Truth in Crypto

What is Stellar?

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Cellou Diallo

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Cellou Diallo is the Founder of Digital AssetDB, which specializes in ICO research and analysis. This analysis introduces an overview of Stellar Lumens.

This post was originally published at https://srv/bindings/506c31e2284a4fb3a7b6cf3a309887c7/code.digitalassetdb.com/what-is-stellar/
Twitter @digitalassetdb

What is Stellar

Stellar has been on the market since 2014, but late 2017/early 2018 was when the platform caught the eye of cryptocurrency investors. Stellar has solid tech, a very strong team, and a cryptocurrency token, XLM—also known as Lumens—that has seen more gains in the last 12 months than it did since its creation. There is a lot to ponder with regards to Stellar, and you will find everything you need to know about the network below: 

Stellar is a real-time gross settlement system, remittance, and currency exchange network. Its token, XLM, was released for trading on the 5th of August 2014.

 

The Problem 

There are at least 10 major cryptocurrency platforms that facilitate quick and cheap cross-border payments. Despite this, there are some problems with global payments that none of them have been able to provide solutions to.  

Firstly, the fees are so high on major crypto platforms that global micropayments are no longer feasible. Not only that, in some cases, transactions take as long as 30 minutes (sometimes more) to confirm. Users need a crypto that reduces the cost of smaller transfers; they need split-second confirmations. Secondly, there are many mobile money operators in the world but there is little or no interoperability between their networks. Customers would really benefit from being able to send and receive payment from different providers. 

Lastly, no cryptocurrency non-profit company has attempted to use their platform to drive social and economic change in the underdeveloped and developing regions of the world. The economy and standard of living in these countries would improve considerably if its citizens had access to a platform that allows them to send/receive payments globally and hassle-free. 

 

The Solution 

Stellar facilitates real-time payment settlement, cross-border currency exchange and remittance on its platform. Transactions on the Stellar network take 2-5 seconds, and on average, fees cost just a fraction of a cent.  

Additionally, Stellar is an open-source, decentralized and nonprofit technology. The company is in partnership with financial houses and money transfer operators all over the world in a bid to make speedy, cheap, and cross-border payments possible in even the most remote parts of the world.  

The network is live in some parts of Europe and the Philippines, and they plan to begin live transactions in Africa and the Gulf countries next. Stellar has partnership agreements with notable companies like IBM, Oradian, the Praekelt Foundation, and SatoshiPay.  

 

 The Team 

Stellar was founded by Jed McCaleb—the original founder of Ripple and founder of eDonkey—and Joyce Kim. At present, the company is being managed by a team of well-trained and well-experienced board members and advisors led by Joyce Kim, the other brain behind Stellar. Kim studied at Cornell, Harvard, and Columbia; before Stellar, she was a Venture Capitalist and an attorney.  

She is joined on the board by Keith Rabois. Rabois was a Senior Executive at PayPal, VP of Business Development at LinkedIn, and board member at Xoom and Yelp.  

Shivani Siroya, the CEO of InVenture, is also on the Stellar board; as is Patrick Collison, the MIT-trained CEO of Stripe; and Greg Brockman, former CTO of Stripe and MIT and Harvard alumnus. The founder of WordPress.com, Matt Mullenweg, is also an advisor, along with many other influential men and women in the tech and cryptocurrency circles.  

You can view the full list of Stellar’s advisors here 

 

 The Market 

The cryptocurrency market is one of the biggest in the world, and Stellar only holds ~1.84% of the total market share (as at February 5, 2018). As a result, there is ample room for the company to grow.  

Additionally, given the fact that Stellar is targeting the relatively untapped African, Asian, and Middle Eastern markets (among others), they are looking to take their business to the most populated regions in the world. If they pull it off, it could be a major coup as far as cryptocurrency payment networks are concerned.  

 

 The Competition 

Stellar’s biggest competition is Ripple. However, their use case pits them against all major cryptocurrency companies that offer international payment services e.g. Bitcoin, Litecoin, Verge, Nano, Dash, Monero etc.  

Ripple already has an advantage over Stellar, they have secured agreements with nearly 80 banks and financial institutions. On the other hand, Stellar is targeting a market segment that holds lots of potential, and unlike Ripple, they do not intend to just provide payment networks for financial houses. Rather, Stellar wants to connect banks and payment systems to people.   

 

The Business 

Stellar is a nonprofit company that wants to revolutionize worldwide payments by facilitating the transfer of funds across international borders within seconds and at low cost. By charging very low fees, Stellar also makes micropayments more viable. 

 

The Return 

According to CoinMarketCap, since it was released for trading in August 2014, Stellar’s token, XLM, has grown by over 15,000% (as at February 5, 2018). Therefore, all original/early investors would have seen multiple returns on their original investment.  

Prospective investors can be encouraged by the strong team, burgeoning cryptocurrency token, innovative technology, and unique use case.  

 

Transparency 

The Stellar team is filled with top-class developers, innovators, business managers, and entrepreneurs. Many of them are well-known names in the tech scene and have held notable positions at successful companies. As a result, it is safe to assume that Stellar is in good hands.  

Furthermore, Stellar is an open source technology and anyone with an interest to do so can inspect and contribute to their code. They also have a working product and active communities on Facebook, Twitter, Slack, and Reddit.  

 

Likelihood of Critical Mass 

Despite having been around for more than 3 years, the Stellar Network does not have enough users to assure critical mass. However, considering the fact that their current target market consists of countries where there is a scarcity of online global payment services, once Stellar launches their services in this region, it may not take long before they attain self-sustainable growth.  

Additionally, it also helps that these regions—Africa, the GCC, and parts of Asia—are some of the most populated in the world.