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9 Reasons Why You Should Invest in Stellar (XLM) Today

18 Min Read
Last Updated April 28th 2021

There are lots of reasons why you might want to invest in Stellar XLM. Many think that they have to be a savvy crypto investor with lots of money — but, with some common sense and research, it’s pretty accessible, even for beginners.

Stellar Lumens (XLM) has been gaining exponentially over the past three months. Quite expected, considering that the entire crypto market is in a boom right now and has hit a valuation that is north of $2 trillion. However, over and above the market-driven push, Stellar is a fundamentally strong cryptocurrency. For context, here are nine reasons to invest in Stellar (XLM) today.

There are all kinds of reasons why you might want to invest in Stellar XLM — probably some you’ve never considered. Here are the top 9 that we found.

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9 Reasons Why You Should Invest in Stellar

1. Stellar Lumens is Practical for use as a currency

One of the reasons to invest in XLM is its practicality as a currency. The stellar blockchain can handle anywhere between 1000 and 5000 transactions per second.

This makes it a formidable competitor to centralized payment systems, a factor that stands to give it value as more people adopt crypto payments.

This is a big deal for a couple of reasons. Firstly, the whole essence of crypto is to make payments a lot faster and compete with centralized payment methods such as Visa and MasterCard. If it does not meet this threshold, then it defeats the whole essence of its adoption.

For this reason, a crypto like Stellar (XLM) comes across as a viable alternative, especially when handling payments for the global unbanked population. Secondly, is the competition within the crypto market.  Today, there are over 4000 cryptocurrencies in the market, and a lot of them are primarily speculative.

The ones that stand to gain long-term are those that have value beyond speculation. Bitcoin and Ethereum have already established themselves as a store of value, and utility cryptos respectively. On its part, Stellar is among the cryptocurrencies that are emerging as viable options for payments.

This will see it gain in adoption long term, by people looking to make daily transactions without going through the banking system, don’t have access to the banking system, or businesses that want to jump on the crypto payments bandwagon. So far, the number of companies that are accepting crypto is growing, and it’s global.

From companies like Tesla in the U.S to restaurants in Hong Kong, the adoption is rising. The best part is that Bitcoin, which is the most widely known cryptocurrency, is no longer practical in making payments due to its rising network fees. The same goes for Ethereum, leaving the likes of Stellar as top contenders.

2. Stellar Lumens has KYC functionalities

One of the key misgivings of cryptocurrencies is their susceptibility to misuse by criminals. Recently, ECB President Christine Lagarde noted a risk of cryptos being used in money laundering and other financial crimes.

Stellar is exempt from this problem. That’s because the stellar blockchain has an inbuilt KYC feature. Anyone looking to build assets on the stellar blockchain can do a background check on users.

This can only mean one thing, in the long run, Stellar is one of the cryptos that will find favour with regulators in key markets like the U.S and the EU. This could unlock significant value in Stellar (XLM).

However, it is not just a matter of being accepted by regulators, but also the ability to compete with the upcoming Central Bank Issued Digital Currencies (CBDCs).

While crypto enthusiasts may not care much about government control over money, a sizeable population of the world does.

Lots of people still want the certainty of being able to trace their payments and would gladly adopt government-issued crypto. For decentralized payment cryptos to compete effectively in this market, they need to be in a position to offer the same value that CBDCs offer and more.

Stellar stands out quite well in this respect. Stellar’s KYC functionality means it is at par with central bank-issued cryptos in terms of safeguarding against criminality and transaction speeds. It also has the added advantage of decentralization and privacy.

Unlike government-issued crypto that gives a central bank the ability to monitor transactions and probably censor them, Stellar has no central point of control. There may be concerns that its validators are too few for it to be considered decentralized, but that’s about it. Some cryptos have much worse tokenomics, and they are doing just fine.

3. Stellar Lumens has smart contract capabilities

The stellar blockchain allows for the building of assets. This means investors can launch tokens and even build decentralized exchanges on this blockchain.

Since XLM is the native token on the stellar blockchain, it means there will always be value for it. The decentralized exchange, in particular, could be one of the critical factors that will drive the value of Stellar in the long run.

That’s because while it accepts payments in any currency, stellar is one of the anchor currencies on this network. This means that once people on-ramp via fiat, Stellar lumens becomes the best option for moving between assets at a minimal cost.

Then there is the brand aspect to it. While the stellar decentralized exchange is agnostic on the currencies that can be used for transactions, it carries the name stellar. This means that this DEX’s growth would draw in more investors into Lumens for the association.

The good news is that the DEX has lots of growth potential. Over the last four years, the number of people using decentralized exchanges for crypto transactions has shot up.

This has primarily been driven by a better understanding of the markets and security issues around centralized exchanges. Just recently, one of Turkey’s largest exchanges made away with over $2 billion of investor funds.

The owners simply shut it down and fled. This is not uncommon, and many others have done the same. With a DEX such as the stellar decentralized exchange, such issues are non-existent since there is no central party in the whole exchange.

