Stellar Lumens is the growth leader among the Top 100 cryptocurrencies.

Stellar Lumens (XLM), known for its long presence in the crypto market, surprised the community with a sharp jump in price. The cryptocurrency went up 56% in a day, and the weekly increase reached 187%, effectively tripling its value in seven days.

This meteoric rise has allowed XLM to become the 14th largest altcoin by market capitalisation. The growth was accompanied by record trading volumes – over half of the token’s liquid supply was moved overnight. Only on the XLM/USDT trading pair on the WhiteBIT exchange the volumes exceeded $1 billion.

In addition, XLM registered a number of technical signals indicating the continuation of growth. A landmark event was the so-called ‘golden cross’, recorded for the first time since April 2022, which led to a 35% rise in price. As a result, XLM was able to overcome key resistances in the range of $0.25-$0.30, reaching the maximum values since the beginning of 2021.

Market liquidations and the start of the ‘alt season’

According to Coinglass data, XLM’s strong growth has caused more than $14.5 million in short position liquidations.

However, several other altcoins such as VeChain (VET), Cardano (ADA), and Polkadot (DOT) also recorded significant growth overnight, up 33.5%, 25%, and 25%, respectively. Even the meme cryptocurrency Dogecoin (DOGE) was not left out, rising in price by 20%.

These events have prompted analysts to talk about the onset of the ‘altcoin season’ – a period when investors’ attention shifts from bitcoin to alternative cryptocurrencies.

Crypto analyst Henrik Seberg, making a prediction for the market, wrote in his X account:

SO IT BEGINS (for real)!#ALTSEASON

Hold on! This one is going to be steep

– Henrik Zeberg (@HenrikZeberg) November 23, 2024

However, Ethereum (ETH), the second most capitalised asset, has so far failed to share the general optimism, falling 0.2% in the last 24 hours.

Jed McCaleb – early years and early career

Jed McCaleb was born in 1975 in Fayetteville, Arkansas. He studied at the University of California, Berkeley, but before he finished his studies he moved to New York where he started developing his own projects.

First of them were peer-to-peer network eDonkey and file sharing application eDonkey2000, created in 2000. McCaleb also developed Overnet, a peer-to-peer network primarily for exchanging large files.

Despite the popularity of these projects with users, they eventually ceased to exist due to a conflict with the Recording Industry Association of America (RIAA). The company MetaMachine Inc. whose founder and CEO was McCaleb, was forced to stop distributing its software and pay $30 million in compensation to the RIAA for copyright infringement. Thus MetaMachine Inc. managed to avoid copyright infringement lawsuits. However, the eDonkey server, located in Belgium, was seized by the local police.

Crypto exchange Mtgox.com

In 2007, McCaleb purchased the domain Mtgox.com for his website selling in-game items from Magic:The Gathering. However, due to the popularity of bitcoin, a crypto exchange was created on Mtgox.com a couple of months later. In November 2011 McCaleb decided to sell the exchange despite its great popularity and huge bitcoin trading volume.

Almost every participant of the crypto-market knows about the sad fate of MtGox. At the beginning of 2014, 70% of the world’s bitcoin transactions were conducted through the exchange, but in February of that year it was discovered that 850,000 BTC had been stolen from the company over a long period of time by unidentified individuals due to technical vulnerabilities. Although 200,000 bitcoins were found after some time, Mt.Gox had to launch bankruptcy proceedings. Hundreds of millions (now billions) of dollars in damages were inflicted to exchange clients.

However, McCaleb could not have any legal claims in connection with this, because at the time of Mt.Gox’s collapse, he had long since ceased to be its owner.

Collaboration and conflict with Ripple

In 2011, McCaleb founded OpenCoin (since 2013, Ripple Labs) and became one of the company’s chairman.

The Ripple network has been developed since 2004 by Ryan Fugger as an international decentralized payment system. Based on the Ripple protocol, in May 2011 McCaleb began creating the cryptocurrency XRP, which is radically different from bitcoin in that all transactions in the network were confirmed by consensus of its members. A few months later, McCaleb offered Chris Larens the position of executive director.

However, the fact that XRP was controlled by a small group of people caused McCaleb to disagree with the rest of the founders and, as a result, a break with Ripple in 2013. Next, however, the fun part began. On leaving the company, McCaleb received 9 billion XRP (out of 100 billion issued) as compensation. A year later, he announced his intention to sell all of the coins he owned, which would have instantly caused XRP to plummet.

