Is Stellar (XLM) a Good Investment for You?

Is Stellar (XLM) a Good Investment for You?

Written by Deepak Bhagat, In Crypto, Published On
October 20, 2022

The 2021 crypto mania may have buried Stellar, an ancient cryptocurrency project. Lumens (XLM) gained roughly 100% last year, compared to other cryptocurrencies that gained 500% or more. Long-term investments are hazardous, although it has been one of the top 50 cryptos by market cap since 2014.

Although it is developing smart contract capability, it is not a flashy programmable cryptocurrency like Ethereum (ETH) or Solana (SOL). In contrast, Stellar is focused on facilitating monetary transactions, which is a lucrative market. Stellar facilitates the global transfer of fiat currencies including USD, BTC, and EUR. The ultimate goal is to have all the world’s monetary systems operating on the same network.

Is it wise to make a purchase?

Stellar is a trustworthy digital money initiative. It has a competent staff behind it, and it addresses a serious issue in the real world: the excessive fees associated with cross-border transactions. MoneyGram, Circle (the firm behind USDC), and IBM are just a few of the large companies that have partnered with it.

The problem a cryptocurrency solves and the size of its user base affect its viability. Stellar’s fast and cheap money transfers solve the high transfer charge issue. The World Bank estimates that moving money overseas costs 6.5%. A US worker sending $100 home to El Salvador loses $6.50. Verified Business Research expects the remittance industry to reach $40 billion by 2028, up from $16 billion in 2020.

Cryptocurrencies are volatile and may lose value, so only invest what you can afford to lose. This market is unregulated and risky. You alone know your risk tolerance, investment choices, and financial situation, so conduct your own research. You can study XLM price prediction 2030 before investing, but it is not 100% guaranteed.

Stellar, being one of the more well-known cryptocurrencies, poses less of a danger than ones that are still in their infancy. Stellar, like many other cryptocurrencies, faces competition both from inside and outside the cryptocurrency industry due to the complexity of the digital payment field.

Here are two major obstacles to consider:

  • Digital currencies issued by central banks (CBDCs) and stablecoins

GovCoins are central bank digital currencies (CBDCs). China is launching its digital yuan as the US debates a digital dollar. Stablecoins are digital currencies tied to a currency or commodity. CBDCs and stablecoins threaten Stellar’s benefits. Without Stellar, digital dollars or dollar-pegged cryptocurrencies may be moved globally.

Stellar, however, wants to be the ideal CBDC partner. The article justifies the platform as a place for trustworthy issuers to offer asset-backed digital tokens. Stellar worked with the Ukrainian government on CBDC. Stellar’s popularity would increase if even a tiny proportion of the 90 governments studying CBDCs (according to the Atlantic Council) issue their digital currencies on Stellar.

  • The Rules

Many digital assets fear further cryptocurrency regulation. Ripple, like Stellar, is fighting the SEC over whether it is a security or a cryptocurrency. If this were a security, the SEC would require registration, reporting, and trading. If the SEC wins this action, Stellar and other cryptocurrencies may suffer.

Global governments also want to regulate banking-related cryptocurrencies like Stellar. Better consumer protection may boost crypto trust and deter criminals. New rules might hurt Stellar.

In conclusion

Stellar’s skilled personnel, long history, and compelling use case suggest future success. However, CBDC proliferation and regulatory costs may be obstacles. Stellar is great cryptocurrency.

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