This is a confidence boost and it won’t be long before DEXs dominate the exchange market and established ones like the Stellar DEC take over the market. It’s a factor that gives the stellar blockchain lots of underlying value.

Read Also: Could Stellar Be A Millionaire-Maker Coin?

4. Stellar Lumens is listed on multiple exchanges

The number of exchanges that a cryptocurrency is listed in, is one of the most important factors to its growth. That’s because it affects both its liquidity and credibility of a coin or token. This also explains why whenever crypto is added to a new exchange, the price shoots up.

The rationale is quite simple, accessibility and liquidity. When crypto is available on multiple exchanges, more investors, both retail and institutional, have access.  Therefore, as the market expands, it can benefit from the surge in demand that follows.

Secondly is the stability that comes with liquidity. When an asset is highly liquid, a few investors selling or buying may not significantly impact the price.

For context, since the crypto market crossed the $1 trillion market capitalization, Bitcoin is now considered a risk-off asset.

This means that a single investor buying or selling may not hurt the price. The price can still move up and down, but it is unlikely to be as drastic as it was in 2017 or earlier.

In the altcoins market, Stellar (XLM) is one of the most liquid assets. It can be traded on pretty much all major exchanges ranging from Coinbase to Binance.

On top of that, Stellar has a liquidity advantage that most altcoins do not have, and that’s a DEX of its own.

Millions of dollars’ worth of stellar lumens change hands on the stellar DEX; as more people get to know of this DEX, its trading volumes will grow.

High liquidity counteracts whale activity on its price. The impact of liquidity as a safeguard against whale selloffs is evident in the price action of XRP, a key XLM competitor.

Through 2021, Ripple co-founder Jeb McCaleb has sold hundreds of millions of dollars worth of XRP.  However, this has had little impact on the price, and XRP is gained by over 100% and seems to be trading in tandem with the rest of the market.

This price action shows that highly liquid cryptos like XLM is safe from a selloff by a single entity. This is probably one of the best reasons why you should invest in XLM today.

5. Stellar Lumens is a mirror, but a safer version of XRP

XRP and XLM are two cryptos that are related in lots of ways. For starters, both are targeted at the highly valuable cross-border payments market and have made in-roads in it.

For instance, Ripple has been aggressive in pushing for the adoption of XRP for payments settlements in Europe and Asia.

On its part, the Stellar Development has established several valuable partnerships with companies like IBM.

Ideally, both are valuable investments, but XLM is less of a risk, a factor that could see it gain more in adoption long term.

That’s because Stellar is run by a foundation, while XRP, has a company, Ripple, behind it. The complexity around XRP comes from the fact that having a corporate entity behind it has created issues with the SEC.

The SEC argues that XRP was at one point sold as an unregistered Ripple security. The case is still in court, and there is no telling about the direction it could take.

This uncertainty has not played out well for Ripple and XRP. Some of the critical partners that Ripple had won earlier, such as MoneyGram, have permanently served ties.

A couple of exchanges have over the past year, delisted XRP too. If the case takes an adverse direction against Ripple, things could get rocky for XRP in the short term. However, these problems don’t mean that the cross-border payments market will cease to exist.

The gap is still there, as banks need a way to settle transactions faster and at a lower cost. This leaves a potentially big market for Stellar adoption and value growth for XLM. Stellar fits perfectly in this market for two reasons.

Like XRP, it can be used to settle cross-border transactions fast, and at almost zero cost. It can achieve this and without the risk of getting into problems with regulators.

Without regulatory risks, XLM is in a good position to be adopted by the U.S., one of the world’s biggest financial markets.

Then there is the speculative aspect of it. As investors understand the size of the cross-border payments market and the potential that XLM has in it, the value of XLM could grow exponentially in coming years.

This could be the single biggest value driver that XLM has, especially now that cryptocurrencies have gone mainstream and people are more aware of the potential they hold in the market.

Read More: Ripple vs Stellar

6. Stellar Lumens Gains with the rest of the market

If you are still unsure on whether you should invest in XLM, consider the fact that the whole market is on the rise.

The crypto market is usually quite predictable in the sense that it moves as a whole. For context, when Bitcoin hit its recent highs of $60k, the altcoins market rallied too, with many altcoins hitting and surpassing their all-time highs.

This means that with a good understanding of the direction that the market can take, you can make pretty low-risk bets on any crypto and make money. On this basis, one can argue that Stellar Lumens is in a good position for adoption as a high-growth investment.

That’s because overall market fundamentals are looking good. For starters, cryptocurrencies have finally gone mainstream. Since the market crossed the trillion-dollar mark, the level of investor interest, both institutional and retail, has shot up.

You now have traditional trusts that are run by the likes of Jacob Rothschild investing in crypto exchanges. Big banks such as Goldman Sachs and JP Morgan are also positioning themselves in this market.

The regulatory environment is also poised to get better for crypto. In the U.S, for instance, the incoming SEC chairman is quite friendly towards crypto and could open the flood gates for things like crypto ETFs.

