Stellar Lumens: The Sleeping Giant

June 13, 2017

Not much attention has been paid to Stellar Lumens (XLM). However, there are some reasons why you should, as those that know early profit the most.

  • It has consistently been in the top 20 cryptocurrencies in terms of market cap yet remains as one of the cheapest altcoins.

  • It has grown at a staggering pace during the first half of the year with the price jumping over 6000% at one point.

  • The Stellar Lumens Consensus Protocol provides a system to reach consensus without relying on a closed system that records XLM transactions. Therefore, it doesn’t rely on proof of work nor proof of stake to secure its blockchain. Instead the network relies on a Byzantine agreement system, which provides decentralised control, low latency, flexible trust and asymptotic security. Ultimately, this means that each node on the blockchain has the right to decide which others to trust, so they don’t need to rely on the same trusted participants to reach consensus.

  • Its core philosophy is to develop the world’s new financial system. It is an open platform that connects banks, payment systems and most importantly people, facilitating transactions in over 180 currencies worldwide with each transaction being completed in under 5 seconds at a cost of less than $0.001.

  • Its greatest value is that it can get around liquidity problems even when there are no established markets. This is a game changer for underbanked communities and developing countries. Speed and low cost will provide greater access to capital while mitigating threats of corruption, which will put them on a level playing field with developed countries.

  • Stellar is even complementary to Bitcoin, which means that as Bitcoin becomes more and more accepted in the global community as a legitimate means of payment, XLM will be the low-cost method of providing liquidity in the transfer between Bitcoin and fiat currencies.

  • Banks are likely to adopt the Stellar blockchain network first to transfer funds given that its core philosophy is more central to banks’ core functions today. It is simpler and easier to use and understand compared to other technologies that have a broader scope of applications. The adoption of blockchain technology is likely to come in phases based on ease of compatibility. Stellar’s specificity is its strength.

  • It is backed by a growing number of sponsors such as Barclays, Deloitte, Stripe, Tempo and WordPress that are already providing global services today, and the groundwork for the Stellar network has already been laid with partnerships in the Philippines, India, and Africa.

  • It has had increasing exposure and interest having been launched on numerous exchanges this year such as Poloniex and Kraken, with the latest being Yuanbao, one of the largest Chinese cryptocurrency exchangeSimple Guide: How to Invest in Ethereums.

Notes for investing

  • Stellar is in a unique position given that it is undervalued despite its strong fundamentals. It is definitely a contender for a ‘buy and hold’ strategy.

  • Daily movements are often upwards of 6%, presenting a unique opportunity for those who hold a substantial number of units to profit from these movements.

  • Technical analysis: the XLM chart demonstrates a bullish ascending triangle formation, with short term targets of 0.05 (tip of the triangle) and 0.06 (previous high).

  • The XLM distribution on June 27 may present a unique opportunity to buy a greater number of XLM at a lower price as the supply of XLM may increase substantially depending on the demand for participation in the distribution. This is more of an unknown rather than a certainty.

  • All users of the Stellar network must hold a minimum of 20 XLM in every single account to ensure that they are authentic and to maintain a seamless flow of transactions. This reduces the concerns of the high supply of XLM. The more users there are, the greater the demand and the higher the price.

  • XLM is an inflationary currency with a fixed increase rate of 1% per year. This means that the price will rise at a sustainable rate over time.

  • Stellar will benefit from the growth of Ripple (XRP) as it is often perceived to be a younger, decentralised version of Ripple – the third largest cryptocurrency by market cap. This serves as a psychological boost in the profile for Stellar and ultimately means you could buy a version of XRP at a much lower price.

  • A large number of ICOs use ETH as the basis of transfer, which is currently boosting the price of ETH more so than any other news. Companies behind the ICOs will inevitably need to offload their ETH positions in order to fund their projects, which can push the demand away from ETH into cheaper altcoins such as Stellar. While there are no clear indications of the scale of this move, it is beneficial to have a position in XLM in case this shift occurs.

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