The Next Bitcoin

December 2, 2017

“Guys, I’m gonna buy a Bitcoin!” – that was what Harry, a close friend of ours, told us during a night out. This was a few days ago when Bitcoin reached another all-time high. All the attention remains on Bitcoin and its cousins – Bitcoin Cash, Bitcoin Gold, Bitcoin Silver…the forks continue and the free money keeps flowing. Along with Harry, a majority of purchasers of Bitcoin have no interest in its fundamentals. They only have an interest in its price. A recent survey was conducted suggesting that holders would not sell their Bitcoin investment until close to $200k but have no significant reason why that number was chosen[1].

The FOMO (fear of missing out) effect is both empowering and blinding. It is empowering in the sense that it has enabled a significant group of people who are typically risk-averse to make an exception on this ‘once-in-a-lifetime’ opportunity to make a quick buck. It is blinding because such behaviour is justifiable to them as ‘everyone else is doing it’.

Harry hadn’t dared to invest a single cent in his life but Bitcoin was fine! I myself have been a victim of FOMO and got burnt.

Mob mentality has been the making and breaking of many investments, including my own. Bitcoin will be no exception, especially when the power to move markets is centralised in the hands of a few wealthy cryptocurrency whales.

We’re not here to challenge people’s decisions to invest in Bitcoin. That would be a very unpopular (albeit unprofitable) move. Just don’t be a Harry and buy Bitcoin without knowing what it really is!

We’re here to encourage our readers to consider taking a chance on the lesser known alternatives – the Bitcoin 2.0s that were built for longevity, like Stellar Lumens (XLM), that will survive long after Bitcoin has burst its bubble. (In all transparency, XLM is part of our portfolio.) From 2018 onwards, you will be kicking yourself for not owning a few XLM when it will go mainstream. Here are some reasons why.

The table below outlines some key comparisons among the top two cryptocurrencies in terms of market cap, Bitcoin and Ethereum, and Stellar Lumens. 

101 Comparison Table of Stellar Lumens, Bitcoin and Ethereum

Dec 2 2017 Bitcoin Ethereum Stellar Lumens
Current Rank 1 2 15
Founded 2009 2015 2014
Price $11,000 $460 $0.09
Market Cap $180bn $35bn $1.5bn
Circulating Supply 17mn 96mn 18bn
Confirmation Time 51 minutes[2] 3.5 minutes 5 seconds
No. of Transactions 3 per second [3] 20 per second [4] 1,000 per second [5]
Used for ICOs No – not a popular platform for ICOs Yes – has the most expressive programming capabilities but often misused or overcomplicated[6] Yes – best choice as it provides simple and secure smart contract features good enough for a majority of cases
Transaction Cost $8[7] $0.094[8] $0.0000002[9]
Algorithm Proof of Work Proof of Work (planned migration to Proof of Stake) Stellar Consensus Protocol
Reliant on Mining Yes Yes No – the consensus algorithm resolves faster than mining
Scalability Issues Yes Yes No
Supply Capped Uncapped 1% inflation
ATM Yes No Yes
Partners N/A 200+[10] 35+[11]

 

When you put their capabilities side by side, Bitcoin is not a winner. We are starting to see payment companies such as SatoshiPay abandon Bitcoin for Stellar Lumens as the costs are just too high and the technology ‘outdated’[12]. But in a fast-paced market like crypto, where double-digit daily returns are no surprise, who realistically has the time to draw up a comparison table like this? You’d just buy Bitcoin, like Harry, because it’s the most well-known crypto out there. Over time, Bitcoin has erroneously become synonymous to the words ‘cryptocurrency’ and ‘blockchain’, and we are none the wiser.

Before you know it, the excuse that ‘blockchain’ is still an undefined, vague concept will no longer cut it. Knowing the facts will mean that you have the upper hand when blockchain technology becomes the new norm. So let’s then take a look at how some of these facts can make your rich:

