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Is Stellar Lumens a Safe Investment?

Is Stellar Lumens a Safe Investment?
Written by publisher team

Editor’s note: This article has been corrected. The Stellar decentralized exchange is built in Stellar.

While the developers of most cryptocurrencies hope one day their coins will go to the moon, the team behind them is Excellent lumen (CRYPTO: XLM) They set their eyes on the distant stars. Well, that is figuratively speaking, but the non-profit Stellar Development Foundation played a role with the altruistic goal of creating a borderless blockchain payment network that helps underbanked people in poor and developing countries.

But its early adopters have benefited greatly from the network, too. Those who bought a stake in its inception are now making a staggering 15,000% return after seven years. XLM is now the 18th largest cryptocurrency in the world, with a market capitalization of $7.5 billion. This despite the fierce competition from XRP (CRYPTO: XRP) and developed by Ripple Labs. So, can new investors see the same interstellar jump in the price of XLM if they buy now?

Image source: Getty Images.

Brief astronomical history

XLM was created by Jed McCaleb and former attorney Joyce Kim in 2014. McCaleb was a former co-founder of XRP and Mt. Gox, first Bitcoin (CRYPTO: BTC) exchange in the world. McCaleb left Ripple Labs in 2013 after a falling out with the latter’s vision of creating a for-profit institutional payment network. Mt.Gox shut down in early 2014 after the mother of all Bitcoin hacks experimented – resulting in nearly 800,000 BTC being stolen by hackers, rendering them insolvent.

Initially, the founders planned to mint 100 billion stars and give 50% to users who signed up, 25% to charities, and 20% to both XRP and Bitcoin holders. Unfortunately, this plan did not take off.

It was clear that the Stellar Development Foundation was not going to achieve its goals any time soon. Biometric and phone-based secure electronic payment systems, such as those offered by FinTech in South Africa Net1 UEPS Technologies (NASDAQ: UPS)They are much easier to use and better serve the needs of those who do not have a bank account. To use XLM, one must first understand blockchain technology, which can be a tough sell for people like the nomadic warriors of South Sudan. Furthermore, keep in mind that XLM users will still need to find an exchange to convert their coins into fiat currencies after receiving them. But often, the only way to withdraw money is to submit a withdrawal request to one of them Bank account.

Currently, the total supply of XLM is about 50 billion, with a circulating supply of about half that amount. As of the time of this writing, only 4.6 million tokens, worth approximately $412,650, have been donated to 17 charities as part of the foundation’s nonprofit arm, Lumenthropy. But one cannot say the same about its trading arm, Interstellar.

Peek at the Milky Way while you're above a beach.

Image source: Getty Images.

The galaxy is the limit

Together with fintech startup Tala, Visa (NYSE: V) Get a stable currency in US dollars USDC (CRYPTO: USDC) to consumers on EthereumAnd AlgorandAnd SolanaAnd blockchains are excellent. This move will allow Tala customers to use USDC as a bidding at more than 70 million merchants worldwide that accept Visa. Stablecoins can be obtained as loans to assets when investors pledge their cryptocurrency as collateral, allowing them to keep up with daily expenses without selling their investments. It’s not just Visa. Last year, Bankhaus von der Heydt, one of the oldest European banks (established in 1754), launched the Euro stablecoin on the Stellar blockchain.

Transactions settle on the Lumens network in less than five seconds and cost pennies less, making them ideal for both international and consumer transactions. They are ideal for disrupting the traditional banking sector, which can charge huge foreign exchange fees for cross-border transactions. The setup works because the Star Compatibility Protocol (SCP) uses nodes, or individual users running Stellar software, to validate transactions. this is done Free, similar to the way writers on Wikipedia contribute unpaid for the good of all humanity. So network transaction fees and environmental emissions are always low. The network is also no longer inflationary, with new block emissions being halted and a portion of transaction fees taken out of circulation for each use.

Moreover, Stellar is evolving into an electronic object distinct from its main competitor Ripple Labs. For starters, it has its own decentralized exchange (DEX) that allows users to trade cryptocurrency pairs. Due to regulatory restrictions, DEXs are one of the only ways US investors can access the lucrative cryptocurrency market. DEXs like UniswapLaunched in 2018, it is already seeing more than $380 billion in annual turnover. That’s not all; Stellar also operates a cryptocurrency exchange portal, allowing users to exchange cash in euros or Chinese yuan.

Finally, unlike Ripple Labs, neither the Stellar Development Foundation nor Interstellar nor any of its affiliates are facing a disruptive lawsuit from the SEC alleging the illegal sale of unregistered securities. This is, ironically, despite Stellar minting all of its coins from the start just as Ripple Labs did with XRP. So it does not face hesitation in adopting it due to regulatory scrutiny. Overall, given the unique network setup, promising partnerships, expansion of decentralized finance, superior positioning compared to XRP, and lack of legal issues, XLM is definitely one of the best cryptocurrencies to buy at the moment. Consider becoming Lumenaut today, slang for the proud owner of XLM.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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