Amid the general panic, Ripple Labs entered into an agreement with McCaleb that he could only sell coins to the extent that the price would not be affected. However, in 2016, it was revealed that McCaleb was selling much more XRP using, among other things, family members. After discovering this fact, Ripple was forced to go to court. During the proceedings, Jed was offered new terms to limit the maximum amount of sales allowed.

However, the Wall Street Journal tracked McCaleb’s activity and concluded that in August-September 2018, he began selling XRP in volumes 10 to 20 times greater than what was allowed under the agreement with Ripple. In one day, he sold 752,076 XRP at once, which at the exchange rate at the time was equal to $351,000.

Thus, McCaleb was a threat to the stability of the Ripple cryptocurrency for as long as he was the largest holder of its tokens. Notably, he had a significant motive for Ripple’s collapse – after leaving Ripple, McCaleb co-founded the cryptocurrency Stellar, which competes with XRP.

In any case, Ripple’s current difficulties are not with McCaleb, but with the U.S. Securities and Exchange Commission lawsuit filed against the company on December 22, 2020. It is possible that in the event of a negative outcome of the case, this payment network will cease to exist altogether. Thus, McCaleb abandoned the ship in advance, which is now probably destined to sink.

As of March 22, 2021, McCaleb, who had been single-mindedly getting rid of XRP all these years, held slightly more than 380 million tokens. At the same sales rate, that balance could be zeroed out in just two to three months.

Stellar (XLM) – McCaleb’s new project

In 2014, Jed McCaleb and Joyce Kim (with whom ) co-founded the Stellar Foundation, the non-profit organization behind the development of the cryptocurrency XLM. The foundation for the Stellar network was the Ripple protocol, but in 2015 it developed its own protocol with an entirely new consensus algorithm. The Stellar platform was probably conceived by McCaleb as a “killer” of Ripple: a complete clone of the system, but without its inherent flaws. Unlike XRP, Stellar XLM is a convenient tool for people all over the world, regardless of their financial status or location.

At the time of publication, Stellar is a fast-growing and apparently very promising payment network with partnership agreements with many large companies, such as IBM. XLM is the 14th largest cryptocurrency by capitalization (more than $15 billion).

So who is Jed McCaleb?

It is amazing that while being at the origin of so many scandalous projects, McCaleb has always managed to get away with it, making money and preserving his reputation. Moreover, now his participation in any cryptocurrency project almost instantly attracts the interest of market participants and makes the project popular without any PR-campaigns. What is it – luck, intuition? Or maybe the secret of Jed’s success is in his values after all?

As McCaleb writes on his website http://jedmccaleb.com/, the reason for creating Stellar was the realization that “the world’s financial infrastructure is broken and that too many people are left without resources”. Making financial instruments as accessible as possible to all people is the very idea that prompted him to break with Ripple.

Interestingly enough, McCaleb has always spoken negatively about various cryptocurrencies. He claims that 90% of all current cryptocurrencies are garbage, including TRON. Jed is a supporter of cryptocurrencies such as Bitcoin, Ethereum and Stellar. However, in his opinion, many financial institutions will never use bitcoin because of the low bandwidth of its network.

The incident with Stellar happened three years ago. An unknown attacker used a bug in cryptocurrency protocol. An error allowed to produce about 2.25 billion tokens. The total cost of all the coins at that point was around $10 million. All new XLM coins were sold immediately after the attack on cryptomarket stocks. This fact was noted by the analytics from Messari Company.

But Stellar was not the only one who faced such a problem as an inflation mistake. Messari also remembers some similar situations:

1. The Electronic Coin Company recently published a bug report. The error was revealed in a cryptocurrency protocol. Technically, a disclosed bug could afford to issue new coins non-stop.
2. In 2018 a Coinmetrics Company found a bug in Bitcoin Private protocol. It allowed them to issue 2 million coins additionally, not provided for in a white paper. Afterward, the team used to solve this problem by burning coins.

Yet, such an event in Stellar showed up among other stories because of the scale of an occurrence. As a result of this error issued tokens accounted for 25% of the XLM volume in circulation. The reaction of the developers was rather interesting. They preferred to keep this story in secret and to conceal it from the community. People knew about the Stellar inflation bug only from the report made later on by Messari.

