The Stellar Cryptocurrency – An Overview!

Stellar Cryptocurrency

In the last month, there has been a drop in the cryptocurrency market. Digital assets such as bitcoin, ethereum, ripple and others have fallen in value quite significantly. At the same time, the overall downward trend has not affected the value of Stellar cryptocurrency as much. The cryptocurrency is inexpensive, but it doesn’t lose its positions.

Let’s try to figure out what is the peculiarity of Stellar cryptocurrency, what are its advantages and why, against the general trend, it manages to steadily hold its rate.

Stellar cryptocurrency – general information

Many experts say that this crypto coin is an improved version of Ripple. Immediately we want to note that the statement is only partially true.

The history of Ripple digital currency began 6 years ago, when the platform and tokens were launched.

Due to its cheapness and practicality, many players of the cryptocurrency market immediately began to invest in it, assuming that in the future it will grow by thousands of times.

That said, Ripple has not turned out to be as perfect as assumed.

Here are the factors that cast doubt on XRP as a cryptocurrency at all:

  • CryptoFund was created by Ripple Labs. Due to the fact that the organization is commercially based, first and foremost, it is looking for its own benefit.
  • It is Ripple Labs that owns XRP cryptocurrencies (more than 55% even at the moment). Therefore, it has the ability to artificially raise or lower the rate.
  • Ripple was a centralized platform with closed code. Changes could only be made in consultation with the company’s management.

After investors voiced their grievances, Ripple Labs management promised to solve them. The only thing that was done was to open the source code of the platform.

Therefore, opinions began to emerge about the need for a fork, in order to solve the aforementioned problems. It was indeed produced and the result was the emergence of the cryptocurrency Stellar.

Features of Stellar

Compared to its “parent,” the Stellar cryptocurrency has a number of features stemming from its advantages. You can learn more about the properties of the Stellar cryptocurrency from this article, and here we will briefly look at the main points that deserve attention.

  1. From the beginning, the system had an open protocol.
  2. 100 billion crypto coins were issued. 25% of them were given to non-profit organizations, and 5% were “frozen” in the system to cover operating costs with them. 
  3. Users who purchased large sums, according to the agreement, committed not to sell them for the next five years.
  4. This was done to prevent investors from being able to manipulate the rate of the digital currency.
  5. From the beginning, the new system had a cryptocurrency of the same name, Stellar, but in 2014, after rebranding, it was renamed Lumen (XLM).

The functioning principle of Stellar XLM

Stellar is a decentralized platform that allows the exchange of assets. XLM cryptocurrency is needed to act as a unit of exchange.

This is a kind of “bridge” for the exchange of some assets for others.

 We can give a very simple example. A person works on the Binance exchange and owns bitcoins. He wants to transfer them to another user, but in ethereum currency. In order to do that, he needs to register on the Stellar platform, enter the data for the transaction and select the exchange option. This way, initially BTC will be transferred to XLM and then to ETH. 

Advantages of XLM (Lumen)

The market success of this digital currency lies in a number of advantages that it offers to investors.

Among them are:

  • Decentralization of the open-source platform.
  • Equal rights between members of the system.
  • Transaction processing within a second.
  • Support for all existing crypto funds.
  • Security of the system.

Like any other cryptosystem, Stellar has disadvantages. However, they are not significant.

Among them are the minimum threshold for the activation of the wallet and the impossibility of mining.

The threshold is very low – for transactions, the account must have a minimum of 20 XLM. 

Why the value of XLM is not falling

Despite the fact that December 2021 marked the fall of the cryptocurrency market, Stellar was able to maintain its position. Prospective contracts have been signed by developers.

Traders do not recommend selling XLM cryptocurrencies now, as they believe there will be significant profits in the future.

Investing in Stellar cryptocurrency

It is already clear today that the developers have created a truly in-demand cryptocurrency. Therefore, according to experts, XLM should grow in value.

Analysts suggest that by the end of next year, the level of capitalization will begin to grow again and will amount to more than $10 billion.

For comparison, a year ago the capitalization was about $ 3 billion, and today it is $ 6.5 billion. 

If the growth dynamics continues, next year the currency may be worth at least $ 0.5 per crypto coin.

Stellar cryptocurrency article and permission to publish here provided by Jamie Martinez. Originally written for Supply Chain Game Changer and published on December 29, 2021.