Stellar Lumens: Down But Not Out

August 29, 2017

In our post that we published on 13th June 2017, we acknowledged Stellar Lumens’ potential and noted the influence that the distribution on 27th June would have on its price. While 16 billion units were up for grabs, only a third of that was claimed. Hence the drop in price was not as apocalyptic as some predicted. The distribution closed on the 27th August, albeit the deadline for exchanges has been extended to the end of the year.

This is good news. From the perspective of supply and demand, the supply has reached its peak meaning that demand will take over the reins in determining the price of XLM.

So what can we expect from here?

Demand will be driven by good fundamentals and proven by partnerships

Stellar has consistently delivered on its program of work to date and in the process, has attracted new partnerships across the globeincluding Global Express Money Transfer in China and the Middle East, SendX in Singapore, and VoguePay in the UK and Africa in the last quarter. When we break Stellar’s objective down to its core, the aim has always been to send money cheaply and quickly and it is achieving it. Remittances to developing markets estimated to reach around $6.5 trillion between 2015 and 2030, meaning that the traction of Stellar will increase and for a good cause!

Stellar can fix the ICO problem

The cryptocurrency market needs a sustainable model for ICOs. ICOs have wreaked havoc on the Ethereum network where the supply of ether has been concentrated in the hands of the few and subsequently dumped. Ethereum was not designed for this purpose, whereas Stellar is. Stellar transactions can be confirmed in 5 seconds, 42x faster than Ethereum transactions. It also has a negligible transaction fee (0.00001 XLM = $0.00000002) compared to Ethereum’s median cost for a transfer at $0.094. A good description of the benefits is listed on Stellar’s blog itself.

Stellar’s market cap suggests it has a lot of room to grow

Currently, Stellar Lumens comes in at 33rd in terms of market cap sitting at $240 million with over 11 billion units in circulation. Given its previous highs with over $500 billion in market cap, it is reasonable to expect a return to those figures at the very least given Stellar’s technical progress.

Stellar is already humbly providing solutions to real-life problems

Stellar is also already providing the technology behind fair and efficient payments to farmers in the coffee industry. Coffee cherries are graded on the farm directly using the technology and farmers get an instant digital payment. What’s important to note about this is that markets themselves are becoming increasingly democratised and it would not be surprising to see Stellar technology be phased into many more industries in the near future where fair and efficient payments are required.

Stellar can be the new anchor for cryptocurrency exchanges

Scale is becoming an issue for a number of large cryptocurrency exchanges. Kraken, for example, recently announced how it had scaling issues and would need to delist pairs and suspend a number of advanced order types. True, the explosiveness of the cryptocurrency industry this year has been unprecedented but given its relative infancy this is a general concern. Stellar may be able to step in to help. As Jed, cofounder of Stellar, notes himself, “It will become an increasing challenge for exchanges to not only list all the tokens and coins people are asking for but to also create the multitude of pairs between all of them.” He hopes that people will start moving to a more decentralised exchange model where tokens can be created directly on Stellar skipping the need for an anchor altogether such as an unwieldy Bitcoin in order to facilitate trading and distribution.

We cannot close this post without mentioning price! XLM units are incredibly cheap at this point in time at just under 0.000005 XBT (or $0.02). We will likely never see it so cheap ever again. The altcoin bear market and the recent distribution have contributed to its incredibly low price and the technicals suggest a potential breakout back up to 0.000006 in the short-term and 0.0000014 in the medium-term. If Stellar continues to consistently deliver on its program of work, we may even see a return to its all-time highs.

It occurs to us that now the smart thing to do is just to buy a ton of cheap coins and sit on them. What if you bought a million of these units while they are still cheap? That’s what the so-called Bitcoin whales did 5-6 years ago. It seems like those of us lucky enough to be on this train at this juncture have a once-in-a-lifetime opportunity.

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