The essence of the error made by Stellar Lumens

As Messari analytics stated, creating new XLM was able due to the particular program bug. An error helped to merge user accounts and double the assets. This program error was used 110 times in 2017. It allowed creating more than 2 billion new tokens.

The XLM developers reveled this bug at the beginning of April 2017. After it, they corrected this error quickly and unnoticeably. This fact was stated in a Messari report. In Stellar channels, all the network reports are labeled with special tags. The specific date is also indicated. In three of these reports, there was a non-standard tag “not for general use”. Exactly in these reports, there was information about fixing the inflation bug.

Jed McCaleb was involved in solving this problem immediately. He posted a preliminary bug fix on the 6th of April. On April 30 an official announcement about the network updating appeared. During this period, the attack vector remained open. According to Messari, the reason was to test the fix.

In an official announcement on April 30, Stellar mentioned a fixed bug. Yet it was paid very little attention to it. In particular, the developers did not say about the scale of the problem. The created XLMs were sold on crypto exchanges. To remedy the situation, the creators of the cryptocurrency used a trick. They decided to burn the corresponding amount of tokens from the project’s reserves.

Messari analysts were able to find the bug. They used the Horizon client which is not available in block browsers. Stellar’s spokesman C. Rudder commented on the appearance of the Messari report. He agreed that the developers could have responded to the inflation error another way.

“Stellar was a developing project in April 2017. Our community of developers was not big, but all of them were dedicated to the program. We have mentioned this bug twice and we were sure that it became known. We have taken steps to burn the tokens to keep the planned emission volume the same. Stellar is now a great project, and our standards and rules have changed to match this reality. We always try to say about any serious mistake in detail. We never keep in secret such failures”, Rudder said.

He added that a full inventory of Stellar Lumens will be completed by the end of the year. It is assumed that in the report there will be more information about those inflation errors. The bug cost $10 million.

Yet, Stellar is known not only with such a failure that it tried to hide. The Company has an active community and it calls for help in hard times and crisis periods in the world. Stellar donated 2.5 million XLM as part of a mutual aid campaign to fight COVID-19. During the pandemic people needed medical help as well as finances.

The founders said that similar organizations should join their efforts and capabilities. It is necessary to help those who are fighting against the coronavirus pandemic. Organizations that help save lives should receive support. Everyone who has the opportunity to do so shouldn’t stay away.

Anyone can make a mistake and lose money. But not everyone can spend money on a good deed.

Cryptocurrencies are various and have various functions. Some were created to replace fiducial money. Others help to conduct multi currency operations throughout the world. The main mission of Stellar cryptocurrency is to create financial products and services. They can unite people all over the world including those who don’t have an access to bank service at present time.

The platform has a unique technology. That is why Stellar is used as a ‘bridge’ between different digital coins. It is useful when the direct exchange is impossible. The Stellar platform provides users with an effective payment system. This allows them to transact with immediate confirmation and almost zero fees. The platform also lets us issue the tokens and organize fundraising.

Lumen is an inflation cryptocurrency without limit for the largest coin supply. Nowadays the total amount of lumens increases 104 million XLM. The cryptocurrency is popular among businessmen. Its main sponsor is the American company ‘Stripe’.

Stellar XLM timeline

The background of the platform begins in 2014. That time Jed Caleb (a developer) and Joyce Kim (a lawyer) launched the ‘Secret Bitcoin Project’. They tested software versions for their platform. By that time Jed already had large experience in the field of cryptocurrency.

Since 2012, Jed is co-founder of the Ripple (XPR) clearing platform. He often criticized this platform because it is centralized and its code is hidden. He considered it a greedy corporation striving to get as much money as possible. This inspired Jed to create another platform that won’t have the same downfalls.

From the very beginning, Stellar worked with Stripe too. Then, its general director found another non-commercial organization. Its main aim was to develop the Stellar XLM platform. Their plan was access to financial services in the regions with bad economics. 25 million tokens were granted for people whom the bank services are inaccessible. Such human attitude and principles led to fantastic results.

