If I had bought $ 1.000 worth of Lumens tokens (quotation XLM) from Stellar in March 2017, you would have nearly $ 95.000 today. An increase of over 9.000% in five years. Stellar is a money transfer and remittance platform that has been around since 2014. Lumen is the platform's native token, and is a core part of Stellar's business.
What's really cool is that Stellar is one of only 11 cryptocurrencies that were in the top 50 by market cap five years ago and are still there today. It was in 23rd place then and today it is in 31st, according to data from CoinMarketCap. Where many other cryptocurrencies 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 exchange all forms of money, be it traditional money like dollars or cryptocurrencies. A popular application is in international money transfers, which can cost an average of 6,5%. Stellar makes them possible at a fraction of the cost.
Unlike some cryptocurrency projects looking to replace traditional financial systems, Stellar wants to improve existing institutions. Its mission is to power a digital economy where money can move freely around the world. You will need Stellar's Lumen Token to use its platform. Lumen is available in several cryptocurrency apps and exchanges.
Stellar price action
Stellar hit its all-time high in early 2018 during Bitcoin's first true bull market (BTC). Like Bitcoin, Stellar's price then dropped. XLM struggled to recover any momentum until 2020 and 2021, when it rose alongside the rest of the cryptocurrency market. However, unlike Bitcoin, Stellar was unable to return to its early 2018 highs.
In fact, XLM earned around 100% last year. That's a solid return, but nowhere near some cryptocurrency's gains of 5.000% or more. However, Stellar is a very different proposition. Many of the cryptocurrencies that saw staggering gains were relatively new, making them high-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 in the long term.
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 the Russian invasion of Ukraine, have prompted investors to move away from riskier assets such as cryptocurrencies. There are fears that we could be in a prolonged period of low prices.
If we're at the start of another crypto winter, it's reassuring to see that Stellar has already survived a long slump. The platform is also planning to launch the 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 of the growth of cryptocurrencies like Solana (SOL) and Avalanche (AVAX) last year.
Stellar is also already working to turn a potential threat into an advantage. Several countries are deciding whether to follow in China's footsteps and launch their own govcoin or central bank digital currencies (CBDC). These are centralized, government-backed versions of existing currencies that will work on the blockchain.
The reason CBDCs could threaten Stellar is that they could offer low-cost international money transfers and fast transactions without the need for crypto. But Stellar is marketing itself as a platform that governments could use to issue CBDCs. If Stellar is successful and able to work with governments, it would go a long way to neutralize the negative impact of govcoin.