  1. In 2014, Stellar split from Ripple. The Stellar Development Foundation was created. Corporate donors included Blackrock, Google and Stripe. Those are some big names. They aren’t donors because they are altruistic towards a non-profit organisation. We’re likely to see how these big players will come to adopt Stellar Lumens for their own revenue-generating purposes. Watch this space.
  2. The Stellar network launched with 100 billion STR (renamed XLM) tokens (evidently a much bigger supply than the limited number of Bitcoin). BTC holders received a proportion of XLM in 2015 as part of the initial distribution. These tokens serve as a ‘bridge’ between different currencies that do not have their own direct market, thereby providing extensive liquidity, especially to unbanked communities but also think about the possible use cases for seamlessly transferring private placements between wealthy individuals. All Stellar accounts need to hold at least 20 XLM in their balances at all times.
  3. In 2016, Deloitte created a payment network prototype using the Stellar network. The project was completed in 4 weeks and reduced transaction costs by 40%. Each transaction resolved in 5 seconds.[13]
  4. In December 2016, money transfer organisation, Tempo, successfully integrated into the Stellar blockchain enabling users to send global remittances from Europe cheaply online – a $150bn market. 600,000 transactions can be sent for only $0.01 in fees.[14] Simply incredible.
  5. In May 2017, XLM invaded the top 10 cryptocurrencies with a 131% increase in value.[15] While a pump and dump at the time, with XRP, its closest cousin in the top 5, there is no reason why XLM cannot achieve at least half of XRP’s market cap in the near future. Based on current supply, that would mean a price of over $0.2. That’s a 500% gain from today’s levels. We’d take that any day.
  6. In June 2017, Stellar opened up another 16 billion new XLM on the market as part of its second distribution in addition to the 9.5 billion that already existed. There was genuine panic and concern on the dilutive effect it would have on the price.[16] Especially in an irrational market like crypto, a falling price does not instil confidence. There was also a general dissatisfaction with the way that XLM was distributed simply to BTC and XRP holders rather than those that truly had a genuine stake in Stellar’s philosophy.
  7. In September 2017, an email alert by paid stock / crypto-picking newsletter group, Palm Beach Confidential, provided an unprecedented bullish signal on XLM.[17] That subsequently triggered huge buying volume from cryptocurrency whales.
  8. On October 16 2017, IBM announced that it had established a partnership with Stellar to facilitate a revolutionary payments process.[18] The news was so significant that it pushed XLM’s price up 100%+ in a single day. Already in use across 12 currency corridors among several Pacific Island nations and Australia, NZ and the UK, the intention is for further expansion in Q1-Q2 2018. Stellar’s technology is not only improving existing payment solutions in developed countries but also opening up unbanked regions to the global financial system. Real-time payment will soon be facilitated in over 110 countries with central bank involvement.[19]
  9. In the near future, Stellar will be serious competition for Western Union. Currently, working immigrants typically have no other choice apart from using Western Union to transfer money to their home country to support their family who don’t have their own bank account. Users have no choice but to accept these fees. With 791 million transfers made in 2016, there is huge potential for Stellar and IBM to take some of that market share.[20] Even partial Stellar adoption will have a significant impact on its market cap.
  10. In November 2017, Novatti Group entered into an agreement to integrate its platform into the Stellar network.[21] This is the company that is behind the processing of WeChat remittances between Australia and China. WeChat is the most popular high-traffic payments app utilised among the Chinese. Not to mention, WeChat owner, Ma Huateng, just became the 13th richest person in the world.[22]
  11. On November 2 2017, the first ICO was launched smoothly on the Stellar network.[23] It served as a viable simpler alternative to Ethereum.
  12. On November 11 2017, SatoshiPay announced its partnership with Stellar citing its reasons for abandoning Bitcoin. The latter was no longer viable for everyday transactions due to scalability and minimum amounts, with transaction fees being exorbitantly high. Significantly, Bitcoin was abandoned, and Stellar Lumens was chosen as its replacement out of a whole host of possible cryptocurrencies.
  13. On November 15 2017, the first Stellar Lumens ATM was launched in Singapore. This served as a first positive step in bridging the gap between cryptocurrencies and fiat currencies, with Stellar effectively allowing people to transact in their currency of choice, be it fiat or digital.[24]
  14. On November 22 2017, Mobius launched its ICO pre-sale on Stellar, citing specific reasons for choosing Stellar over Ethereum. Faster and cheaper transactions make ICOs more accessible and more accessibility means more money raised. The simplified model of Stellar vs. Ethereum means a reduction in the chances of security pitfalls.[25]
  15. On November 28 2017, Stellar Lumens made history by joining the $1 billion market cap club, which only a select number of cryptocurrencies have done.
  16. On November 29 2017, Stellar Lumens reached $0.10 for the first time – a significant psychological trading level that paves the way for growth to expand beyond $0.01 increments to $0.10 increments.
  17. On December 1 2017, it was announced that IBM added 8 new validators (i.e. Stellar anchors) in 8 different countries to the Stellar network – Australia, Brazil, Canada, Norway, Italy, Hong Kong, India, United Kingdom.