Block-chain engineers liked the idea of uniting banks, payment systems, and private bodies. To unite them in one platform was reasonable. So, the cryptocurrency had its own protocol. It is called the ‘Stellar Consensus Protocol’ (SCP). Developers made it accessible to everyone. David Mazieres, a professor at Stanford University, participated in developing SCP.

The new original code was published in April of 2015. The Stellar network was updated the same year in November. This fixed the problem and also increased the productive capacity.

The peculiarities of Stellar XLM

• The network is capable of handling payments in a fixed currency.
• Stellar cryptocurrency is not based on the Proof of Work algorithm. It means the lack of miners.
• XLM is one of the cheapest cryptocurrencies. Operation fee is 0, 00001 XLM.
• On average, the transaction is conducted for 3-5 seconds. The platform can operate more than one thousand transactions per second.
• The developers always carry out works by extra payment channels. It will make the ‘stellar’ network much bigger.
• All transactions of the platform are open.
• Every user of the network can independently choose the node to work with.
• Opportunity to make cross-currency transfers.
• Smart contracts option.
• More than 200 trade areas work with Stellar XLM.
• Stellar is compatible with other representatives of the cryptocurrency market.
• Lumen is used in almost all types of cashless payments.
• Even if some servers stop working, the whole system will not suffer. Plenty of interchangeable servers maintain its reliable work.

Still, the platform has some disadvantages as well:

• The network can freeze up in any suspicion of a hacker attack.
• Falling the cost of cryptocurrency – annual inflation of Stellar XLM is 1%.
• Low yield of node maintenance.
• Restricted possibilities for decentralized applications;

Digital background of the platform

Lumen is available at many cryptocurrency wallets. They are available for different devices and operational systems. Most of XLM wallets have set-in integration with Stellar decentralized exchange.

The main portfolio of systems for XLM is Foxlet Stellar Wallet. There are versions for Windows, macOS and Linux. BlockEQ is an excellent option. It is supported both by PC and phones. Both digital purses are able to work with Stellar tokens. It is comfortable, isn’t it?

Lobstr Wallet is also a popular mobile wallet for Stellar XLM. Users of Android and Apple devices can easily use it. Ledger Wallets Nano S, Blue, and Trezor also support Stellar XLM.

Lumens are popular. They are regarded at about 40 cryptocurrency exchange stocks. About 30% of total sales occur at Binance together with bitcoins. A considerable percent of total volume comes from South Korea on the Upbit fund market. XLM is also available at crypto markets such as Kraken, OKEx, Bitfinex, and Poloniex.

How Stellar achieved recognition

No one large bank and central bank arranged on the partnership with the platform yet. Yet, in 2017 the situation changed. Lots of payment systems did not want to stay behind. Ways to transfer money were in their shortlist of priorities. They lacked suitable channels for this. They all wished to work with the Stellar Foundation.

For instance, Tempo, the French service. Stellar XLM could help them to make a financial channel with Philippine Coins.ph. It means that all Filipinos in Europe can help financially to their families. They can send money just with a name and phone number. No need to wait long, 3-5 minutes later the money will be transferred already in peso.

A significant step to universal recognition is the partnership with IBM. This technological giant corporation uses wanted to have more profitable financial operations. The Stellar platform makes them cheaper and quicker. IBM also wants to have Stellar XLM as a block-chain for multicurrency money transfers. For instance, a builder from Samoa can make a contract with the customer from Indonesia. Before it was just impossible.

IBM is fully satisfied with the internal Stellar XLM currency. IBM considers lumens as a ‘fuel’ or ‘intermediary asset’ to carry out their transactions. Also, IBM promotes XLM among its clients. They convince financial companies in the success of digital assets for a business. And Stellar’s block-chain is an excellent option.

The list of Stellar’s partners constantly increases. Even Islamic countries recognized that Stellar’s protocol meets the Islamic principles. This allows the Stellar platform to broaden their horizons. So, they provide their services to the countries of the Persian Gulf and South-East Asia.

There are some experts that compare Stellar XLM with Ripple. Yet, such a comparison is inappropriate. They have too different directions and principles. Stellar has a non-commercial form. This makes it impossible to gain profit from its activity or cryptocurrency growth.

To transfer money in any currency cheaply and quickly is a high-demand service. In this case, Stellar XLM is beyond the competition. Maybe, soon all central banks will launch cryptocurrencies. So, Stellar XLM has all chances to become the ‘environment’ of these cryptocurrencies.

