Stellar cryptocurrency, so-called XLM, is up 75% since the beginning of 2020 and continues to rocket higher which makes it a good investment. Moreover, if we compare XLM to Bitcoin, we’ll find another reason to pay attention to Stellar. When it comes to the time that it takes for one Bitcoin transaction to be processed, XLM can make up to 200 transactions in the same amount of time.

The early days of Stellar and how it works now

Created in 2014, Stellar is a product of the Stellar Development Foundation, and initially, it wasn’t about the cryptocurrency itself. Who were the founders?  Among the creators was Jed McCaleb, who is famous as co-founder of Ripple. He also launched the now non-functioning bitcoin exchange, called the Mt. Gox.  Stellar was created as something bigger than one particular cryptocurrency as the aim of the founders was to offer the integrity of financial transactions.

Stellar was tailored to be a decentralized payment platform that would give its clients an opportunity to make international transactions between any areas and any currencies. Unlike its main rival in the market, Ripple, Stellar Lumens concentrates on the individuals rather than financial institutions. In other words, the ecosystem links people, institutions, and payment systems whenever they are located.

Nowadays, Stellar is an international consortium that brings together individuals and businesses from all over the world. Stellar works with numerous currencies. For example, it allows exchanging Stellar for Bitcoin. Plus, they work as a decentralized system for Bitcoin exchange. Stellar has its own native crypto called Lumens or XLM.

Stellar Lumens went through different times during these six years. In March 2019, Stellar announced that Denelle Dixon would take over Jed McCaleb’s leadership role as executive director. In the same year, Binance started to work with Stellar. Binance’s Trust Wallet began to accept and support XLM transactions for its customers.

What happened to Stellar Lumens over these years? Here are the most important milestones to pay attention to.

Airdrops

Advertising both itself and Stellar, Blockchain.com promoted its first airdrop in 2018. They were going to release $125 million in XLM over a half a year. The company decided to deposit $25 in XLM into each new Blockchain’s wallet. The rest of the Stellar Lumens should have been given to existing customers. This airdrop began on November 11, 2018. Did it change the Stellar’s price? Of course, the price increases by ten percent right after the announcement and it continued to rise for at least one day after the airdrop started. Blockchain.com claimed that this airdrop was the biggest one ever.

It wasn’t the only giveaway. In 2019, Stellar Lumens announced another airdrop. The company planned to give away more than $120 million worth of Stellar Lumens. They also cooperated with Keybase, a file-sharing application to organize the process. The event was designed to take place for 20 months and only verified customers were eligible to participate. Each of the clients would get up to $500 worth of XLM. However, the situation rapidly changed as in December 2019, Keybase wrote in their blog that the planned airdrop had been canceled. According to the post, Keybase was unable to verify and ban all the fraudulent accounts.

Cooperation with Thunes and Western Union

Although XLM isn’t as popular as Bitcoin, it has many partners that support Lumen transactions. In March 2019, Western Union started to work with Thunes, a blockchain platform that offers transnational transactions. Thunes’ technology relies on XLM, meaning that Western Union will use XLM for cross-border payments.

XLM became one of the best

Is XLM recognized on the market?  In April 2019, Lumens became one of the most popular cryptocurrencies listed on Coinsquare.com, a famous Canadian trading platform. The CEO of Coinsquare admitted that XLM was mentioned because the cryptocurrency was often requested by its users.

Network issues

On May 15, 2019, the Stellar platform collapsed for more than two hours. The network was unable to validate XLM transactions. The price of Lumens increased by 20 percent after the breakdown. Why did it happen? The CTO of Stellar Lumens explained that the reason was in the platform itself. Stellar Lumens was working too fast, and it resulted in the network issues.

Lumens burn

In 2019, Stellar’s executive director Denelle Dixon stated that 55 billion of the initial 105 billion XLM had been terminated (“burned”) by moving them to a signature-free address. Around ten percent of the burned crypto was in Stellar’s operating account and the rest had been held in the partnership accounts.

The main benefits of XLM

Is XLM a good cryptocurrency? It is impossible to access it right now, but Lumens have tons of advantages. Here are some of them:

• high speed and stability: Stellar supports up to 1000 operations per second;
• instant confirmation for transactions: it usually takes less than 5 seconds;
• a minimal fee for operations: it is just 0.0001 XLM;
• multifunctionality: Stellar can provide both fiat and cryptocurrency operations.

Stellar’s reputation and its unique approach make it the big players in the cryptocurrency market. It is no surprise that XLM is one of the most popular cryptocurrencies nowadays. Moreover, we can expect this popularity to rise as more people join the blockchain sector.

