Reasons I’m Still Not Sold On Buying Stellar (XLM)
Stellar (XLM) wants to connect banks, payment providers, most importantly, the people by providing a platform upon which they can make monetary transactions faster, securely and cheaply.
This is all great and should it work, then the network could be one of the few that go on to transform the financial industry. In the end, the beneficiaries here or rather winners could be the millions of unbanked people all over the world.
While I don’t dispute the potential of this coin and what could happen if the adoption strategy worked, I’m not yet sold on the fact that it actually will happen.
Stellar’s demand Vs. adoption
It isn’t anything against the coin, but as an investment opportunity, Stellar doesn’t provide much incentive to buy. If the demand for XLM was anywhere near what a coin that wants to go global targets, then I’d be totally sold on getting Lumens.
The common thread among the many XLM holders is that the coin will be valuable long-term. It’s assumed that the platform will get significant traction and massive adoption, eventually leading to value growth for XLM.
The biggest carrot dangled is the IBM partnership. Now, this is a tech giant, but until recently it didn’t use XLM directly in any way. The pilot project with payment providers in the Pacific region happened yes, but no significant traction has followed.
The recent Veridium Labs deal could be great for Stellar, but these are far too isolated instances that make Stellar’s race towards adoption sluggish at best.
Other players, Ripple (XRP) included also bring an element of competition that makes the feeling that XLM will become the defacto cross-border payment platform less than likely. Value appreciation, therefore, pegged on adoption is out, even by long-term standards.
One of the plunks used against Ripple is that it isn’t decentralized, which essentially goes against the ethos of cryptocurrency’s founding minds.
Well, it turns out Stellar isn’t entirely decentralized itself, with a huge amount of Lumens being held by the founders. They in effect wield massive control over coin distribution versus price movement.
While prices are mostly a confluence of several factors, the increasingly huge volumes of Lumens being released make it quite simply impossible for the prices to move anywhere near the all-time high again.
There are currently 18,577,770,543 XLM in circulation against a total supply of 103,966,327,161 XLM. The one thing power can do is to lead to an uncontrolled release of XLM, arbitrarily or due to partnerships. The half chance that it could actually transpire means buying the coin for investment may not work.
No marketing effort
I believe what Jed and team are doing at Stellar deserves to be commended. The project has already hit the market and there are a lot of great things lined up- FairX, SDEX and Lightning Network. But there is one area that the team appears not to bother about: marketing.
Get me right, XLM isn’t BTC or ETH or even XRP that are getting front page coverage from the media. What the Lumens require is a marketing strategy, a plan to get the global community realizes what an excellent project it is. The Build Challenge is a good part of it, but not enough.
For investors, until at least crypto goes mainstream, the price is everything. The tech may be good, but few people get in just for the sake of the tech; it’s about what the coin will be worth in the short-term, mid-term, or long-term. Marketing will do a great deal of good to encourage the community.
And if the focus isn’t on profits, then, the worst thing is to tell investors in your project that they have nothing to gain. No new investor is coming on board with these sentiments.
Today Stellar (XLM) is trading at $0.27 against the USD, declining in value with the rest of the market. While a recovery is likely and new highs are possible, the main question is whether the coin has enough support to target the nearly $1.00 it tested back in January.
The 2017 boom could well happen again and we could see insane price movements. However, I am not convinced that XLM is an investment to bank on.