Siamese twins

The companies can be compared with the Siamese twins. Since the project ideas originated from one person Jed McCaleb. But the target audience and purpose of each company are different. The first twin, born in 2012, was Ripple. Now the value of its own tokens is currently ranked as the third-largest market.

The second twin, born in 2014, was Stellar (XLM). Its father was the very person who established Ripple Company.

XLM represents the mechanism of transacting assets quickly and with the least expenses. In financial transactions, the company applies a distributed blockchain. The protocol’s code resembles the Ripple’s one. It is worth noting that some specialists consider Stellar as Ripple’s fork. But it is not quite true. The fork is a blockchain that was organized based on the blockchain’s code used before.

The Stellar’s technology is available absolutely for all the banks. The main idea concluded that Stellar was aimed at the developing countries’ market. People and companies from third world countries can make payments abroad. All the transactions were with the least commissions. The transaction is made in the shortest periods.

The analogy characteristics of the projects are as follows:

• First of all – the same establisher;
• Only private nodes are used, no mining in both systems;
• The distributed ledger mechanism as a matter of priority;
• The projects are in their way to make payments free and quick;
• Ideal for international payments;
• R&D engineers try to control the number of issuing coins.

Both companies use similar methods in their work. Besides, it is worth noting the essential differences between these two systems. First and the very important fact is that its co-founder left Ripple for Stellar. He is eager to help emergent nations. People in need do not get any financial facilities. He demonstrated his thoughts several times. He just making free XLM donations to all these people.

Therefore, XLM Company is represented as a non-commercial organization. And this point first of all differs from the Ripple. Although these two blockchains are targeting at huge payments sector abroad. Mechanisms of their work are devised for banks and financial companies. The Ripple’s team believes that banks begin to use this techno. To solve currency problems, banks will buy their currency.

The nods reach an agreement in different ways in both systems. An agreement model is a kind of mechanism. It confirms and verifies all the payments without any intermediaries.

Both cryptocurrencies use their scheme and protocol.

There is a similar system of coins issuing – so-called “at-will” of the team. Besides, it is worth to mention a slight difference here. Annually Stellar takes into account 1% inflation. This mechanism was borrowed from the traditional currency system. When the US Federal Reserve begins to issue more dollars, the inflation process starts. If the currency goes through inflation, it causes the impact of the value. The amount of circulating currency is increasing.

In reference to the XRP coins, they are deflationary. Ripple decided to burn the transaction fees. It means the circulation will decrease sooner or later.

It is commonly thought that Ripple is more decentralized. This company froze XRP coins when McCaleb established Stellar. That was a one-off incident. But it shows the great Ripple’s control over its cryptocurrency. For this very reason, people prefer Stellar instead of Ripple.

The current situation on the market

XLM nowadays is a cryptocurrency that can be sold for billion of dollars. It was managed to achieve a $13 billion capitalization in 2017. The most outstanding triumph was its cooperation with IBM Company. In case of their successful cooperation would be possible to broaden it to the other regions. This will be a great success for all the team.

Ripple had an opportunity to make a much more great partnership. The reason for the earlier establishment. They have already tested their technologies with more than 100 diverse popular banks.

XRP’s using in banks’ international transactions is directly influences its value. This criterion is quite important. For today Ripple technology doesn’t require XRP for its functioning. The coin can prove its usefulness only in case banks need it for liquidity. To exchange another currency for their own, the bank must open a notary account. The main problem is that banks must keep money in every notary account. These crypto coins in their way to solve this issue. As a result, banks definitely will use it.

Conclusion

We studied both systems and made a comparison in detail. Despite the same technology, companies’ paths of development are quite different. So, the main question is – which of the company is better to choose?

If you familiarize yourself with the price charts of both coins you will notice a quite similar changer. Because of this, investors have the same faith in each project. So the final decision can’t be made yet. Although, take into account the similar behavior of other altcoins.

Ripple is not trusted by big financiers. So many people choose Stellar Lumens as an investment target. Ripple was the first and it is a popular company that is on everyone’s lips. But their competitors from Stellar have much more potential for growth.

Both cryptocurrencies have shown very good results in recent years. They were managed to conclude an important partnership.

