Stellar Lumens (XLM)

The Coin: ​Founded in early 2014 by Jared McCaleb (who also happens to be the founder of the now infamous Mt. Gox) and Joyce Kim. The project describes itself as an “open source protocol for value exchange, and to promote global financial access, literacy, and inclusion”.

The Tech: ​Before going any further, it is necessary to make the distinction between the Stellar Network and Lumens. Stellar is the name of the network and protocol designed by the Stellar Foundation, while Lumens are the cryptocurrency used on the network. The Stellar global transaction network and protocol aims to be as widely accessible as possible, and its primary purpose is to allow for the international exchange of currencies to occur more easily and cheaply.  It does this by utilizing the same concept of the ledger system used by bitcoin and many other
cryptocurrencies (obviously with different source code for the Stellar Network), and by constantly syncing all servers running the Stellar network every 2-5 seconds. The source code for the Stellar network is completely open source and free to download on their website. In addition to this, it also uses “anchors”, which act as bridges between the Lumens cryptocurrency and whatever fiat currency you wish to exchange it for. These anchors will usually be banks or credit unions, meaning that although the Stellar Network itself is decentralized, its very use case requires that the system as a whole is not. This may be controversial to some, as one of the biggest reasons for the rise of bitcoin is its relative untraceability and freedom from centralized banks and financial institutions. However, every coin has a use case that it aims to fulfill, and those who wish to avoid the bureaucracy and regulation of banks should put their money elsewhere.

Features: ​While not exactly a feature, one of the most unique characteristics about the Stellar project is that it is 100% nonprofit. The developers wish to distribute 95% of all Lumens to the public eventually, even giving free Lumens to Bitcoin and Ripple holders.  In addition, the stellar network is free to use and the network fees are among the lowest ever seen in the crypto space. One Lumen can cover about 100,000 transactions. As of the time of this
writing, that is about 0.12 USD. The reason for this extremely low networking fee is because Stellar aims to become one of the largest currency exchange platforms in the world, allowing anyone with access to a computer a chance to utilize the Stellar network. Another useful but overlooked feature is that of micropayments, allowing people to exchange payments of less than 100 USD to another currency and do so with reasonable exchange rates. This is a growing niche that could use such a service, as the ever expanding pool of migrant workers in European
countries often need a way to send small amounts of money to their families back home. Stellar also aims to serve lower class people as well, a demographic uncommonly targetted by most cryptocurrencies. Through mobile apps that allow users to manage their accounts and low interest loan and micropayment options, the Stellar network will be a boon to potentially hundreds of thousands of underprivileged people. From what their whitepaper and mission
statement say, it appears that the Stellar foundation truly wants to help people and contribute to the overall advancement of human society, with profit taking a backseat.

The Trend: ​However, with all this altruistic talk of charity and helping the less fortunate, Stellar still very much intends to do what it needs to do in order to turn a profit for its investors. At the end of the day it’s still a business, after all. Remaining relatively stagnant for the first 2 years of its existence, Lumens value shot up a whopping 8x in May of 2017 from just half a cent to 4 cents. Some people are put off by coins with high supplies because the values for the individual coin or token aren’t as high, but this is a very illogical way of looking at things as the amount of
money put in is all that really matters. However, psychological factors like this do play a larger part in the trends of cryptocurrencies than many people think. After this initial spike, the value corrected and levelled out again, before skyrocketing in late November to upwards of 12 cents.

The Verdict: ​This is one of those projects whose true value will be shown only with time.  Although a savvy trader can probably turn a decent profit by short term buying and selling this coin, it is likely to give far greater rewards to patient long term holders who gradually accumulate, a task which is easy given that this coin undergoes frequent price corrections. I wouldn’t recommend short term trading this coin if you are new to cryptocurrencies because it
will likely be an underwhelming experience. If Ethereum is an action blockbuster, then Lumens is a slow paced indie movie (a bad analogy considering Ethereum has a lot of long term potential as well). Although the flashing tickers and rapidly changing percentages in the crypto space give many people the urge to sell as quickly as possible, it is imperative, for this coin or any other, that patience and rationality are exercised. Don’t expect a 100% gain in 2 weeks from this coin, but know that you possess the possibility of turning a 1000%+ gain in 2 years.

This is not financial advice.

Trade smart.

Mark Weerasinghe4 Posts

Mark Weerasinghe is a journalism student at the University of Copenhagen who has been studying and investing into cryptocurrency for nearly two years. He has been a fanatical supporter of Ethereum and Monero throughout their existence, and believes that blockchain technology is not just a get-rich-quick opportunity, but the foundation for the future of global trade as a whole.

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