Stellar (XLM) vs. Bitcoin (BTC): Features of Crypto Projects and Development Forecasts

Stellar (XLM) vs. Bitcoin (BTC): Features of Crypto Projects and Development Forecasts
November 1, 2021 0 Comments

Stellar (XLM) vs. Bitcoin (BTC): Features of Crypto Projects and Development Forecasts

In 2014, the decentralized system Stellar was launched with its own cryptocurrency, Lumens (XLM). It was conceived as a platform for the creation, storage, and transparent exchange of any kind of money. It is positioned not as a replacement for the existing financial system but as a tool for its modification.

It is a fork of the Ripple cryptocurrency (XRP). The main purpose of the project is to carry out money transfers between banks, people, etc. Among the main partners is the IBM corporation.

Bitcoin (BTC) became the first cryptocurrency, after which 1,000+ others were created, but it still remains the flagship and sets the direction of the market. At the same time, the main cryptocurrency has a number of restrictions, the main ones being scalability, commissions within the network, and mining features.

Unlike Bitcoin (BTC), internal transactions in Stellar are confirmed very quickly, within 2-4 seconds, while the commission is only 0.00001 XLM and is charged as protection against spam attacks. XLM is the stock ticker for the Lumen cryptocurrency, the internal payment unit of the Stellar network.

Features of Stellar (XLM) vs. Bitcoin (BTC)

Stellar is a peer-to-peer network that consists of nodes (computers) that maintain a distributed ledger and exchange information to confirm and add transactions to it. The nodes are based on the Stellar Core program, which implements the Stellar Consensus Protocol (SCP) algorithm. This type of consensus-building was created as a result of improvements to the Federated Byzantine Agreement (FDA). Bitcoin (BTC), in turn, operates thanks to the Proof-of-Work (PoW) consensus method. Bitcoin uses the SHA-256 hashing algorithm.

Stellar (XLM) features include:

  • the ability to tokenize any assets (from fiat currencies to gold or stocks) and conduct transactions with them;
  • use by large corporations and banks (one of the major agreements was concluded with IBM);
  • low token price and minimal transaction fees make it optimal for quick transfer of funds between different accounts or exchanges;
  • they want to use the technologies of the project even at the state level. The agreement with the Ministry of Digital Transformation of Ukraine is indicative;
  • transactions are fast as no traditional miners are needed to approve applications. The speed is faster than many blockchain-based networks;
  • the platform is open-source and published on Github.

In the total mass of crypto coins, 95% of XLM should be distributed free of charge and evenly, for which the fund employees are responsible. Of this amount, 25% is allocated to non-profit organizations. 5% of the total amount goes to operating expenses. Therefore, Stellar is not mined on its own. The question of how to mine Lumens (in the usual sense of the word – using your computing power) is not relevant today. The stabilization of the cryptocurrency is also facilitated by the fact that large amounts of XLM under a restrictive agreement are prohibited from selling for five years.

How Stellar (XLM) vs. Bitcoin (BTC) Works

Stellar (XLM) is not based on a blockchain like Bitcoin (BTC) but uses a distributed ledger. Special quorums are used to check updates in the registry and make new transactions. The creators claim that unlike PoW (proof of work), which uses Bitcoin (BTC), SCP is more customizable, faster, and more efficient.

Key properties of SCP:

  1. Decentralized control.
  2. Low latency. That is, the nodes quickly reach a consensus.
  3. Asymptotic safety. The network is protected, as digital signatures and a series of hashes are used, the parameters of which are adjustable. Analogy: the number of characters in a password increases as the attacker’s power increases.
  4. Flexible trust. Example: A small non-profit firm can play a key role in maintaining the integrity of much larger organizations. That is, users can trust any combination of parties they see fit.

Everyone can run their own node to keep the network running. This is the essential difference between Stellar and the Ripple protocol.

Stellar (XLM) vs. Bitcoin (BTC) Transaction Speed

The Stellar (XLM) network is supported by 130 nodes. Thanks to them, the productivity reaches ≈ 1000 TPS. It takes about 5 seconds to send XLM. This is a high speed considering that Bitcoin (BTC) is ≈ 7 TPS. The Bitcoin blockchain is not characterized by high scalability and bandwidth. It can take 60+ minutes to finalize a transaction.

According to the testing of a Stellar prototype network (XLM) on a cloud server (information provided by Stephen van Koller – CEO of Barclays Africa), the speed reaches 10,000 TPS.

Stellar (XLM) vs. Bitcoin (BTC) Network Analytics and Forecasts

Some digital assets have started to compete seriously with Bitcoin. Experts argue that such coins help increase overall confidence in BTC, and you should not expect them to replace Bitcoin. The most serious contenders for Bitcoin (BTC) are Ethereum and Ripple, two coins based on their own blockchains, which have an advantage over Bitcoin in terms of speed and commissions when processing transactions. Considering that Stellar is a fork of the Ripple (XRP) project, crypto investors do not give up hope that the rate will rise.

The Stellar (XLM) crypto project has long-term prospects, and the coin’s price has every reason to grow. The platform is constantly evolving:

  1. There are more and more new stablecoins operating in the Stellar network (Circle has already issued USDC, and the oldest German bank Bankhaus von der Heydt – EURB).
  2. New long-term partnerships are being created with large companies, corporations, and even government agencies. The latest agreements were concluded with the Ministry of Digital Transformation of Ukraine, IBM, the German company Vonovia, which issued bonds on the Stellar blockchain.
  3. The speed and volume of transactions are increasing.
  4. Thanks to the ability to create smart contracts and decentralized applications, the project can become a competitor to Ethereum.
  5. Stellar Development Foundation is expanding the number of developers.

All cryptocurrencies are different. There are 8,587 different digital coins in the digital asset class. Stellar has not kept pace with the rate of rising in the price of Bitcoin (BTC). However, this digital currency has risen in price. The maximum cost of Stellar (XLM) came in the month of May 2021. Of course, it was no higher than the value of the leading coins.

The recipe for success in this asset class is a combination of practicality, recognition, and PR. Bitcoin (BTC) has about 50% of the total cryptocurrency market capitalization. At the same time, he has a significant share in media reports. As you know, the possibilities of manipulation in the crypto market using PR are high.

When Stellar entered the market, it was well-received by the cryptocurrency community and the press. An important role in this was played by the contrast between the open principles of the Stellar network and the closed format of Ripple. But during 2014-2015, the platform began to acquire independent fame. Her reputation was first supported by famous individual personalities who became members of the board of the coordinating fund and then by cooperation with large corporations.

The rise and fall of the rate of this cryptocurrency against the dollar continue constantly. Some trends are triggered by external factors that can easily excite the relatively young cryptocurrency market.

In connection with the above, and also taking into account the announced cooperation with a number of large companies, including Tempo Money Transfer, Flutterwave, ICICI Bank, Coins.ph., the forecasts for XLM growth and for the development of the Stellar network, in general, are very encouraging.