Cryptocurrencies have been a trend for recent years. They can be used not only for payments but also as an investment.  Many coins you see are bump and dump, but how to choose the most reliable? Actually, it can be a tough choice, especially if you don’t know how crypto works. At first, we need to say a few words about cryptocurrencies in general.

Have you ever traveled abroad? One of the first things you probably mentioned was that people in different countries use different payment methods, so you had to exchange your money for the local currency. You need dollars to buy coffee in the United States of America, and if you want to enjoy your drink in Europe, you should prepare a few euros.

Investing in cryptocurrency is something similar to exchanging money abroad. Bitcoin, Litecoin, and Stellar are several examples of ‘foreign currencies’. They work like digital money on the web.

What is Stellar?

Launched in 2014, Stellar is a decentralized digital platform aimed to reduce the gap between banks, individuals, and payment systems. The project was started as an easy and cheap payment service where people from all over the world can make transactions without waiting days or paying expensive fees. The Stellar platform has its native digital currency called Stellar Lumens or XLM.

How does Stellar work?

Similar to other cryptocurrencies, Stellar Lumens are based on blockchain technology. The Stellar network consists of thousands of decentralized servers that support a shared ledger where all transactions are processed. The ledger records the funds as credit released by particular gateways. This credit is added to an account on the network which here acts as the multifunctional digital wallet. The Stellar users can send their assets to other users on the network through various currencies. No matter what currency do you use for payments, as you can immediately exchange your assets at the best possible rate.

5 reasons why investing in Stellar is a good idea

Stellar Lumens is included in the list of the best ten cryptocurrencies by market capitalization. Moreover, if we compare the Stellar coins to the growth rate at its very beginning, XLM has demonstrated an impressive growth recently. If it isn’t enough to convince you, we prepared five reasons to explain why Stellar can be a good option to invest.

1.     IBM partnership

This reason alone makes Stellar one of the top cryptocurrencies in the digital world. IBM and Stellar Lumens are collaborating to solve a very important problem. The IBM-Stellar payment solution has changed the way how traditional and currently, non-traditional institutions conduct transactions. Now it is possible to send money to anyone throughout the world with as little fee as possible.

According to their blog post, IBM selected Stellar Lumens because of its non-profit status, its high speed, and its transparency. The fact that the platform supports various asset types also played a huge role.

Stellar also has a partnership with KlickEx.

2.     Technology

Similar to other cryptocurrencies, Stellar uses blockchain, but that’s not all. The coin is similar to Bitcoin as it is released via blockchain transfers, but you don’t need to mine it. XLM is also similar to Ethereum as it allows creating dApps. However, there is one important difference between Stellar Lumens and other coins — a transaction fee. It is incredibly low when it comes to Stellar cryptocurrency.

The platform is quite straightforward, which makes it super user-friendly, especially for new customers. And we need to mention the speed of transactions. The network works really effectively to maintain top-notch speed. It operates more than 1000 operations every second, meaning that transactions are very fast.

3.     Regulations

This is one of the biggest advantages that Stellar has over other crypto projects. ICO regulation can be a huge problem in the crypto world. Every day we see governments issue more and more regulations to protect consumers. For example, crypto projects must comply with standards such as anti-money laundering policy and offer a high level of security. Some authorities have gone so far as to completely forbid the ICOs while some try to prevent ICO and blockchain-related misconduct.

However, you don’t need to worry about ICO regulations if you use Stellar. This company is already compliant with the main ICO rules and is working to help others with a regulation-compliant token offering.

4.     The transactions are extremely cheap

What makes Stellar so special? Transactions! They are fast and cheap.  Each transaction on the Stellar platform costs 0.00001 XLM, which means that it is almost free of charge. And if we compare it to traditional payment methods, the offer sees even more profitable.

Last but not least, all transactions are super-fast. The average time is 2-5 seconds, with about a thousand operations occurring every second.

5.     Stellar allows easy transfer of money

Stellar can replace many financial instruments as it can convert and transfer all assets at ease. You can make payments and send your funds to anyone in the world at a super low cost and instantly, in any currency. The platform is working to make transnational transactions accessible for people, and it appears that they do this very well.

Stellar solves numerous problems by representing various types of currencies and assets, making transactions easy across institutions and currencies, and offering a highly scalable platform.

With the IBM partnership and the fast transactions, Stellar has achieved quite a lot in recent years, and XLM seems to have a bright future ahead of it.

