Here’s Why the Stellar Lumens (XLM) Price Skyrocketed
As Ripple (XRP) prices continue to lose steam, a purported “Ripple Killer” is fast catching up. Stellar (XLM) is now sitting at the sixth spot on the list of most valuable cryptocurrencies, after having pushed Litecoin off the podium.
If you follow my work, I’ve been pitching Stellar as a potential multibagger for a while now. This time around, I’ll be flirting with numbers to put a price tag on XLM. But before we get to my Stellar price prediction for 2018, let’s first rehash the recent developments that have breathed fresh air into this crypto.
Two noteworthy pieces of news in the past couple days have helped add a nitrous oxide boost to XLM prices.
Firstly, in case you haven’t been following, the famous online payments company, Stripe, just bid farewell to Bitcoin for good. Basically, the company will no longer be entertaining Bitcoin transactions since Bitcoin’s slow processing speed and high transaction fees were beginning to take a toll on its reputation.
With Bitcoin out of the picture, the company has indicated plans to add other cryptocurrencies as a replacement. What’s notable is that Stellar got the first mention in the handful of possible Bitcoin substitutes they are considering. (Source: “Ending Bitcoin support,” Stripe, January 23, 2018.)
It’s worth pointing out here that Stripe has provided seed funding to Stellar since its early days. A partnership with Stripe would be a major breakthrough for Stellar. Since the probability of it happening seems high, we’ll be holding our breath on it.
Secondly, it seems like Stellar is beginning to steal away ICOs (initial coin offerings) from the ICO powerhouse, Ethereum. An ICO is a blockchain project (more like a crypto-based startup) that raises money through cryptocurrencies. As of now, Ethereum is the most popular choice for ICOs.
This week, however, a major ICO picked Stellar over Ethereum. Mobius, which is touted to be a project similar to Stripe, has managed to raise $39.0 million through Stellar’s native coin, “lumens.” Mobius’s reasoning to choose Stellar was simple; Stellar is both cheaper and faster than Ethereum. (Source: “Why a $39 Million ICO Chose Stellar Over Ethereum,” CoinDesk, January 25, 2018.)
Similarly, there have been some recent instances where project developers have moved to Stellar’s network citing the same reasons. We have the example of Kik ditching Ethereum in favor of Stellar, and SatoshiPay giving up Bitcoin and shifting to Stellar. Their choice has been based on Stellar’s better scalability and faster performance over the other cryptos.
Long story short, Stellar is beginning to draw attention. But this hasn’t happened overnight. Stellar first came on the scene when it sealed a landmark deal with the Big Blue—a deal that pinned it across the world map. This deal primarily underscores my bullish XLM price forecast.
Don’t Forget The IBM – Stellar Partnership!
Exactly three months ago, in October, Stellar entered into a groundbreaking partnership with International Business Machines Corp. (NYSE:IBM).
IBM had plans to create a cheap cross-border payments platform, which could work with or without banking intermediaries. For this initiative, IBM picked Stellar’s blockchain-based technology.
As part of the deal, IBM is in the process of building a network through which money can flow from one country or currency to another country or currency. The mode of payments IBM is using on the network is Stellar lumens—Stellar’s native crypto-coin. The tech giant has already launched a test service for 12 currencies across the world.
In addition to this partnership, Stellar has managed to seal more than two dozen similar partnerships across the globe, including six in Africa, eight in the Asia-Pacific region, three in Europe, and five in the Persian Gulf. (Source: “Stellar and the State of Cryptocurrency,” Stellar.org, January 22, 2018.)
So rest assured, Stellar is not just a “whitepaper.” It’s a fully-functioning reality. However, before I turn to my Stellar lumens price prediction 2018, I’d like to address one concern.
You may be wondering why the media doesn’t talk about Stellar as much as Ripple. It does sound like a promising technology, after all. Well, it’s probably because the latter has better PR in the industry.
Ripple arrived on the market three years earlier than Stellar, so, by default, it has the first-mover advantage. On top of that, the team behind Ripple has used its resources well to establish repute within both Silicon Valley and on the Wall Street.
What’s striking, however, is that both Ripple and Stellar share a common co-founder. Jed McCaleb, who’s currently leading Stellar, is also the co-creator of Ripple. McCaleb knows Ripple inside out. This is exactly why Stellar can give Ripple a serious run for its money.
Why Stellar May Be the Next Ripple
Let me break it down further why Stellar is being touted as the Ripple killer.
Stellar is a decentralized technology for moving funds across borders. It’s the blockchain equivalent of SWIFT (Society for Worldwide Interbank Financial Telecommunication)—the platform used by most banks for international money transfers.
Ripple does exactly the same. But Ripple promotes itself as a solution for banks. Contrarily, Stellar promotes itself as a solution for people. This is the differentiation that primarily sets them apart.
While Ripple is shaking hands with the banking sharks, Stellar is joining hands with tech giants for a nobler cause. Stellar’s aim is to make the flow of funds cheap, fast, and safe for the underprivileged—for instance, millions of people living in third-world countries who can’t afford high banking fees. Stellar will allow them to move funds for only a small fraction of a penny.
So I’m seeing Stellar reaching a much bigger target market than Ripple in the long term.
Plus, in terms of technology, Stellar boasts superiority over Ripple. Although both Stellar and Ripple are equally scalable and can entertain up to 1,000 transactions per second, Stellar is much cheaper to use than Ripple. This makes Stellar more attractive.
Coming to their price performance now, Stellar is a winner here too. Despite having tumbled from its all-time highs, Stellar has managed to weather the recent cryptocurrency crash way better than Ripple and other leaders.
Since the beginning of this year, Stellar is up more than 23%, outpacing Ripple’s performance. In the past one year, Stellar has delivered returns in excess of 28,000%, again beating those of Ripple.
Chart courtesy of TradingView.com
Analyst Take
While I’m also bullish on Ripple, if I were to make a choice between Ripple and Stellar, I’d pick the latter. At this point in time, Stellar’s growth potential seems tremendous as new projects join Stellar and its partnership with IBM materializes.
I’ve discussed before why I fear Ripple’s love affair with the money-hungry banking industry may turn out to be its Achilles heel. In the grand scheme of things, Stellar may enjoy an edge over Ripple for reaching out to people directly. After all, statistically speaking, there are more people out there than banks.
Regardless, I must warn my readers that since cryptocurrencies cannot be valued with traditional valuation tools, their proposed value largely depends on their anticipated demand. This is why volatility remains high in this market. So investors must tread with care.
My Stellar price prediction 2018 is nonetheless bullish and I’m seeing XLM crossing the $1.00 mark soon. I forecast Stellar lumens to be trading in the range of $1.00 to $1.25 through the latter half of the year.