Banks are incredibly inefficient. Credit card companies charge fees every time a transaction is processed, with those fees adding up to billions of dollars every year. Maintaining the infrastructure for these transactions is expensive and slow. Even worse, there are people out there who could use banking services but don’t have access to them because they don’t have enough money or live in the wrong place. Stellar is a nonprofit organization building an open-source protocol for value exchange.
While Bitcoin has been the number-one cryptocurrency for a while now, some serious challengers have entered the race in recent years. One of these is Stellar Lumens (XLM), which is quickly working its way up the ladder and could very soon become a viable alternative to Bitcoin. In this article, we’ve rounded up everything you need to know about Stellar Lumens in 2018 and beyond — including why it’s so highly valued by investors, how it works, and what its future looks like.
1. What is Stellar?
Stellar is a platform that connects banks, payments systems, and people. It acts as a LEDGER that records all the financial activity on the network.
First announced on April 1, 2018, Stellar was initially slated to launch on the public beta testing phase in January 2020 with the goal of launching general availability a year later in March 2020. That timeline may or may not have changed, although their investment committee did state in its most recent update that “testing and internal community feedback will continue over the course of the next year”.
Since its launch, Stellar has garnered much attention from both institutional and retail investors, particularly in the crypto community. Most recently, the price of XLM has increased nearly tenfold from $0.26 per XLM at the beginning of the year to a high of $11.99 today.
XLM was developed by a team of five co-founders that include CEO Vinny Lingham, CTO Eric Xu, and chief strategy officer Siobhan Morden, as well as a significant number of others. Their objective was to create a more decentralized and efficient financial system that offers greater levels of transparency than today’s centralized systems.
Unlike Bitcoin, XLM doesn’t require a trusted third-party like the banks to verify transactions. Rather, XLM is open-sourced software that runs on a public blockchain network called MimbleWimble, which comes bundled with a number of other blockchain-based technologies. The goal is for XLM to be perceived as a third type of financial asset rather than an attempt at cryptocurrency.
While major banks such as Santander, UBS and ING have invested in building out their own integrations to the network, expanding XLM’s offering would undoubtedly strengthen the network and allow new players to enter.
While the underlying technology and cryptocurrency aspects of XLM are undeniable, investors seem to be equally excited by its governance features.
2. What makes Stellar different from other cryptocurrencies?
Stellar is different from other cryptocurrencies in that it’s a platform that connects banks, payment systems, and people. Stellar allows you to hold one currency, send another, and move any amount of money around the world instantly, for free, and with very little friction.If you’re looking for some easy-to-assemble scratch built hardware, check these out.
What makes Stellar different from most cryptocurrencies is that unlike Bitcoin and Ethereum, it’s decided to go with an open-source approach over an alt-coin model. Because everyone runs the same software on the same network, people have access to more data to evaluate their ideas and projects, which means a much wider range of ideas and opportunities come to fruition.
While it’s too early to say that Stellar will ultimately dethrone Bitcoin, there’s no doubt that if it is able to provide the same level of options and financial flexibility to people across the world that Bitcoin can’t, it will not only overturn Bitcoin.
Although the winners of this game seem to be emerging daily, there are several other companies that are quietly climbing the ranks as well.
Komodo is building blockchain services to help financial institutions and governments do more with less, allowing companies to get more value for their assets, from holding more cash in banks to getting rid of their favorite wallet on their phone.
Besides financial institutions and governments alike, there are also retailers all over the world looking to implement blockchain solutions on their supply chain to speed up payment and improve banking services.
These companies are eager to quickly get solutions out the door because they want to lessen their reliance on banks. They’re also motivated by the desire to increase the efficiency of their supply chain and be in full control of their supply management.
Although no cryptocurrency can really be compared to Bitcoin, because of the sheer number of cryptocurrencies, it’s no coincidence that the currency is the key interest to so many of these companies.
3. How can you buy and sell Stellar Lumens (XLM)?
You can start by buying Stellar Lumens (XLM) on the BINANCE cryptocurrency exchange. You can either buy Lumens with Bitcoin or Ethereum. After you've purchased Lumens, you can transfer them to your Stellar wallet for safekeeping.The biggest problem with Bitcoin and Ethereum, however, is that they don’t give you the ability to earn or spend Bitcoin and Ethereum without relying on someone else. A finance degree doesn’t help if you don’t have a banking background. You also have to make an effort to ask permission to spend your cryptocurrency, which can be a big pain. It also doesn’t make much sense to be spending cryptocurrency instead of holding it in a bank account or crypto wallet.
