A Deep Dive into Stellar for Progressive Investors

In this edition, you’re going to learn all about Stellar, an open-source network for currencies and payments that makes it possible to create, trade, and send digital representations of all forms of money. It doesn’t matter whether we’re talking about dollars, pesos, Bitcoin, or pretty much any other form of currency.

Not only is Stellar a project with a real-world use case that has a market cap of over $12.1 billion Canadian, it’s also one of the newest addition to the Netcoins family. That’s right! You can buy, sell, and trade Stellar and its token, Stellar Lumens (XLM), at Netcoins.

The usability of the token and the affordability of the transaction fees combined with the speed and scalability that the Stellar blockchain offers are exactly why the project is ranked in the top 30 among all crypto projects by market cap, even though Stellar has nothing to do with the meme coins or NFT projects that seem to be blowing up every day.

Stellar has been a stalwart project in the blockchain world since its genesis block was mined back in 2014. It continues to excel now, and it will likely unlock liquidity in the future on a scale that most blockchains won’t be able to compete with.

Let’s talk about the beginnings of Stellar, what its mission is, and other things you should consider before buying, selling, or trading XLM tokens at Netcoins.

What Is Stellar?

Stellar is the name of the blockchain network developed by The Stellar Development Foundation. It is an open-source blockchain, meaning it is decentralized and owned by those that use it. Lumens are the native token used to secure payments on the Stellar network. 

The foundation was co-founded in 2014 by Joyce Kim and Jeb McCaleb. McCaleb is the founder of the infamous Mt. Gox crypto exchange (which was for a long time the most popular crypto exchange in the world and arguably the most significant first mover in the world of crypto exchanges). He is also one of the co-founders of Ripple.

Stellar does not want to replace the current financial system. The project wants to enhance it by providing greater access to liquidity to all people around the world. A global network of nodes verifies and processes transactions on the network making it possible to do just that. 

Stellar focuses on six key prongs: fintech, remittances, cross-border payments, the U.S, Dollar Coin (U.S Dollar Coin), central bank digital currencies (CBDCs), and exchanges.

Stellar Tokenizes Any Currency and Puts It on the Blockchain

Stellar’s ingenious design exists to solve issues for people and businesses related to cross-border transactions. It allows users to create and utilize ‘dollar tokens’.

The benefit of creating these dollars lies in the fact that any currency can be tokenized. It doesn’t have to be dollars – all of which is done through the use of anchors. Anchors are financial institutions, money services businesses, and fintech companies that make it easier to move value from the traditional banking system to Stellar and vice versa. Anchors act as both the on-ramp and the off-ramp for facilitating such transactions on a larger scale.

Stellar is Cryptocurrency’s Original Stablecoin Creator

Stellar is an innovative project not just because of what it’s trying to do in terms of unlocking liquidity, but also because it is one of the first movers in the world of stablecoins.

Why is it important to know that?

If you’re trying to be the world’s largest decentralized on-ramp and off-ramp facilitating transactions between traditional financial institutions and the blockchain, you need a way to transfer that value back-and-forth in a way that remains stable.

Let’s look at an example using the Canadian dollar and the Honduran Lempira.

Stellar Facilitates Transfers of Value in A Stable Format

Let’s pretend that Bob does business in Canadian dollars and needs to pay his supplier in Honduras’ local currency, the Lempira. He can have a smart contract created in which Bob sends a tokenized version of Canadian dollars through the Stellar network. Using its access to anchors a.k.a. financial institutions and the inner workings of its blockchain, Stellar can send a tokenized version of Honduran Lempira to Jennifer on the other side of the transaction. 

What’s the advantage of doing this?

Think about this. 

A StatsCan study from 2017 suggests Canadians paid an average of 11% in fees to send up to $200 outside of the country. Here in Canada, we take the value of our Canadian dollar and its purchasing power for granted. Even though our government and governments around the world are flirting with hyperinflation thanks to the coronavirus pandemic and all of the economic stimulus and money printing happening as a result.