Stellar Lumens (XLM) in 2020

While Stellar is something that can easily draw your interest, it is a great idea to monitor its position on the market. What is happening to XLM right now?

In 2020, Stellar Lumens have been fluctuating up to the 10 cents value. If we compare Lumens to other cryptocurrencies, it doesn’t seem very attractive. However, it is great as now, six years after XLM’s creation, its price is still higher than when it was released.

If we look into the past, XLM was close to the $1 value, stopping at $0.875 at the beginning of 2018.  These days Lumens are slowly increasing in the value, with 2019 to 2020 witnessing a rise in the price of 4.90%. Taking into account all these facts and its features, Stellar is important in the cryptocurrency world.

To conclude, Stellar (XLM) is one of the fastest, oldest, and most reliable digital coins. Lumens can provide its users with stability and high speed. Plus, it offers a quite sufficient market cap.

Therefore, experts are sure that Stellar has the potential to become a big-name project in the future years. If you are thinking about investment, it is essential to keep in mind that investing in Stellar can bring great results right now. Last, but not least, XLM is one of the low-priced cryptocurrencies you can invest in.

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.

Lumens (XLM) deserves much more attention than it gets in the crypto media. First of all, it’s cheap: while Bitcoin and Ethereum charge up to $5 per transaction, the fee for sending XLM is just a fraction of a cent. Second, it’s several times faster than Ethereum. And finally, it has a very interesting consensus protocol – the first one to implement the so-called Federated Byzantine Agreement model.

In spite of these advantages, Lumens has long lagged behind other major cryptos. But in 2020, XLM finally made a breakthrough, growing by over 17%. Even if you’ve never been interested in lumens before, now is the time to take a close look at this coin.

Drama at Ripple Labs

To understand what makes Stellar so different from other top coins, we have to talk about its founder, Jed McCaleb.

McCaleb first became famous as the founder of Mt. Gox – a bitcoin exchange that collapsed in 2014, long after he’d left it. His second cryptocurrency project was the decentralized protocol Ripple, together with the cryptocurrency XRP. Ripple was first released in 2012 and is mostly geared at financial institutions.

McCaleb left Ripple in 2013, but why he did it is a bit of a mystery. A detailed report published in the New York Observer claims that the problem was his personal relationship with lawyer Joyce Kim. He brought her onto the team and made one of the top executives at Ripple Labs. This created problems with the CEO Chris Larsen. Eventually McCaleb tried to oust Larsen from the company – but lost the vote and had to leave himself.

Another reason is that Jed McCaleb had many ideas for Ripple that the board wouldn’t accept. He needed a project of his own to implement those ideas – and that’s why he went on to develop Lumens together with Joyce.

McCaleb founded the non-profit Stellar Development Foundation together with Patrick Collinson, CEO of the famous payment company Stripe (which also provided $3m in funding). The official launch date is July 31, 2014.

The original version of Stellar was very similar to Ripple – so much so that many called Stellar a fork of XRP. There were only 2 real differences:

1) The coin code was open-source from the beginning (Ripple made its source code public in September 2013);

2) Stellar Foundation is a non-profit, while Ripple Labs is a for-profit company.

Soon after launch, the team of Lumens began work on a new version of the source code, completely different from that of XRP. In April 2015, the Foundation released a new White Paper and a brand-new consensus algorithm, called simply SCP (Stellar Consensus Protocol). It was created by the Stanford researcher David Mazières.

In November 2015, the updated network went live. The crypto’s ticker was also changed from STR to XLM. By the way, some people still mistakenly call XLM a fork of XRP. This is incorrect: the coin was a fork at the very beginning, but now it’s a different blockchain.

Early growth and future potential

Stellar was first listed on an exchange on August 6, 2014, at the price of $0.0026. Back then, the market cap was about $860k. The price remained virtually unchanged for two years, while the capitalization grew to $25 million by April 2017. By that time, Stellar had already signed a number of important partnerships, including with Deloitte. The biggest breakthrough came in October 2017, when it announced a collaboration with IBM to enable cross-border payments in the South Pacific. At that point, the price was already above $0.02 – an almost 10x increase since launch.

Since then, Lumens has been through a lot. During the grandiose cryptocurrency rally in Dec 2017 – Jan 2018, the price surged to $0.6 – only to sink to $0.04 by the start of 2020. This year, as we’ve said, the coin has made an impressive recovery: as of December 2020, the price fluctuates around $0.15.

Now you know how Stellar started – initially as a very close imitation of Ripple, then as a fully independent cryptocurrency with different objectives. And while Stellar’s market cap is just about one-sixth of XRP’s, it’s just as interesting from an investor’s perspective. In fact, some analysts predict that the price will soon rise above $0.11. And this means that XLM is definitely a coin you should be following.