One coin we’ve been keeping an eye on is none other than Stellar Lumens (XLM). Stellar is owned and operated by the not for profit Stellar.org and has been heralded as the future of banking.
XLM is a hard fork of Ripple (XRP) and through the Stellar Consensus Protocol facilitates lightning fast and cost effective domestic and cross border money transfers. Transactions through the Stellar network take mere seconds which is a significant improvement on the current SWIFT system where transactions can take up to five days to complete.
Stellar is the decentralised payment infrastructure system and Lumens are the native cryptocurrency on the network. Lumens act as a base or bridging currency which brings liquidity to various currency pairs which otherwise may not have been easily tradable. We talk about liquidity a lot but we view it as one of the biggest issues facing the crypto space.
For example, someone wanting to send their Polish friend Zlotys (PLN) with their Indonesian Rupiah (IDR) may be unable to do so or may find that they must wait for an extended period for the trade to execute. The reason for this is because the transaction will need to be processed by multiple banks and will therefore incur multiple fees along the way. It all boils down to a lack of connectivity and a lack of liquidity in thinly traded currency pairs.
When a trade like the above is placed on the Stellar network, the distributed exchange will search the order books and will find the cheapest and fastest way to facilitate the trade using a string or chain of currencies which could include Lumens, the US Dollar or any other major currency as a base.
Such a transaction would be completed almost instantly and would incur a very small fee of 0.00001 XLM which is less than a cent. This makes Stellar Lumens a very attractive system for transacting money and is effectively ushering in a new era of financial interconnectedness.
Not only will this allow for more streamlined payments in the developed world but it will also empower and firmly integrate the financially disadvantaged into this new global system. It’s no wonder IBM are on board!
2018 should be an interesting year for Stellar and we are eagerly awaiting the integration of the Lightning Network which is beginning this year. Whilst there has been a lull in trade volume, the number of new accounts continues to grow and we do expect that trade volume will resume in line with adoption rates.
We aren’t looking to buy XLM yet as we are still in a bear market but as of writing, support at the $0.18 level appears to be holding – for now. Volume is still incredibly low and we would at the very least like to see XLM break above the 0.23 and 0.26 levels to confirm a potential reversal. As we mentioned earlier, we are keeping a close eye on this promising project which is down a whopping 80% from all-time highs.