2014. A pivotal year for his career path with a project out of space. The dark look, he thinks back to one of his previous successes released 2 years earlier, in 2012. And yes, he didn’t stay in his cave doing nothing, the bugger. He didn’t have his head in the air either. For the more cinephile among you, you may have thought of Christopher Nolan who produced two masterpieces of cinema: Batman and Interstellar. But no, today we’re going to talk about Jed McCaleb and the famous XLM coin, or Stellar Lumens for those in the know, launched in 2014, 2 years after launching XRP (Ripple). Put on your headphones, fasten your seatbelts, and embark with us in this Coinstory#3 to coin everything.
- XLM coin, the story of the Stellar Lumens Coinstellation
- XLM coin: everything you need to know to coinprihend
- Partners of Stellar and its XML coin
- Stellar coins review, pros and cons
- Stellar Lumens price, where and how to buy XLM coin?
- Reminder of the risks of trading cryptocurrencies
Disclaimer: This article does not constitute investment advice or an invitation to invest. It is strictly for informational purposes only. You are solely responsible for the trading and investment decisions you make.
XLM coin, the story of the Stellar Lumens Coinstellation
2014, the beginning
To fully understand Stellar, let’s start at the beginning. Stellar (XLM coin) was founded on July 31, 2014 by Joyce Kim (a former lawyer) and Jed McCaleb. The second character may be familiar to you as Jed McCaleb is the founder of Mt.Gox (a former Japanese bitcoin exchange platform that went bankrupt) and the co-founder of Ripple.
In 2013, following disagreements, he decided to slam the door and found his own company, like a big guy. That’s when he met Joyce Kim, a lawyer. Her experience at Ripple was a great help to him because the first code of Stellar is based largely on the source code of Ripple. Why reinvent the wheel when you can just fork it?
The differences between Ripple (XRP) and Stellar (XLM coin)
If Stellar is partly based on the Ripple code, there are however some differences, but what are they? What does Stellar bring more?
Unlike Ripple which is focused on working with banks only, Stellar has chosen to differentiate itself by working a little more with individuals. The difference with Ripple is also that Ripple at the beginning was very centralized, whereas Stellar was more open.
Stellar is therefore tackling financial transactions between individuals. Their ambition is simply to create a new global financial network.
Since we are nice here at Coinpri and we want you to have everything well coinpri (ndrchef: ok we stop), we made you a summary table :
|XRP crypto (Ripple)||XLM crypto (Stellar)|
|Founders: Chris Larsen and Jed McCaleb (2012)||Founders: Joyce Kim and Jed McCaleb (2014)|
|Focus: banks and institutions||Focus: individuals|
|Highly centralized||Partially decentralized|
|Max supply: 100 billion (48 billion in circulation)||Max Supply: 50 billion (25 billion in circulation)|
|Ripple price: $0.33 (26/07/22)||Stellar price: $0.10 (26/07/22)|
|ATH: $3.37||ATH: $0.89|
2015 : Mission “sky” for XLM coin
In April 2015, the Stellar Development Foundation, created in collaboration with Stripe (chief editor’s note: an internet payment company founded in 2011) launched an improved protocol with a new consensus algorithm.
This new protocol is the creation of another big name in the world of blockchain: David Mazières, professor at Stanford. After a collaboration with Stripe Stellar thus offers itself a place in the Sun with David Mazières, but the xlm coin and its founder does not intend to stop there…
2017: Towards infinity and beyond for Stellar and XLM
In 2017, Stellar gets a partnership with IBM. At that time, Stellar’s price was at its highest with a market capitalization that lifted it to 13th place in the cryptocurrency rankings, not bad!
The goal of the partnership was to facilitate international transactions in the South Pacific region.
Also in 2017 a grant program was announced, with the aim of forging new partnerships. It was possible to obtain 2 million dollars in lumens for the development of projects.
2021 : Stellar enters the CBDC race with Ukraine
In January 2021 Ukraine announced to use the Stellar blockchain for the development of its Central Bank Digital Currency (CBDC). Yes, according to the agreement signed with the Ukrainian Minister for Digital Transformation at the time, the blockchain equivalent of the Hryvnia (chief editor’s note: the official currency of Ukraine) will be created on Stellar!
