Money transfers are big business, as this crypto’s growth shows.
- Stellar’s Lumens token has grown by over 9,000% in the past five years.
- Stellar is a money transfer platform that seeks to enhance existing financial systems.
- Stellar hasn’t managed to regain its all-time high from 2018, but it’s still one of the few cryptocurrencies that was in the top 50 by market cap five years ago and is still there today.
If you’d bought $1,000 of Stellar’s Lumens (XLM) token in March 2017, it would be worth almost $95,000 today. That’s an increase of over 9,000% in five years. Stellar is a money transfer and remittance platform that’s been around since 2014. Lumen is the platform’s native token, and it’s a key part of Stellar’s business.
What’s really interesting is that Stellar is one of only 11 cryptos that were in the top 50 by market capitalization five years ago and are still there today. Back then, it was in 23rd place, and today it is in 31st position, according to CoinMarketCap data. Where many other cryptos have fallen much further down the list or collapsed completely, Stellar is still going strong.
What is Stellar?
Stellar describes itself as an “open network for storing and moving money.” It offers ways to create, send, and trade all forms of money, whether that’s traditional money like dollars or cryptocurrencies. One popular application is in international money transfers, which can cost an average of 6.5%. Stellar makes these possible at a fraction of the cost.
Unlike some crypto projects that seek to replace traditional financial systems, Stellar wants to enhance existing institutions. Its mission is to power a digital economy where money can move freely around the world. You’ll need Stellar’s Lumen token to use its platform. Lumen is available from several top cryptocurrency apps and exchanges.
Stellar’s price action
Stellar reached its all-time high at the start of 2018 during Bitcoin’s (BTC) first real bull market. Like Bitcoin, Stellar’s price then dropped. XLM struggled to regain any momentum until 2020 and 2021 when it rose alongside the rest of the crypto market. However, unlike Bitcoin, Stellar has not been able to return to its high of early 2018.
Indeed, XLM gained around 100% last year. That’s a solid return but nowhere near some cryptocurrencies’ gains of 5,000% or more. However, Stellar is a very different proposition. Several of the cryptos that saw eye-watering gains were relatively new, making them much higher-risk investments. The fact that Stellar has held its position in the top 50 for much of its existence means it has a better chance of surviving long term.
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Here are some key moments for Stellar in recent years.
- July 2020: Stellar announces integration with Samsung Blockchain Keystore
- February 2021: Stellar announces integration with USD Coin (USDC) stablecoin
- October 2021: Stellar announces partnership with MoneyGram
What does the future hold for Stellar?
Cryptocurrency prices have struggled in recent months, with many trading well below their all-time highs. Tighter economic conditions, combined with Russia’s invasion of Ukraine, have pushed investors away from riskier assets like crypto. There are fears we could be in for a prolonged period of low prices.
If we are at the start of another crypto winter, it is reassuring to see Stellar has already survived one lengthy slump. The platform is also planning to launch smart contract functionality this year, which it says will help it remain an accessible ecosystem for developers to build high-quality applications. Smart contract functionality is one of the big drivers for the growth of cryptocurrencies like Solana (SOL) and Avalanche (AVAX) last year.
Stellar is also already working to turn a potential threat into a benefit. Several countries are deciding whether to follow in China’s footsteps and launch their own govcoins or central bank digital currencies (CBDCs). These are centralized, government-backed versions of existing currencies that will run on the blockchain.
The reason that CBDCs could threaten Stellar is they could offer low-cost international money transfers and speedy transactions without the need for crypto. But Stellar is marketing itself as a platform governments could use to issue CBDCs. If Stellar succeeds and is able to work with governments, it would go a long way to neutralizing the negative impact of govcoins.
There’s also a potential cloud on the horizon in terms of increased regulation. There are two parts to this. First, it is extremely likely that various countries, including the U.S., will introduce stricter rules on crypto this year. Stellar, which offers bank-like services, may find itself forced to follow bank-like rules.
Second, Stellar has a lot in common with Ripple (XRP), which is in a legal battle with the SEC over whether it is a cryptocurrency or a security. Securities have to follow strict reporting and trading rules. If Ripple is ruled to be a security, there could be a knock-on effect for other cryptos, including Stellar.
If you’re hoping to see another 9,000% growth from Stellar in the coming five years, you may be disappointed. However, if you’re looking for an established cryptocurrency that may survive and grow in the long term, Stellar may be worth a closer look.
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