Stellar Lumens (XLM 1.35%) climbed about 100% last year. But since, like many cryptocurrencies, this player has struggled to move higher. Year to date, Stellar is down about 24% and trading at about 20 cents. Still, Stellar remains a decent-sized player compared to the thousands of cryptocurrencies out there. It is No. 31 when it comes to market value.
Of course, Stellar may climb from today's level. But the big question is does it have what it takes to make it to and past the key level of $1? Let's take a closer look at this crypto player for some clues.
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Transferring money around the globe
Stellar is a decentralized network used for the transfer of money around the globe. The native currency is called the lumen, and it exists as a way to secure the blockchain's operations. Each account using Stellar must hold a small number of lumens. In addition to security, Stellar uses lumens so that the system won't favor one particular currency -- such as the dollar or the euro. Instead, transactions are paid in lumens.
And this brings us to two major points: Transaction costs and speed. Stellar wins in both areas. Transactions cost only 0.00001 lumen. And each operation reaches completion within three to five seconds. Cost and speed have been trouble spots for some cryptocurrencies, including market giants Bitcoin and Ethereum.
So, what kind of applications can we find on the Stellar network? Developers can build global payment apps, asset exchanges, and micropayment services, for example. One major user of Stellar is IBM. The company has built its IBM World Wire global payment network on Stellar.
What's next for this dynamic network? According to the blockchain's 2022 roadmap, Stellar aims to increase scalability and innovation. Stellar also wants to boost participation in the network and bring in new users. And the third point is the idea of championing diversity and inclusion. Progress on any of these goals could offer Stellar's value a boost.
A coin supply perspective
Now let's get back to our question. Could Stellar climb to $1? Let's look at this from a coin supply perspective first. Stellar's circulating supply totals about 24.9 billion. So, if that supply reaches $1, we're looking at a market value of $24.9 billion. That means Stellar would become the world's ninth-biggest cryptocurrency. That's very possible.
It's also possible Stellar could reach $1 as use of its network increases. A look at Stellar's recent statistics shows growth is happening. In the third quarter of last year, total accounts increased by more than 23% year over year to almost six million. The total number of payments soared 149% to nearly 30 million payments in the quarter. And through the end of the third quarter, Stellar had processed one billion transactions since the start of 2021.
It's important to remember that all cryptocurrencies are risky. Competition is high and the market is relatively new. But Stellar has what it takes to reach for the stars -- and that may mean hitting $1 or more down the road.
Adria Cimino owns Ethereum. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
As a cryptocurrency enthusiast and expert in the field, I possess a comprehensive understanding of blockchain technology, decentralized networks, and various cryptocurrencies, including Stellar Lumens (XLM). My expertise extends to analyzing market trends, evaluating the underlying technology of different digital assets, and interpreting their potential for future growth or adoption.
Stellar Lumens (XLM) is a digital asset designed to facilitate global money transfers through a decentralized network. It operates as an open-source protocol, aiming to make cross-border transactions more efficient and affordable. Here's a breakdown of the concepts and information mentioned in the provided article:
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Stellar Lumens (XLM) Performance:
- XLM experienced a significant climb of approximately 100% in the previous year but has faced challenges in maintaining higher values lately, with a 24% decline year to date. As of the article, it was trading at around 20 cents and ranked as the 31st largest cryptocurrency by market value.
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Stellar's Functionality:
- Stellar operates as a decentralized network for global money transfers, using its native currency, the lumen (XLM), to secure the blockchain and prevent favoritism toward any particular currency. Users are required to hold a small number of lumens in their accounts.
- The network boasts low transaction costs (0.00001 lumen per transaction) and swift transaction completion times (three to five seconds), outperforming several other cryptocurrencies in these aspects.
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Use Cases and Applications:
- Stellar's network supports various applications such as global payment apps, asset exchanges, and micropayment services. IBM notably utilizes Stellar's network for its IBM World Wire global payment network.
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Future Goals and Roadmap:
- Stellar aims to enhance scalability, innovation, network participation, and user inclusion according to its 2022 roadmap. Achieving progress in these areas could potentially increase Stellar's value.
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Market Value Perspective:
- Analyzing the circulating supply of approximately 24.9 billion lumens, the article suggests that if the value of XLM were to reach $1, the market value would soar to $24.9 billion, potentially making it the ninth-largest cryptocurrency globally.
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Network Growth:
- Stellar has showcased growth in its user base and transaction volumes. In the third quarter of the previous year, the total number of accounts increased by over 23%, with a significant surge in total payments and transactions processed.
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Risk and Potential:
- The article emphasizes the inherent risks associated with investing in cryptocurrencies, highlighting the competitive nature of the market and the relative novelty of the industry. However, it acknowledges Stellar's potential for future growth and reaching higher valuation milestones like $1 per XLM.
In conclusion, Stellar Lumens (XLM) operates as a promising decentralized network for global transactions, offering advantages in terms of transaction speed, cost-effectiveness, and potential use cases. Its future trajectory toward reaching $1 or more per XLM depends on its ability to achieve scalability, increased adoption, and continued innovation in the evolving cryptocurrency landscape.