With Stellar, transactions like the one described above won’t cost 11%. They will cost mere pennies. That’s a value proposition most blockchains can offer. The fact that Stellar offers the same value proposition using traditional financial institutions as anchors makes it easier, cheaper and more seamless than even Bitcoin and Ethereum can.

Who would have imagined a world where cross-border settlement would be so simple? Not to mention cheap too! The best part of it all is the fees are fractions of a penny because Stellar Lumens are used to pay the fees. 

More on Stellar Transaction Fees

Transactions fees on Stellar will cost 0.0001 XLM which currently costs about $0.0000045. This pales in comparison to the $15 average it may cost to send money overseas. The decentralized nature of the blockchain lowers the overhead costs, meaning both parties get to keep more of what they earn to reinvest and grow their businesses.

The Stellar Development Foundation is partnering with MoneyGram International allowing customers to send USDC on Circle. The venture is also connected to Texas United Bank, which will provide settlement services to all parties involved. That helps keep things legal with regulators.

Sending Money Across Borders Costing Fractions of Pennies

The ability to tokenize any asset and utilize a smart contract surely can work wonders for businesses. This can also have a real benefit to regular people too, especially those that send and/or rely on remittances. Stellar makes it more affordable for more than 2 billion unbanked people in the world to send and receive remittances.

For countries whose Gross Domestic Product is primarily made up of remittances, the implementation of Stellar would allow more people to keep their money in their own coffers, and thus, within their own national economies. 

For Stellar, facilitating the above means grabbing a sizeable market share of the $500 billion sent in remittances every year.

An Overview of The Stellar Anchor Network

The Stellar Anchor Network is proving to be critical to the growth and development of tokens that can represent and replace fiat money and allow the value of it to be transferred at a fraction of the cost of Western Union or other remittance services. In September, Latin American stablecoin issuer Anclap announced the launch of a Peruvian stablecoin on Stellar. It will allow instant access to fast and cheap digital settlement of payments.

Now that more and more people are working remotely and not necessarily working for a company in their country of residence, Stellar is positioning itself to benefit global employers and employees. Stellar makes it possible for an employer to issue payments in their native tokenized currency.

It is easy to see how Stellar is investing heavily in making money move globally both fast and easily. The network is invested in a better future for all. Now is your opportunity to get some skin in the game.

Stellar Is Going to be A Game Changer in the World of Remittances

The returns certainly will not end there as the foundation is active to enhance the network. In 2019, the foundation decided to reduce the amount of XLM to 50 billion by burning half the token supply. In effect, inflation was completely taken out of the model.

The foundation is also regularly announcing partnerships with big firms. Currently, their biggest partner is IBM. Stellar also has an endorsement from Franklin Templeton.

In addition to Stellar’s partnerships, the project has a suite of tools which include a decentralized exchange and even a laboratory to experiment and learn more about the network.

Stellar just announced on Nov 3rd that validators voted to upgrade to Protocol 18 which adds Automatic Market Maker functionality to the decentralized exchange. 

In 2021, DeFi has been plagued by high gas fees that have eaten into the profits of investors and the overall desire to use these platforms. This new addition that does not require the use of smart contracts to create liquidity pools coupled with low fees that are native to Stellar will certainly attract new investors and traders to the network.

Stellar continues to invest in the future of global finance and positioning the network to meet our evolving world’s demands.

How to Buy Stellar Lumens at Netcoins

Now that you know more about Stellar, there is no better place to start your Stellar journey than right here at Netcoins.

If you have not done so already, sign up for your free Netcoins account today. You can buy Stellar using an online bill payment or e-transfer. You can also deposit cryptocurrencies like Bitcoin, Ethereum, Litecoin and trade them for Stellar.

Thanks for reading this week’s edition of Netcoins Progressive Investor.

Are you looking to Buy Stellar Lumens (XLM)? Buying Stellar Lumens (XLM)Is Easier Than Ever. Netcoins is a fully regulated crypto trading platform in Canada.