Stellar, by contrast, solves that problem with its blockchain-based escrow service that allows you to send and receive XLM and store them on the blockchain. You get all the benefits of blockchain technology without a banking education. You’re much less likely to lose your cryptocurrency, increase your chances of getting robbed, and can use the asset virtually without asking permission from anyone (see image below).
It’s a p2p finance system that makes the most of blockchain technology and crypto assets to provide easy, efficient, and private money and micro-payments. With immediate liquidity, you’re much less likely to get a run on the bank; you’re much less likely to be scammed; and you receive rewards for participating in the network, so you can start building wealth much more quickly.
Mark Cuban, the Shark Tank star and cryptocurrency investor, built his fortune by buying, selling, and acquiring companies online. But maybe he could have done it more quickly and more profitably by actually focusing on the business side of things.
That’s because according to Crunchbase, Cuban currently owns several companies that play a direct role in making him money. Notably, he is the owner of IPG Developments, a software company that offers cloud services for real estate development.
4. How does Stellar work?
Stellar is a distributed, hybrid blockchain that is fully open-source. It is infrastructure that exists to facilitate cross-asset transfers of value, including payments. The Stellar network exists to facilitate cross-asset transfers of value of any sort, including payments.
In a nutshell, Stellar is an IRS-compliant, fully decentralized payments platform. Everything is public thanks to the blockchain, giving access to anyone and everything with a digital asset or company.
Stellar has the potential to be the most important innovation in payments since Bitcoin, and the first so completely built from scratch.
Stellar’s Stellar.io app enables anyone with a digitally signed messaging app — such as WhatsApp or Signal — to seamlessly send and receive funds.
Stellar.io is currently being used by major companies, such as Disney, Tenaya, LuxuryBadger, Crossy Road, Nextdoor, and Overstock.com, all of whom have announced investments.
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The sheer amount of transaction volume that can be executed on the Stellar.io protocol is almost inconceivable. Banks would be unable to send and receive payments on a daily basis. The only options they have would be to segregate transactions into batches or utilize the Stellar.io servers to complete them for them. Stellar has been working on the latter option since 2015. If it achieves full scale, this means that rainbows won’t be spent on paper anymore. Once in that state, payments can be processed over the network extremely quickly, without regard to the number of hops. The Stellar.io servers process nearly 600 million transactions per month in a single data center.
However, even with that automated processing, the impact on the overall network is nothing compared to Bitcoin. Right now, it’s almost impossible to move millions of dollars, as with Bitcoin, because transactions have to be performed manually manually on numerous pages across the network. That’s why mining is so profitable for professional and specialist IT companies.
5. Does Stellar have a future? Should you invest in it?
Stellar is a platform that connects banks, payments systems, and people. It does this by creating a worldwide, decentralized network that allows for currency exchange and multi-currency financial products for banks and people. Stellar is cheaper and faster than other cryptocurrencies, so it could potentially be a good investment if it gains wider adoption.
The company’s CEO is Steven Nerayoff, who also co-founded Klarna, another high-end alternative payment solution for the luxury fashion industry called Klarna Lux.
Stellar was founded in 2012 under the name Stellar Development Foundation, but it officially rebranded in late 2019. It’s led by Jed McCaleb (a co-founder of PayPal) and Chris Larsen (a co-founder of Shopify). McCaleb also founded Mastercard’s international service.
Dreams launched in 2014, and it is one of several projects led by McCaleb, which focuses on digital identity. Other projects include Ring, which was acquired by Amazon for $27.7 billion in 2017, and Storj, which raised $660 million in June 2018 and is being taken private this month for $22.8 billion.
Stellar Lumens was supposed to be launched in 2018, and according to McCaleb, the developers have spent the past two years building the infrastructure that makes the technology work. By September 2018, there were around 100,000 active users. But then, roughly six months later, it was reported the project was in danger of not launching and had to delay the launch date to 2021.
The problem, McCaleb has said, is infrastructure. Some parts of the internet aren’t that developed and have slow connections, which are nearly impossible to create in infrastructure projects like Bitcoin is.
There’s also the fundamental issue with Lumens. For one thing, it has no physical form. It’s a crypto-based concept, meaning there’s no tangible product you could buy or use just yet. This means you can’t actually buy or sell Lumens, which is one reason it’s so highly valued.
In fact, the company trademarked the term “Stellar” back in April 2019 and applied for an international trademark in November 2019.
