Stellar Lumens (XLM): creation history, advantages and disadvantages, project development prospects

What is Stellar (XLM)?

Stellar is an open source, peer-to-peer, decentralized network for currencies and payments.

In the crypto community, Stellar is considered Ripple's main competitor. And, if Ripple focuses on banks, then Stellar is a kind of payment form that is designed for the masses.

Quite often, a different name for Stellar is found on the network - “Stellar Lumens”, which is erroneous, because Stellar is the network itself, and Lumens is the token of this network.

The main idea of ​​creating Stellar is that everyone who uses this service can convert absolutely all traditional currencies, tokens, gold, stocks, any other securities and assets, in order to later make exchanges between users using Lumens.

Who created Stellar?

The man who created Lumens and co-created Stellar is Jed McCaleb. He is also the founder of the Stellar Development Foundation (SDF), the project's development team. McCaleb is also known in the crypto sector as the creator of the first major bitcoin exchange, Mt Gox.

McCaleb was the Chief Technology Officer (CTO) Ripple, the company most prominent in the development of the XRP Ledger. However, he left the project in 2013. And in 2014 he created Stellar, which was the reason for leaving Ripple.

Apart from McCaleb, other notable figures in the XLM ecosystem are David Mazier (creator of the Stellar consensus protocol), Denel Dixon (executive and CEO of the Stellar Development Foundation), and Joyce Kim (co-founder of Stellar and former SDF CEO).

How does Stellar work?

Stellar works as a forex, stock exchange and crypto exchange combined into one system. Unlike most blockchains, which only store the user's balance, the Stellar network can also facilitate transactions without placing user money on an exchange. This is known as a decentralized exchange. This built-in order book helps resolve trades automatically and makes the network highly liquid. Stellar operates on a network of peer-to-peer nodes, no individual or entity can stop or change any transaction on the network, which means true decentralization.

When someone wants to send their euros to a relative and receive US dollars, they simply enter how many euros they want to send, and after a few seconds, the recipient's wallet already has US dollars. The cost of a transaction is fractions of a cent. The network itself takes an order placed by a person and looks through the order books in search of the best sequence of transactions to convert the sender's euros into US dollars. This could be a direct currency conversion, or if a better price is available indirectly, such as by converting to Lumens and then to USD, the network will use that path instead; the network always chooses the best path for the user.

Advantages and Disadvantages of Stellar

The advantages of using Stellar are that it has high transaction speed, supports multiple currencies on its network, and has extremely low transaction costs. Most transactions on the Stellar Network take less than five seconds to complete, and having multiple currencies and cryptocurrencies available gives users plenty of options. More important than quick transactions with various assets are the costs of these transactions.

The average cost of a transaction on the Stellar Network is one millionth of a US cent, which is a significant difference compared to traditional currency transfers through banks and even other crypto applications and networks. In addition, the Stellar Network is truly decentralized, run by peers on the network, and is not owned by anyone, but simply maintained by a non-profit organization.

The disadvantages of using Stellar are minimal. The main downside has to do with trust, as Stellar uses stablecoin pairs to ease its traditional currency support for assets like the US dollar. The US dollar that is on the Stellar wallet is actually a stablecoin like TetherUSD or AnchorUSD, meaning that the issuer of the stablecoin must be trusted to actually have an equivalent US dollar reserve to token ratio. If it turns out that this is not the case, then it will not be possible to exchange the available stablecoins for the equivalent amount in dollars.

Another downside is that you need to have a minimum balance of Lumens in your account in addition to some more for each asset you own in order to use or store assets on the network, although the amount is minimal. Although considered a disadvantage by some, it is used as a mechanism to prevent spam on the network by avoiding fake accounts being created and being littered with meaningless transactions. Accounts that do not have Lumens cannot use the network.

How many Stellar (XLM) coins are in circulation?

At launch, Stellar produced 100 billion lumens (XLM), with the total supply increasing by 1% annually until 105 billion were in circulation. However, after 2019, that number has dropped to just over 50 billion.

XLM also burns 100 Stroops (0.00001 XLM) every time a transaction is made. This helps prevent attackers from spamming the blockchain with invalid transactions.

The market capitalization, at the time of this writing, is $2,518,313,389. The daily trading volume is $119,252,397, the XLM rate is $0.09955.

How to buy and where to store Stellar?

Stellar is not as widely available as Bitcoin, Ethereum and other market leaders, but it is still easy to find. You can buy it on leading cryptocurrency exchanges, for example: Coinbase, Crypto.com, Binance, etc.

You can also buy Stellar on cryptocurrency exchanges, both for fiat and in exchange for other crypto.

To store Stellar, like any other cryptocurrency, you need a cryptocurrency wallet. The most popular among these wallets are: Ledger, Trezor, SecuX, Lobstr, Solar, StellarPort, etc.

Mining Stellar

Due to the fixed total supply and the maximum amount of XLM already in circulation, Stellar does not have any form of mining or staking.

XML course forecast. The development of the Stellar project

Cryptocurrency prices depend on the supply and demand of the coin, the work of projects, and sometimes the community. Therefore, an accurate forecast is difficult. According to the expectations of various experts and forecasts of the price of Stellar (XLM), the coin may go up in the near future:

• Wallet Investor predicts that the price of Stellar Lumens could reach $0.310 by the end of the year, about $0.868 by 2025. Wallet investors have stated that XLM could hit the $1 mark by 2029.
• According to the Digital Coin Price forecast, XLM could reach $0.30 by the end of 2022 and $0.62 by 2027. According to them, Stellar Lumens can only reach $1 by 2030.
• GOV Capital says XLM price could reach $0.26 by the end of the year, with XLM expected to reach $0.559 by 2030. Based on their price prediction, Stellar could hit $1 by 2025.
• TradingBeasts predicts XLM price could top $0.345 by the end of the year and $0.532 by 2025.

According to the forecasts of most experts, the Stellar coin can reach the range of 0.3 to 0.35 dollars per year, and the Stellar rate will be moderately optimistic until 2025. In the near future, we will be able to observe the real price of Stellar and whether the predictions mentioned above will come true. But, in general, many believe that Stellar Lumens and the XLM token have promising prospects, so we still recommend carefully planning your investments in cryptocurrency, so as not to end up with nothing.