Crypto fans often compare the two companies since they both are designed to provide cross-border financial transactions. Although Lumens and Ripple have a lot of similarities, they are different. With that in mind, we have decided to compare Stellar and Ripple to help you make a smart decision.

In our article, you will find comprehensive information about their similarities, differences, and which cryptocurrency might be better for you.

Stellar vs. Ripple: what is the mission?

While Stellar and Ripple have a similar mission, there is one significant difference if we take a closer look at their audiences. Each project is targeting its own type of users. Lumens focuses on individuals throughout the world, while Ripple tries to build partnerships with financial institutions to help them transfer funds globally. Which plan is better? It depends on your preferences.

According to reports, more than 1.7 billion people don’t have a bank account. If we take into account that around 7.8 billion people live in the world right now, it means that one in five people doesn’t have access to banking services such as loans, credits, and payments.

While financial institutions might be trying to bring in these people into the traditional banking system, Lumens was designed to make something really different. This platform is aimed to skip bureaucracy and give unbanked individuals the financial services they desperately need. This became possible thanks to advanced blockchain technology. For example, people who don’t have an access to regular banking services could use Stellar as an alternative to well-known financial institutions.

Other advantages of the Stellar platform include the ability to transfer funds fast and cheaply all over the world. Borders are nothing when you are using Lumens.  This is particularly useful for unbanked people who might work in other countries and want to send money back home. They usually have no choice but to use expensive money transfer services such as Western Union. The XLM project can make their lives much comfortable.

The coin also allows its members to exchange their assets at ease, which is something that would often be challenging and costly, as anyone who has handled foreign currencies can admit.

When it comes to Ripple, it also offers inexpensive and fast transnational financial operations. However, it targets primarily not people but the financial institutions themselves. It isn’t bad! Quite the opposite, it can make banking services more accessible.

Billions of dollars are crossing the borders every month, so if Ripple can reduce the fees and make the banking transactions much faster, it would be a huge achievement for both banks and Ripple.

Stellar vs. Ripple: which one does offer more features?

When it comes to the features of Ripple and Lumens, it is fair to say that Lumens is a bit better. The Stellar platform is jam-packed with various useful services and extra products.

While Ripple is concentrated mainly on cheap and fast cross-border payments, Lumens does the same and even more. As we have already mentioned above, Stellar also allows customers to convert their funds into other currencies directly on the Stellar platform. Simply put, Stellar offers a built-in and easy-to-use exchange. Meantime, when it comes to Ripple, you have to use other exchange services to exchange your XRP for something else.

Furthermore, the coin offers other services, including smart contracts. In other words, Lumens can be used not only as money but also as programmable money. What does it mean? For instance, by applying XLM smart contracts, you can create your own coin contribution. You can also start your own ICO, where you trade Stellar-based tokens to finance the development of blockchain technology.

Lumens vs. Ripple: are they decentralized?

Another important aspect to take into account when comparing Stellar and Ripple is how they build their networks. There is a big difference between Lumens and XRP.

First of all, Ripple doesn’t allow everyone to take part in the consensus process. Only chosen individuals or institutions, like banks and other big players on the financial market, can validate transactions. Stellar, on the other hand, works more transparent, allowing anyone to join the consensus process.

Moreover, Ripple was harshly criticized when it suspended Jed McCaleb’s XRP savings after he decided to leave the company. While the problem was resolved, the initial decision went against the main principles of crypto. Cryptocurrency is famous for censorship resistance and decentralization. The crypto world is open to everyone, meaning that people can make financial operations without fear of censorship.

That’s why XLM is the winner here, as it is much closer to the fundamental ethos of crypto.

Stellar vs. Ripple: how do they distribute the coins?

Coins are a key element of every cryptocurrency system, so it is a great idea to compare Ripple and Lumens in this regard.  Ripple seems to be a little worse competitor here, as the foundation behind Ripple manages more than 60% of all XRP.

Lumens also had issues when it comes to tokens distribution. The Stellar foundation controlled about 85% of all Lumens. However, this was dramatically changed in 2019, when the company decided to burn more than 55 billion XLM.

Stellar vs. Ripple: what about inflation?

The last aspect we are going to compare is inflation. It is very important when it comes to cryptocurrencies.

