Stellar coin (XLM) review: Making blockchain more global
Stellar coin is tackling a problem that many other cryptocurrencies have seemingly forgotten about: the cost of transferring money between currencies and countries. The protocol has attracted various big-name partners so far, and the rest of the world may be about to discover its potential. Here’s everything you need to know about stellar and its future.
Tired of hearing about cryptocurrencies setting out to be the “new bitcoin” or an “ethereum challenger” every other day? The two trailblazers of the crypto world have inspired a fair few to follow in their wake, and plenty of the attempts have been impressive — but stellar coin (XLM) is a breath of fresh air.
For one, it’s not that new. Secondly, it offers something different: seamless cross-border transfers. Curious yet? Let’s dive into a complete review of stellar coin, including a breakdown of its price history, how its protocol works, and what its future looks like.
Stellar coin history
Do you want the good news or the bad news first? Let’s start with the bad—ever since its launch, stellar has never been worth more than $1 a coin. That pales in comparison to even moderately popular cryptocurrencies, which often reach double-digit (if not triple-digit) numbers.
But even at such a low value, stellar has made some serious progress over the years. It was priced at close to zero (($0.002, to be precise) at launch in 2014, but rose to $0.02 by 2017.
Then, it leaped to $0.87 in January 2018. Unfortunately, it wasn’t destined to last, and the value crashed to $0.2 a few months later (and then down again to $0.04 by January 2020).
Stellar then benefited from the crypto bull run of April and May 2021—before plummeting again. Even taking into account the relative volatility of cryptocurrencies, stellar has seen more ups and downs than most.
How much is stellar coin worth now?
We promised you there was also some good news in store—well, here it is. Stellar coin is currently hovering around the $0.34 mark. That’s an increase of around 16900% since launch (admittedly not so impressive considering how low its price was initially).
Plus, it seems to be recovering steadily from the crypto crash. After the value dropped from a high of $0.73 in May to around $0.21 in July, the increase to $0.34 by August was a considerable improvement. Could a third peak be on the horizon?
With the way things are going, it would be reasonable to expect stellar coin to return to its previous highs, or even surpass them—but before you jump the gun, make sure you understand how the infrastructure behind the coin works.
Stellar coin explained
Let’s go back to basics for a second—what is stellar coin, anyway? Essentially, the Stellar Lumen protocol aims to be the platform of choice for international payments by facilitating transfers between foreign currencies at a fraction of mainstream costs. Kind of like the crypto version of Wise or WorldRemit.
Meanwhile, stellar coin is the native token of the platform, and its primary use is to pay fees.
But now, let’s dive into the protocol itself a little more.
The Stellar infrastructure
Stellar is a distributed payments network, meaning its main aim is to make transactions happen over the blockchain as efficiently and cheaply as possible. The basic idea is similar to Bitcoin, but it has some additional features.
Whereas Bitcoin’s main purpose is to become a medium of exchange, Stellar also aims to foster cross-border transactions (for both crypto and fiat currencies). Plus, you can issue your own tokens on the platforms, making it an ideal environment for entrepreneurs to launch ICOs.
Stellar has achieved faster transaction times than Bitcoin and Ethereum. It can complete 3,000 transactions per second, with an average transaction confirmation time of three to five seconds. In contrast, Bitcoin takes one hour on average and can only manage three transactions per second. Ethereum isn’t much better.
What makes Stellar so fast? It has a large number of servers, but its most crucial weapon is the Stellar Consensus Protocol (SCP).
The Stellar Consensus Protocol
If you’re familiar with the crypto world, you’ll know that the majority of protocols use either proof-of-work or proof-of-stake as their consensus mechanisms, but XLM functions on the Stellar Consensus Protocol (SCP).
Instead of operating as a closed system, the SCP ensures that computers in the network continuously check the public ledger and agree on which version is accurate. The SCP is also decentralized (anyone can participate), fast, flexible (you can choose to trust whoever you want to verify your transaction for you), and uses digital signatures for added security.
Stellar’s stated aim is to serve individuals and support the digital economy, suggesting that it’s looking out for the little guy rather than major corporations. Perfectly in line with decentralized finance.
But is this a valid claim?
It’s true that the project is free and open-source, with lower fees than the likes of Bitcoin and Ethereum—it charges $0.01 for 300,000 transactions compared to $.061 for Bitcoin and $0.02 per transaction for Ethereum. So far, the protocol looks like a champion for ordinary people.
But you’ve also got to keep in mind that Stellar has partnered with traditional corporations and organizations, such as IBM in 2017 and the Government of Ukraine in January 2021.
That shouldn’t necessarily make you turn away, but it’s a valid reason to be wary. If Stellar joins forces with traditional finance organizations, it could threaten decentralized finance rather than help it.
But awkward questions aside, if you’re a current or future crypto investor, the question on the tip of your tongue is probably whether stellar coin will rise in value.
What is the future of stellar coin?
Imagine being able to instantly transfer your USD to a friend in Thailand’s bank account without having to think twice about fees or complications. That’s exactly the world Stellar hopes to create.
We can’t tell you whether stellar coin is a good investment—the crypto market is famously unstable—but we can try to give you a few clues.
For one, stellar coin is a popular cryptocurrency with a clear purpose — unlike many tokens, which tend to promise similar things and all blur into each other. The cross-border solution is a much-needed feature as the world globalizes, and this will stand stellar in good stead.
Judging by some of the partnerships secured, it’s made good headway. Various projects have already held ICOs on Stellar, including The Mobius Network and Smartlands. Plus, as seen already, Stellar has some impressive government and private sector partners (which could be great or terrible depending on your perspective).
However, it’s yet to partner with a major bank for processing international payments, which would be a game-changer and help the coin’s value rise (even if it’s not very decentralized). This may be difficult to achieve considering banks would lose a lot of money if a low-cost alternative burst onto the scene.
As you can see, there are a few factors you need to consider here.
How to buy stellar coin
If you’re brave enough to buy it, stellar coin is available on a few major exchanges, including Coinbase, Huobi, Binance, and Kraken.
Then, we recommend transferring your crypto to a wallet for maximum security rather than keeping it on an exchange. You can download your special wallet straight from the stellar website, or opt for a third-party cryptocurrency wallet where you can hold multiple cryptocurrencies.
At least, these are the most common routes—but they’re far from your only options.
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