Cryptocurrency Stellar (XLM) and its forecast for 2021
Stellar cryptocurrency is a universal platform that allows transactions with payment instruments. XLM cryptocurrency entered the crypto market in 2015. A detailed study of this cryptocurrency shows that it is a clone of Ripple. At the same time, the creators of this currency eliminated a number of shortcomings inherent in its predecessor.
Stellar cryptocurrency differs from its progenitor by the following advantages:
- The implementation of an elaborate system of coin distribution among the user audience, which made it possible to achieve the financial stability of the project;
- In contrast to Ripple, the creators of Stellar did not keep the bulk of the tokens. Thus, it was possible to exclude the possibility of manipulation by the founders. As a result, this crypto will be dependent on the market situation;
- ensuring the maximum speed of transactions using the platform's internal services, as well as the minimum amount of commission.
Such innovations inherent in blockchain-based digital currencies can be dangerous for the banking system. Already now many large commercial structures, as well as financial companies on the wave of Stellar's growing popularity have begun to implement technological solutions used in this cryptocurrency. Due to this, the popularity of the coin is expected to grow, as well as its rate, which will help attract investors.
How was the XLM coin created?
The Stellar cryptocurrency network was developed in 2014 by Jed McCaleb as a fork of the popular Ripple cryptocurrency. At the first stage, the program code and structure of the new coin were based on Ripple. Since 2015, Stellar began to use its own open-source protocol, which can be called an advantage of the platform for third-party developers. At the same moment, Stellar coins (XLM) entered the market, which, some time later, began to be called Lumens on the Poloniex exchange.
The situation with the separation of the two cryptocurrency platforms occurred against the backdrop of increasing criticism of Ripple for its creators' policy of centralization. The arguments of Ripple's opponents were the cryptocurrency's closed code and the fact that all of these coins were actually controlled by a small group of individuals. At the same time, Stellar managed to combine all the advantages of its progenitor and get rid of its inherent flaws, entering the top of the largest cryptocurrencies.
Features of XLM
As any financial project, the cryptocurrency Stellar Lumens has a number of specific features that distinguish it from other similar coins.
The characteristic features of XLM include:
- Stellar Development Foundation acts as the creators of the project;
- The authors of currency are Jed McCaleb and Joyce Kim;
- the software component of the coin is written with the help of C++ language;
- on crypto-exchanges the following trade name of currency is used: XLM;
- it takes no more than 5 seconds to confirm transaction on the network;
- support of thousands of transactions in one second
- the ability to implement any transaction involving the sale of cryptocurrencies, fiat money or tokens;
- open source software code;
- Instead of the usual Proof of Work scheme, this currency uses SCP;
- All technical documentation related to the functioning of the network is open to users;
- simplified and clean API, multi-signature and smart contracts support;
- distributed information base;
- 100 billion XLM coins were initially released to the market;
- the coin received a fixed inflation rate of one percent per year;
- Since Stellar does not use a mining scheme, all coins are available online at once;
- A significant portion of XLM is held by the Stellar Development Foundation.
Not all of the listed features can be attributed to the merits of the coin. For example, many crypto-enthusiasts, having learned about the appearance of this payment instrument, tried to understand how to mine XLM. As it turned out, this currency cannot be mined, which was a real disappointment for part of the cryptocurrency community.
Advantages of XLM cryptocurrency
According to experienced participants of the cryptocurrency market, the main advantage of the digital coin Stellar can be considered the scalability and openness of its source code. A telling aspect of this cryptocurrency's system is that it can easily handle thousands of transactions conducted within one second. At the same time, it takes no more than 5 seconds to confirm a transaction, which is an unattainable result for today's cryptocurrencies. Such characteristics of Stellar allow it to compete on an equal footing with bank remittance services.
Also, one of the most important advantages of this coin is the support of SCP technology, which allows network participants to exchange cryptocurrencies, fiat money, as well as tokens and other assets without restrictions.
At the same time, we should also note the support for the ability of users to use smart contracts, as well as multi-signatures. This makes it possible to significantly expand the functional component of this crypto.
It is quite possible that these positive aspects of Stellar will allow it in a short time to win a loyal audience, appreciating the constant technical innovations that can improve the work inside the crypto network.
The advantages of XLM also include the following specific features:
- The ability for users to create a large number of microtransactions while inside the Stellar network;
- low commissions for conducting even large transactions using the software tools of the network;
- full compatibility of the platform with other financial instruments;
- availability of any fiat currencies and cryptocurrencies, which is an additional factor that expands the functionality of the crypto-network;
- Coin operates in real time, so it is fully dependent on the market situation, which makes it possible to predict its exchange rate to the dollar and other fiat currencies;
- the advanced crypto-encryption system is used inside the network, which increases the overall safety and reliability of transactions;
- support of the automatic exchange of tokens;
- based on the Stellar Lumens software protocol, third-party developers can create clients and various plug-ins focused on facilitating the work with the currency.
Disadvantages of XLM
In general, there are not many, and they are not contained in the coin itself, but in external factors. The fact is that many governments are engaged in the development of legislation aimed at regulating the use of cryptocurrencies. News about the next legislative initiative constantly negatively affects the quotations of major coins. For example, XLM's direct competitor, XRP, is currently under pressure from the U.S. Securities and Exchange Commission (SEC), which could bury the cryptocurrency in the long run. There is no guarantee that after dealing with XRP, the U.S. authorities will not take on XLM, because technically these cryptocurrencies are very similar.
Outlook for Stellar in 2021
Based on the initial plans of the creators of Stellar coin, its further prospects will depend on the number of financial institutions that will cooperate with this platform. The information about the new contract signed between the representatives of XLM coin and the new company has a positive effect on the rate of this currency. The most promising partnership contract for the Stellar platform was the cooperation with IBM, the world leader in computer technology. Such a partnership will undoubtedly benefit Stellar.
However, when considering the prospects for 2021, it is not worth believing the predictions of economists and cryptocurrency market reviewers without a second thought. It is important to understand that XLM is a volatile asset, so its value is extremely difficult to predict. To make money, you need to analyze the market and guess the direction of its movement.
The advisability of investing in XLM
Investors should understand that when investing in Stellar (XLM), you should not expect a large profit in a month. This project was originally positioned as a platform focused on long-term existence and the gradual conquest of the audience. Analyzing XLM, we can say that depositors will have to forget about the funds for at least two years. Before that, it is not worth waiting for a financial return. As for specific figures, in 2021 Stellar is unlikely to cross the mark of $1, given that its value is now about $0.6.
So, this cryptocurrency will not suit fast profit seekers. Therefore, they should pay attention to other coins, such as Bitcoin, Ether or Z-Cash.