potential for future growth.

How Stellar compares to other cryptocurrencies

Stellar is a payment network that operates similarly to RippleNet and can process transactions in multiple currencies. It is supported by a non-profit organisation, the Stellar Development Foundation, and is decentralised, with no third-party control. Stellar is also open-source, allowing for the creation of tokens on its blockchain network.

Stellar's native cryptocurrency, Lumens or XLM, is used for payments on the network and plays an anti-spam role, requiring a small transaction fee for each transaction. Lumens can be exchanged for goods and services, and applications can be built on top of the Stellar network, making it a platform coin.

Stellar compares to other cryptocurrencies in several ways. Firstly, it is a medium of exchange, like Bitcoin, but with faster transaction speeds. Secondly, it can power decentralised applications and smart contracts, similar to Ethereum. Thirdly, it provides the ability to create tokens on its blockchain, like many other cryptocurrencies built on the Ethereum blockchain.

Stellar's unique features include its focus on impoverished areas and micro-financial institutions, its integration with banks, and its ability to process transactions in multiple currencies.

The risks of investing in Stellar

As with any cryptocurrency investment, there are risks involved when investing in Stellar. Here are some key risks to consider:

• Volatility: The cryptocurrency market is highly volatile, and the price of Stellar can fluctuate significantly. While this volatility can provide opportunities for gains, it also carries the risk of losses. Stellar's price has experienced significant swings in the past, and there is no guarantee that it will continue to increase in value.
• Regulatory Risk: The cryptocurrency industry is still relatively new and unregulated. The regulatory landscape is constantly evolving, and changes in regulations or increased consumer protection could impact the price of Stellar. For example, the legal battle between the SEC and Ripple (XRP) could have a knock-on effect on other cryptos, including Stellar.
• Competition: Stellar faces competition from both within and outside the crypto world. The rise of Central Bank Digital Currencies (CBDCs) and stablecoins could undermine the benefits of the Stellar platform. Additionally, other cryptocurrencies, such as Ripple (XRP), offer similar services, and increased competition may affect Stellar's market share and price.
• Security: While Stellar is considered safe and has a robust network, there is always the risk of cyber-attacks, scams, and hacks associated with cryptocurrencies. As seen with other cryptos, a security breach or hack could significantly impact the price and reputation of Stellar.
• Adoption and Partnerships: Stellar's success relies on its ability to forge partnerships and gain widespread adoption. While it has made some notable partnerships, there is no guarantee that it will continue to do so or that its partnerships will remain beneficial. A lack of adoption or loss of key partnerships could negatively impact the price of Stellar.
• Technical Issues: Technical issues or failures with the Stellar network or its smart contract functionality could affect its performance and reputation. Any significant issues could lead to a loss of confidence in the project and potentially impact its price.
• Market Sentiment: The cryptocurrency market is highly susceptible to market sentiment and news. Negative sentiment, such as concerns about the health of the global economy or comments from influential individuals, can impact the price of Stellar.
• Investment Risk: Investing in cryptocurrencies carries a high level of risk. The value of Stellar can decrease as well as increase, and there is no guarantee of positive returns. It is important to only invest what you can afford to lose and to diversify your portfolio to manage risk.

These are some of the key risks associated with investing in Stellar. It is important for investors to carefully consider these risks and conduct their own due diligence before making any investment decisions.

Frequently asked questions