Is Stellar Lumens Worth Keeping An Eye On?

Last Updated January 14th 2022
6 Min Read

Stellar Lumens has gained quite a lot of popularity over the past few years, and investors are curious to know whether Stellar is a good investment. It is a pragmatic blockchain project made to support the digital representation of any currency. It is always best to know what new projects have in their account in a market filled with opportunities.

Here is a detailed study of Stellar Lumens, the reason for its popularity, and leaving a choice for investors to decide whether it is a good future investment. 

What Is Stellar Lumens, And Why Was It Invented

Stellar Lumens (XLM) was created by Jed McCaleb, the inventor of Ripple. It is a digital currency that is similar to Ripple but different in purpose.

The Lumen is Stellar's cryptocurrency created to play a significant role in the network. Stellar is designed in a particular way and necessities that each account holds an adequate number of lumens at all times. Rather than helping institutions, Lumens was created with a mission to help individuals transfer money.

Earlier cross-border transactions caused a lot of problems for people. Lumens was created to overcome the problem of lengthy transactions and high fees. By providing a quick and inexpensive method of sending money across the world, Lumens was able to find a better solution for this problem. 

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

A Fintech For Cryptocurrency: XML

Our society is slowly moving to a cashless society today, and the companies benefitting from this are in no doubt financial technology companies. Fintech companies have become ever more essential as they allow individuals to move money easily. When this comes to the cryptocurrency world, Ripple and Stellar Lumens aims to take out the inter-bank transfer's high cost and make it accessible for all. 

Stellar Lumens act as the peer-to-peer lender for moving money across borders; unlike Ripple, which caters to banking institutions, Stellar targets the unbanked. Both Ripple and Stellar serve the same purpose in the crypto world. Their purported goal is to make transactions easier for people with the speed and security of digital tokens and facilitate the movement of hard assets, including fiat currency, across borders.

Unlike Bitcoin, a proof-of-work (PoW) coin, Stellar uses the Stellar consensus method. Through this method, transactions are settled within 2-5 seconds. The consensus method uses a series of servers that sync with each other for verification rather than using miners for validating the transactions. 


Stellar's Underlying Technology And The Lumen Token 

The Stellar network is an open, decentralized peer-to-peer network that allows money to be moved and stored. Lumen is the network's native token, and it enables users to send sums of money and convert the currency.

The Lumen acts as a bridge that makes trading assets less expensive across borders. Therefore, this decentralized blockchain technology challenges the existing payment providers who charge higher fees for similar services and aims to address the gaps between disparate closed systems, that is composed of the current international financial markets. 

Lumens provide easy transactions of value between currencies that do not have a commonly traded pair. Just one type of currency can be sent from one peer through Lumen, which arrives as a different currency to the receiver. The journey to the receiver is filled with various transitions through several currencies. By ensuring the presence of a straight currency pair swap or looking for an existing demand for initial currency from a Lumen holder, it searches for a pair of lumens and the destination currency, making the transaction seamless.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

What Makes Stellar Lumens Unique?

The first and foremost reason for its uniqueness is, Stellar allows organizations to leverage its network to reduce transaction and remittance costs. Along with that, it also manages micropayments and increases its reach through mobile branches. Each Stellar transaction costs just 0.00001 XLM. Although XLM is not a PoW coin like Bitcoin, it has a substantial price correlation to Bitcoin.

The website Coin Predictor states that the "correlation coefficient of the two cryptos is 0.55," which is a positive number. This is an added benefit to Lumens as it moves in the same direction as the popular cryptocurrency Bitcoin. 

Stellar's network is secured by the Stellar Consensus Protocol, which makes it unique from other cryptos. This protocol has four significant properties: decentralized control, flexible trust, low latency, and asymptotic security, making it a favourable trusted network for users. 


Is Stellar Lumens Worth Keeping An Eye On?

Now the perennial question is whether Stellar Lumens is a good investment? The answer is not simple. The Crypto market is volatile and is prone to sudden changes. Therefore, before planning to invest in any cryptocurrency, investors must do detailed research and study about the particular coin. 

Currently, XLM's total supply is around 50 billion, and the circulating supply is 24.78 billion. With a current market cap of $6.8B and more growth in its value in the coming years, Stellar can be a viable option for investors, but with sound risk management plans. 

Over five years, Stellar lumens is expected to grow as one of the best performing cryptocurrencies, especially considering its scarcity in the market. This will eventually boost its value and growth. Market veterans predict that Stellar's market capitalization might go higher than the growth percentage of Bitcoin over the coming decades. 

Don't Miss: Stellar Lumens Price Prediction


In Conclusion

With its lower cost, faster transaction, easy accessibility, and secure network that uses Stellar Consensus Protocol, XLM has been listed on an array of top exchanges within the crypto market. The scarcity of XLM itself can be a driving factor for the rise of its value over time, especially when Stellar's platform's demand shows a considerable increase. Considering all the factors and sound research, XLM can be a profitable addition to your investment portfolio. Holding it up in your digital wallet may turn out to be a good investment. 

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Read More:

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