2022: Jed McCaleb abandons the Stellar ship?
In July 2022, Ben Armstrong, Youtuber and founder of BitBoyCrypto.com, declared that according to his sources, Jed McCaleb had left the Stellar project.
An information that has not been denied by the main interested party nor by Stellar… Nevertheless, following a tweet from Jed on July 14th inciting to come and meet him and the Stellar foundation in October in Rome, it seems that he is still officially in the project.
So, it’s up to you to make up your own mind here… But anyway, enough gossip, let’s see how Stellar works in general and what the XLM is for.
XLM coin: everything you need to know to coinprihend
How does Stellar XLM work?
The first thing to remember is that this blockchain, unlike Bitcoin, is not designed to be a direct means of payment. It is in fact an intermediary in the conversion of currencies. Thus, XLM should be seen more as a kind of “fuel” that allows the network to be powered and used, not a currency, or at least an intermediate currency.
Stellar’s original goal was to facilitate currency exchange by connecting financial institutions and individuals on their platform.
Let’s take a concrete example. Your grandmother back in Russia wants to send you some rubles. With the current payment system, this is expensive and time-consuming: you have to wait several days for the two banks to agree between them (chief editor’s note: especially in the middle of war and economic sanctions…), and the transaction fees are quite high, because the banks have to pay each other, they are so poor…🙃 !
With Stellar, your grandmother can send you her rubles (or any fiat currency) through Stellar. The transaction cost is much lower, we’re talking about 0.00001 Stellar per transaction (chief editor’s note: we’ll let the mathematicians do the math in $), and to make it perfect, it’s much faster!
Like BTC, this blockchain is like a ledger that records every transaction, and is of course transparent.
When a deposit is made on the account, the user gets a credit, with a virtual wallet. Stellar automatically converts currencies between them, with the lowest possible rate.
That’s it for the general functioning, let’s get to the heart of the matter by studying how the protocol works.
The Stellar Consensus Protocol – SCP
As with every blockchain, there must be a consensus for it to work. The SCP (Stellar Consensus Protocol) is explained in detail in the white paper. If you had the courage to click on the link (and I’m sure you did), it probably sounds quite complicated.
It’s actually very simple: for a transaction to be validated, the participants must wait for the majority (> 51%) to reach a consensus. Thus, the network participants know which transactions are the most relevant before they start settling them. When consensus is reached, the network accepts the transaction.
The verification process is called “Anchoring” and is done with “Anchors”.
Be careful though, there is no turning back!
Stellar Lumens Network
The Stellar Network is a decentralized network that operates around “Stellar Cores”. Each of these nodes is managed autonomously by different actors of the network. As we explained earlier, the nodes of the network agree on the transactions to be managed through consensus. Each transaction represents a modest sum: 100 moves (0.00001 XLM).
At the very beginning, the name of the Stellar token was not Lumens, they were simply called stellars (why make simple when you can make complicated?). But in 2015, the token was renamed Lumen to differentiate itself from the network and avoid confusion between the network and the non-profit organization. So to shine in this society, it is appropriate since to name these Stellar Lumens.
But what are they used for, these lumens? Well, they are used as a tool to fight against spam.
To make a transaction, you must have a minimum of 0.5 lumens on your account. This avoids DoS attacks. It also avoids having unused accounts. Lumens are used as a bridge between two currencies, for example between the euro (EUR) and the US dollar (USD).
Partners of Stellar and its XML coin
Naturally, the technology behind Stellar has attracted many players in the world of finance and cryptocurrency. As a result, Stellar entered into important partnerships early on.
- IBM: by partnering with this world-renowned American IT company for its new Blockchain World Wire product, Stellar and by extension the Stellar Lumens (XLM coin) have gained credibility and visibility in the traditional world of finance;
- Deloitte: the famous consulting firm that is part of the Big Four;
- Stripe: the famous payment company for professionals and individuals in which Binance owns many shares;
- The government of Ukraine: although it is currently more focused on its conflict with Russia than on the launch of its CBDC.
Stellar coins review, pros and cons
- transaction fees: The cost of a transaction is 0.00001 XLM. The XLM is currently $0.10, in other words a pittance.