The growth trajectory of Stellar has been impressive to date and in our opinion, hasn’t received as much attention as it truly deserves as a sensible blockchain solution that is widely accessible and inoffensive to present-day banking practices unlike Bitcoin. The near future looks very promising as well: Chaineum, the first French ICO boutique, stated that it will use the Stellar network for upcoming ICOs. It is preparing eight ICOs by the end of 2017 for European, North American and Asian companies cumulatively worth €200m.[26] Furthermore, Yicex, recently created a website announcing that they had plans for Stellar Lumens to be able to be bought with a debit and credit card.[27] Not to mention, IBM’s Michael Dowling promises for some big partnerships by Q1 2018.

To conclude, XLM is severely undervalued. Cryptocurrency whales know this and they are stocking up fast every day.

Just take a look at the daily volumes. Sell walls have consistently been put up at key price levels to hoard as many tokens as they can before the inevitable pump off the back of ground-breaking news. In our view, those that realise how undervalued XLM is right now and ride the wave will benefit the most. This is a rare opportunity to get in early to the game with XLM in the same way that early adopters held Bitcoin in 2010.

This is your chance. Take it or leave it.

Your mates at Empty Bucket.

If you liked this article, please consider donating even a fraction of an XLM!

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References:

[1] https://lendedu.com/blog/investing-in-bitcoin

[2] https://blockchain.info/charts/avg-confirmation-time?timespan=1year

[3] https://blockchain.info/charts/transactions-per-second?timespan=24h

[4] http://www.altcointoday.com/bitcoin-ethereum-vs-visa-paypal-transactions-per-second/

[5] https://www.stellar.org/blog/using-stellar-for-ico/

[6] https://www.coindesk.com/ethereum-icos-youre-wrong/

[7] https://bitinfocharts.com/comparison/bitcoin-transactionfees.html

[8] https://www.stellar.org/blog/using-stellar-for-ico/

[9] https://www.stellar.org/blog/using-stellar-for-ico/

[10] https://entethalliance.org

[11] https://www.stellar.org/about/directory

[12] https://medium.com/@SatoshiPay/satoshipay-partners-with-stellar-org-4288ae0baa72

[13] https://storeofvalue.github.io/posts/stellar-lumens-what-is-it-and-should-you-invest/

[14] https://www.thepaypers.com/cryptocurrencies-bitcoin-virtual-currencies/money-transfer-tempo-integrates-into-the-stellar-blockchain/767249-39

[15] https://www.cryptocoinsnews.com/stellar-lumens-invade-top-10-with-131-percent-growth-rate/

[16] https://steemit.com/cryptocurrency/@fredrick/warning-the-coming-stellar-lumens-xlm-price-collapse-and-how-to-profit-from-it

[17] http://veekyforums.com/thread/3767458/business/palm-beach-confidential-september-issue-came-out.html

[18] http://www-03.ibm.com/press/us/en/pressrelease/53290.wss

[19] https://www.apfii.org/news/

[20] https://corporate.westernunion.com/annual-report/index.html

[21] https://techinvest.online/novatti-reaches-mou-integration-stellar-network/

[22] https://www.forbes.com/sites/kerryadolan/2017/11/21/chinese-billionaire-behind-tencent-cracks-the-worlds-top-ten-richest-for-the-first-time/#4a11d59e446e

[23] https://medium.com/@smartlands/smartlands-will-be-the-first-ico-on-the-stellar-platform-54b7c81a9ac2

[24] http://www.newsbtc.com/2017/11/16/first-lumens-atm-introduced-singapore-fintech-festival/

[25] https://www.stellar.org/blog/using-stellar-for-ico/

[26] http://www.finyear.com/Chaineum-the-first-French-ICO-Boutique-will-use-the-Stellar-Network-for-Upcoming-ICOs_a38933.html

[27] yicex.com

6 thoughts on “The Next Bitcoin

Add yours

  1. All the favorable arguments for XLM cited in the article hold good for XRP too, right? Then what makes XLM better positioned to explode more than XRP. Shouldn’t you also consider XRP and then come to a conclusion? Would love to hear your thoughts.

    1. Hi Harry,

      Thanks for your comment! Ripple has many more partnerships that we know of at this point than Stellar, but really none of them actually use XRP. Stellar’s partnerships fully utilise XLM in their transactions. XLM is not only the asset but also the mechanism. In this way, XLM should not be pegged to XRP and this has been overwhelmingly reflected in the price movements recently.

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