Ripple’s supply is fixed, while Stellar has 1% inflation a year. In addition to that, Ripple burns all transaction fees. In other words, Ripple is deflationary (supply declines over time) and Stellar is inflationary (supply rises over time). Hence, from a price perspective, Ripple seems to be better on inflation.

Conclusion

To conclude, Stellar and Ripple both are excellent cryptocurrencies. Generally, they are similar assets. At the same time, there are several characteristics that are different. Both Lumens and XRP have advantages and disadvantages. Therefore, it is a great idea to keep in mind all of them while choosing what to invest in.

When it comes to features, decentralization, and coin distribution, Lumens seems to be better. However, Ripple beats Lumens when we are talking about the inflation policy.

Anyway, it’s likely that the two cryptocurrencies will play crucial roles for the future rather than one will beat the other in all categories. Ripple will continue to cooperate with corporations and banks, while Stellar will continue to focus on unbanked people to offer them an alternative to an expensive and centralized banking system.

What is special about Stellar?

Stellar (actually, lumens) is a cryptocurrency created in 2014 by the founder of Ripple, Jed McCaleb. Here are the key advantages of XLM:

• Low fees: each transaction costs just xx. Compare this to Ethereum, where the transaction fee is currently $2.8.
• Speed: it takes only a few seconds to confirm a transaction – as opposed to 30min – 1 hour on the Bitcoin network.
• Designed for fiat transfers: with Lumens, it’s easy to tokenize any asset, such as USD, euro etc. In fact, the blockchain was developed for cross-border payments. The only thing that’s required are white-listed institutions that will exchange fiat into Stellar tokens and back.
• Easy to launch assets: anyone can create a new token on the Lumens blockchain almost for free.
• Built-in exchange: the coin even has its own decentralized exchange – fast, free, and with fiat support. You can access the DEX through the graphic interface StellarX.

What’s the total supply of XLM?

Initially Stellar was launched with a supply of 100 billion coins, managed by the Stellar Development Foundation. Out of these 100bn, 68 billion were allocated for airdrops and giveaways for the users. There was also an annual inflation rate of 1%.

However, the community was concerned about the effect that such a large and growing supply could have on the price. Many also said that the fact that the Foundation controlled 85% of the supply was bad for lumens’ reputation. In October 2019 the inflation mechanism was removed. In November 2019 the Foundation took an even more drastic measure: it burned 55 billion coins, stating that the value of giveaways was decreasing. As of September 2020, the Foundation controls circa 60% of all XLM (30bn lumens), with 20bn circulating in the market.

Can you mine Stellar?

The coin doesn’t use the Proof-of-Work consensus algorithm like Bitcoin or Ethereum, so you cannot mine it. It doesn’t use Proof-of-Stake, either. Lumens has its own unique consensus model known as SCP, developed by the Stanford professor of computer science David Mazieres. SCP is considered one of the most secure and stable consensus algorithms among all cryptocurrencies. In fact, the Lumens blockchain has never been successfully attacked.

2020: the year of partnerships

This year has been very good for Stellar so far. The Development Foundation signed several high-profile partnership agreements: with the banking app Abra, B2B payment solution SatoshiPay, and risk management platform Elliptic Inc. Stellar was also integrated into the Samsung Blockchain Store – a key management solution used in Galaxy phones.

As for price action, Lumens has already appreciated by 71% in 2020, from $0.044 to $0.077. By the way, lumens’ major rival, XRP, has grown only 21% in the same period.

Should you invest in Stellar right now?

Even though XLM is already worth 70% more than it was in January 2020, it still has a lot of potential. 12-month targets offered by analysts vary from $0.09 (+17%)to $0.146 (+90%).

Lumens is still undervalued, mostly because investors’ attention has been focused on DeFi assets and protocols, such as Compound, Balancer, and Yearn Finance. However, as the DeFi industry is struggling with ever-growing gas fees, the spotlight is moving back to more traditional and reliable assets, including Lumens. A new Bitcoin rally in the next couple of months could also push the price of lumens up.

Summing up

Overall, Stellar is a very interesting cryptocurrency that offers real value to users thanks to its fast, scalable and almost-free transactions. At the same time, it’s a good buying opportunity, as it could still appreciate by over 15% until the end of the year and by as much as 90% in 12 months.