History of Stellar (XLM): Advantages, Weaknesses and Everything You Need to Know

Bittime - Stellar (XLM) is becoming one of the cryptocurrencies that is attracting the attention of many people in the blockchain world. This relates to its ability to facilitate fast and cheap cross-border payments. 

So, what is the history of Stellar (XLM)? What are the advantages and disadvantages? Continue following this article to find out the answers to these questions.

For your information, as a blockchain network created to solve global payment problems, Stellar offers various advantages, but also faces a number of challenges. 

In this article, we'll explore the history of Stellar, how the network works, and the advantages and disadvantages you need to know before investing in it. XLM.

What is Stellar (XLM)?

Stellar is a blockchain network founded by Jed McCaleb in 2014 with the main aim of speeding up cross-border payment processes and facilitating transactions between different currencies at low costs. 

This network uses tokens Lumen (XLM) as a means of payment for transactions within the Stellar ecosystem.

XLM is not only used as a payment tool, but also works as "bridge currency" which allows exchange between various assets, both crypto and fiat currencies. 

Stellar offers a fast and cheap solution for international transactions, which are often hampered by high fees and long processing times.

Read also: What is Stellar Lumens (XLM)?

How Does Stellar (XLM) Work?

Source: IQ.Wiki

Stellar relies on the Stellar Consensus Protocol (SCP), a unique consensus protocol that allows transactions to be carried out without going through a mining process like Bitcoin or Ethereum. 

With SCP, transactions can be verified in seconds and at very low fees, making it an ideal choice for cross-border transfers.

Apart from that, Stellar also uses anchors, which is an entity that allows conversion between fiat currency and digital assets within the Stellar network. 

This allows users to send payments in a specific currency, even though their balance may be in another currency, which is then automatically converted by the Stellar network.

History of Stellar (XLM)

Stellar was first introduced in 2014 by Jed McCaleb. Previously, he was also involved in the development of Ripple (XRP). 

The project is funded by a number of early investors, incl Stripe, a large fintech company that supports the development of payment infrastructure.

In the beginning, Stellar had supply 100 billion XLM. But in 2019, the Stellar Foundation decided to burn approx 50% of the total XLM supply. 

This move increased the scarcity of the coin and caused a spike in the price of XLM in a short period of time. However, even though prices have soared, the long-term effects of this coin burning remain debated by analysts and the crypto community.

As time goes by, Stellar continues to innovate, including establishing partnerships with large companies such as IBM, and in 2018, Stellar signed a deal with TransferTo to expand the reach of cross-border payments to more than 70 countries.

Read also: 6 Factors Causing XLM Coin Prices to Rise 100%: Can They Still Rise?

XLM Coin Tokenomics  

Tokenomics Stellar explains how XLM is distributed and used in the Stellar network. Here are some important details about the XLM token:

Total Supply and Circulation: 

After the coin burn in 2019, the total supply of XLM became 50 billion token. Currently, approx 27 billion XLM circulating on the market, while the rest is kept by the Stellar Development Foundation (SDF) to fund future development.

XLM distribution: 

The Stellar Foundation manages XLM distribution to support adoption and development of the Stellar ecosystem. XLM tokens are distributed through incentive programs for developers, partner grants, and community initiatives.

Lumens (XLM) Usage: 

XLM is used to pay transaction fees within the Stellar network, linking various currencies, as well as minimum recommendation for each account in the network. This ensures that transactions can run smoothly and safely, while avoiding misuse of the system.

Pros and Cons of Stellar (XLM)

Stellar (XLM) has its own advantages and disadvantages for a blockchain network, like other blockchains. So what are the advantages and disadvantages? Check out the following explanation.

Advantages of Stellar (XLM)

1. Low Transaction Fees: One of Stellar's main advantages is its very low transaction fees, making it ideal for international transactions that typically involve high fees.

2. Transaction Speed: With Stellar Consensus Protocol, transactions on the Stellar network can be processed in seconds, much faster compared to other blockchain networks such as Bitcoin or Ethereum.

3. Focus on Remote Economies: Stellar is designed to make access to financial services easier for those without access to traditional banking, especially in developing countries.

4. Strategic Partnership: Stellar has established partnerships with large companies such as IBM and TransferTo, further expanding the Stellar ecosystem.

Disadvantages of Stellar (XLM):

1. Global Adoption Challenges: Although Stellar has great potential, adoption is still limited, especially among retail users. Banks and financial institutions are still cautious in adopting new technology.

2. Competition with Similar Projects: Stellar competes directly with projects like Ripple (XRP) And SWIFT GPI which also focuses on cross-border payments. This competition may affect its future growth.

3. Controversial Coin Burning: The decision to burn half the XLM supply in 2019 was criticized by some who saw it as a form of market manipulation that went against the principle of decentralization.

Also read: 5 Best Cryptos to Invest Before 2025

Current Price of Stellar (XLM)

XLM Price currently in range Rp8.131 per XLM (with 24 hour trading volume reaching IDR 56.2 trillion). Despite a decrease of approx 11,24% in the last 24 hours, XLM is still ranking #14 in the global crypto market capitalization list, with a total market value of approx IDR 244 trillion.

These price fluctuations reflect the volatility of the crypto market in general, which often experiences sharp changes in the short term. Therefore, it is important for investors to monitor XLM price movements and consider fundamental factors that may influence future prices.

Conclusion

Stellar (XLM) is a blockchain project that has great potential to revolutionize cross-border payment systems, with a focus on low fees, transaction speed, and inclusivity. 

For those of you who are interested in investing in or using XLM, it is important to fully understand the advantages and disadvantages of this project, as well as the ever-changing market dynamics.

FAQ About Stellar (XLM)

1. What is Stellar Lumens (XLM)?

Stellar Lumens (XLM) is a token used in the Stellar network to pay transaction fees and support exchanges between currencies on the network.

2. What is the difference between XLM and XRP?

XLM (Stellar) focuses more on cross-border payments and currency exchange, while XRP (Ripple) is designed for interbank payments. Although they both have similar goals, they have different technical structures.

3. Can XLM be used in all countries?

Stellar focuses on developing countries and regions that have limited access to banking services. However, XLM can also be used in many other countries as long as there is an internet connection.

4. What affects the price of XLM?

The price of XLM is influenced by various factors, including market demand, institutional adoption, and partnership announcements or technical updates affecting the Stellar network.

5. Is Stellar (XLM) a good investment?

Investing in XLM, like other cryptocurrencies, carries high risks. Before investing, be sure to do your research and consider the advice of a professional financial advisor.

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Reference: 

Investopedia, Investopedia article, accessed December 4, 2024.

Coinhouse, aricle Coinhouse, accessed December 4, 2024.

Coinmotion, article Coinmotion, accessed December 4, 2024.

Coinmarketcap, Coinmarketcap XLM price chart, accessed December 4, 2024

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