- Speed: The network has low latency. Nodes reach consensus quickly, so transactions are handled efficiently. All the nodes in the network communicate with each other peer-to-peer and verify all transactions very quickly (about 3 seconds compared to 15 for ETH for example).
- Decentralization: There is no bank. Everyone can participate in the network. Trust is based on an algorithm and not on a third party.
- Security: Security is based on digital signatures and hash families. With this system, 51% attacks are avoided. It also takes 1 XLM in the digital asset portfolio, which avoids DoS attacks with a large number of micro transactions. The network has not yet suffered a serious attack.
- Partnerships: One of the main partners is IBM. They would not have invested if they did not believe in this blockchain. The same can be said for the Ukrainian government, which has been looking into CBDC since 2017!
- Scalable: The protocol is scalable, the proof is the possibility of adding support for payments using the Lightning Network, which would make the Stellar network much faster and more flexible.
- A banking solution: Approximately 1.7 billion people in the world are unbanked. This poses a major problem when it comes to investing… Stellar offers a solution to these people by allowing companies to invest and develop (especially in Africa and Asia). With Stellar it is possible to save and borrow at low cost and fight against poverty.
- Very similar to Ripple: One of the main criticisms of Stellar was the resemblance to Ripple, its competitor. Expectations were high for Stellar, which positions itself as a “Ripple killer”. Unfortunately, Stellar is still struggling to really stand out.
- Really decentralized(?): The network is certainly decentralized in terms of nodes, but this is not the case in terms of tokenomics. A large part of the tokens belong to the founders / team / advisors. In case of a massive sale of their tokens, this would create a big selling pressure and would make the XLM price fall.
- Circulating Supply: The total supply is 50 billion tokens, but there are currently only half (25 billion) in circulation. As more and more tokens are put into circulation, the value of the token is likely to fall if demand does not keep up.
- Controversies: We’re talking about controversies here, not scandals. Overall, Stellar has managed to avoid the legal setbacks of its competitor Ripple. This has not prevented some controversies, as in January 2018 when $400,000 of XLM from blackwallet.io was stolen. Well obviously the abandonment of the project by its CEO …
Stellar Lumens price, where and how to buy XLM coin?
Buying XLM coin on a CEX (centralized exchange)
If you want to buy XLM, it is important to choose your exchange platform carefully. Do not hesitate to look at the number of daily transactions or the volume of exchange.
It is possible to buy XLM on the main exchange platforms, such as Binance, FTX, Crypto.com, and many others. You can use your bank card (credit card) to buy a digital currency, usually USDT. You can then trade it against XLM.
Buying XLM coin on a DEX (decentralized exchange)
You can also buy XLM on a DEX (Decentralized Exchange) using a Metamask wallet. You need to create a wallet to do this. Note that you can have several wallets on the same Metamask.
Reminder of the risks of trading cryptocurrencies
Investors can make money easily if the price of the token rises, whether to invest or speculate. The market value of XLM depends on its capitalization, which itself fluctuates depending on the market situation.
By choosing the best trading platform, you can trade your euros (EUR) or dollars (USD) against this digital asset at the best price, waiting for its value to rise and exceed its ATH.
However, beware of the volatility (price fluctuations) of these digital currencies in the context of a speculative bubble as it is possible that after a financial crash, the token will lose its value.
Also beware of leverage as it can be tempting to want to make faster gains. You should also be aware of transaction fees that may apply on exchanges. If you plan on keeping your liquidity, you can still trade XLM against stablecoins (Dai, BUSD, USDT, USDC) if you are worried about a crash.
You can also ask the best stockbrokers, analysts, brokers of Wall-street to make the best investments for you, but it may not cost you the same…!
Some words to conclude ? Come on. We can say that the XLM is an interesting digital currency, which has the merit of making us question the decentralization, the use of the crypto in front of central banks and classic national banks. It is positioned in competition with Ripple, which does not end with its legal setbacks … Who will win? The future will tell us! Want to know more? Feel free to read our other articles and for the more adventurous, here is a complete video on the Stellar in English.
Coming from a teaching background, I’ve become passionate about the world of Blockchain. I’m eager to learn more and share the fruit of my research through my articles.