Typically, “stellar” is expressed as “stellar lumens.” This is a cryptographic protocol and blockchain system that was developed in 2014 by Jed McCaleb and Joyce Kim. Simply put, Lumen is the coin represented by the ticker symbol (XLM) that is used on digital asset markets and intermediaries for transactions, while Stellar is the blockchain. It functions as a decentralized pricing system that makes it easier for people, businesses, and banks to conduct financial operations.
You need to fully understand what you are getting yourself into before choosing to trade in Stellar. If you trade in Stellar solely on advice from social media streams, you’ll unavoidably be headed for irreparable losses. This article gives a thorough analysis of the system’s benefits and drawbacks for this purpose.
Advantages
A short visit to numerous cryptocurrency finance websites reveals optimistic predictions for the future of Stellar (XLM). For both new and expert market participants, most analysts see XLM to be an appealing investment. Let’s examine its advantages to determine whether this network has potential.
- No cases involving governing agencies
It has avoided any legal disputes with government agencies from the very beginning. It has always maintained its independence in terms of setting its pricing, which is why activity on XRP has did not affect it thus far. A technological company’s outlook is brightened and its worth is boosted by the absence of scandal or legal issues.
- Trading is incredibly simple
It is one of the most frequently listed cryptocurrencies worldwide. It is available on numerous web networks. These networks track transaction patterns in the millions of dollars on public assets like XLM and make this currency trading easy and simple.
- The prospects of centralized financing
Due to the potential of its blockchains, the organization that developed and popularized the network for use has expanded into Central Bank Digital Currency (CBDC). Financing experts consider CBDCs to be the upcoming major economic disruptive force. This puts the system in front of other smart networks that aspire to transform the banking sector.
- An increase in trading activity
One of the most ignored technical indicators by new investors is transaction frequency. Knowing how much money is being traded by investors can help you detect activity on a specific asset. A market that is expanding typically experiences growing volume. May saw an increase in the trading volume of Stellar Lumens (XLM). This demonstrates the coin has gained a significant amount of attention.
Disadvantages
You run the risk of losing most of your money if you only consider an asset’s prospects as a possible investment vehicle. Let’s quickly review the drawbacks Stellar has that you should think about before making an investment decision.
- Ripple is a serious competitor
Average buyers might think about employing Ripple’s technology solutions in their daily activities since the company is more centralized and supports hundreds of banking firms with its XRP coin. This is due to Ripple’s first-mover benefit and an extensive list of partner referrals.
- Unpopularity
For traders, popularity is crucial as it affects an asset’s volume statistics. XLM is a rather uncommon coin, it is only well known among those who are deeply interested in the crypto finance industry.
- No mining rewards
Since XLM is not dependent on mining, there are no mining incentives to entice brokers and purchasers. Even though this reduces the amount of energy used for mining using blockchain networks, it excludes XLM from crucial cryptocurrency conversations.
- Risk of collapse
Because of its low pricing, XLM might be among the first coins to fail if strict control were to be introduced in the future. Due to various uncertainties that plague the crypto finance industry, it has struggled to acquire consistency over the past three years and could experience a sharp decline in the future.
