Is Stellar (XLM) a Good Investment for You?

Written by Deepak Bhagat, In Crypto, Updated On

May 4th, 2024

, 400 Views

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 intelligent contract capability, it is not a flashy programmable cryptocurrency like Ethereum (ETH) or Solana (SOL). In contrast, Stellar is focused on facilitating monetary transactions, 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. Its competent staff 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 research. You can study XLM price prediction 2030 before investing, but it is not 100% guaranteed.

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

Here are two significant 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) issued 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 it 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, but new rules might hurt Stellar.