This means that the demand for cryptocurrencies in key markets like the U.S is about to shoot up. While such institutional adoption is heavy on Bitcoin, any increase in the price of Bitcoin will see the price of altcoins rally as well.

This is especially the case for altcoins that have a strong use case like Stellar (XLM). Stellar has especially unique in an increasingly mainstream crypto market.

That’s because it offers a utility value to the financial industry in terms of cutting costs for cross-border payments. It is also a fully-fledged cross-border payments system on its own.

This means that it stands in a good position to grow in a world that is increasingly adopting blockchain technology.

Check Out: Is Stellar Lumen a Good Investment?

7. Stellar Lumens has a fantastic team behind it

The strength or weakness of a crypto project has everything to do with the team behind it. If the team is weak, the crypto will also be weak too.

Many projects that have weak teams behind them either fade away or are easily infiltrated by hackers leading to a catastrophic loss of value. Stellar (XLM) does not have such problems, as it is backed by one of the strongest teams in the crypto space.

The team is led by Jed McCaleb, one of the most important names in crypto. Not only is he one of the founders of Stellar, but he was also a founding member of Ripple, one of the most successful projects in the crypto-verse.

Besides McCaleb, the Stellar Development Foundation has been adding tech heavyweights to the team over the years. In 2019, it brought in Denelle Dixon to take over from Jed McCaleb as CEO. Like Jed, Dixon is a respected name in the tech industry.

He is a former COO of Mozilla Foundation and has been quite instrumental in the rebranding of Stellar. It was under his watch that Stellar (XLM) was listed on Coinbase. Another big name in the Stellar Development Foundation is David Mazieres.

David is a globally renowned computer scientist. In his career, he has worked as a computer science professor, specialized in security.

He is known for his deep expertise in the theoretical aspects of computer science. The best thing is that he is not just another expert in the stellar team but is also a lifetime board member, making important decisions for the long-term growth and development of stellar.

The Stellar Development Foundation also boasts other high-profile names that make Stellar a viable crypto investment in the long run.

Some of them include Patrick Collison, who is the CEO of Stripe; Matt Mullenweg, the founder of WordPress; and Sam Altman, who also doubles up as the president of Y-Combinator, a company that is known for incubating highly successful startups.

All these big names have played a considerable role in getting Stellar to where it is today, as one of the most recognized cryptocurrencies in the market.

On top of that, it gives investors, especially institutional ones, faith in stellar lumens. For a market that is just starting to gain traction, this is a big deal and could see it grow exponentially in the long run.

Don't Miss: Stellar (XLM) Price Prediction for 2025 and 2030

8. Stellar Lumens has a world-class user experience

Cryptocurrencies are a complex tech and it’s only recently that most people are beginning to have even a small understanding of them.

This only means one thing, only the easiest cryptos to understand, trade, and store are likely to gain the most traction. Stellar (XLM) is one of the most user-friendly cryptocurrencies in the market.

One of the things that make Stellar user-friendly is its ability to be stored on multiple wallets including Ledger, and Trezor. This means if you buy Stellar (XLM), you do not have to leave it on exchanges.

This is quite attractive to an investor who wants to get into crypto with a long-term view in mind. On top of that, the stellar network recommends a number of wallets that users can use to store their XLM. 

One thing that stands out about the wallets that the stellar network recommends is the transaction fees. The average transaction cost on these wallets is 0.00001 XLM.

This is negligible, while also allowing for super-fast transactions and safety. For context, to make a transaction from BlockEQ to a stellar web wallet takes about 2 seconds.

The transaction is also anonymous, and almost cost-free. When it comes to ease of transactions, Stellar is one of the easiest to use in the market.

It has a DEX, StellarX, through which users can trade in an environment where they retain full custody of their XLM until a transaction is completed.

Similarly, the DEX allows for fiat on-ramps, which makes it even easier for investors to get into XLM. The DEX also has no trading fee, which makes it even easier for investors to buy into Stellar.

For most other cryptocurrencies, the process of on-ramping involves first buying Bitcoin. This process is tough, and quite complicated, especially for someone who is new to crypto.

9. Stellar Lumens has a clear roadmap

The crypto market has over four thousand cryptocurrencies. However, most of them are nothing but pump and dump schemes that have no clear roadmaps on growth and development.

This explains why the crypto top 100 has changed so much over the past years. Stellar is one of those that have maintained their place among the best, and for good reason. It has a very clear roadmap on growth and development, and it has been acting on it.

This means that it is continually strengthening itself for the market, and creating the right environment for long-term growth.

Since 2014, the stellar blockchain has made significant progress on its roadmap. The latest was in 2020 when it enabled anchors to connect to each other, thereby opening liquidity on the network. This has helped drive up the network effect for the stellar blockchain and make it one of the most successful blockchains one of the most successful ever built.

As part of the roadmap, the developer team also intends to keep increasing the network’s capacity and make it at least 5 times more efficient than it is.

One way to do this will be by creating additional payment corridors. With such a strong road map, it is not hard to see why Stellar is a fundamentally strong cryptocurrency to invest in for short term, and long-term gains.

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