As 2017 witnessed the best year for the cryptocurrency market to date, there are many reasons pundits reckon that 2018 will be another booming year for the sector.
Launched in 2014 as the hybrid blockchain, Stellar’s Lumens (XLM) has experienced a blistering breakout at the start of 2018. Stellar (XLM), founded by Jed McCaleb (creator of Ripple and eDonkey) and Joyce Kim, aims to connect people, payment systems and banks.
Stellar is an open-source protocol, enabling everyone to run a client; this is to avoid dependency on a single server in case some of the servers fail. While the most significant market players cooled off over the holidays, XLM displayed steady gains over the past few weeks, piercing into the top ten cryptocurrencies by market capitalization.
On January 4, Stellar’s market cap was $15.4 billion, while the altcoin reaches highs near $1, rising from $0.09 on December 3, 2017. The altcoin’s rapidly rising volume has also overtaken other cryptocurrencies like Cardano (ADA), NEM, and IOTA.
XLM-USD (Bittrex, Daily)
On December 29, XLM-BTC displayed a bullish breakout, bringing the pair to a new all-time high at 6370 satoshis by January 4.
XLM-BTC (Bittrex, Daily)
What’s Causing the Escalation for XLM and XRP?
Stellar seems more promising and affordable than bitcoin, as well as providing faster transaction times and the ability to move between fiat currencies. On top of this, large market players like Deloitte and IBM have partnered with Stellar to develop affordable and cross-border payment systems; these collaborations could result in the acceleration of blockchain-based banking.
If you had invested $100 in XRP in 2017, it would have grown to about $35,000 in 2018. Ripple and Stellar are gaining prominence in 2018 with founder being the same; Jed McCaleb founded Mt. Gox bitcoin exchange, sold in 2011 and left Ripple in 2013 and now operates Stellar. Both cryptocurrencies are benefitting from rumors that Coinbase will list the altcoins in the near future, as well as the increasing interest from investors in cryptoassets.
Though bitcoin is the trending cryptocurrency and ended 2017 about 1,300 percent higher, Ripple and Stellar have positioned themselves in second and seventh respectively in terms of market cap. Both cryptocurrencies are featuring reduce transaction costs and cross-border payments; while XRP is focusing on banks, XLM seeks to become a gateway for remittance and the best choice for micro-transactions.
According to Joe DiPasquale, founder of BitBull Capital, said to CNBC:
“There has certainly been a change in the thinking of crypto hedge fund managers in what will give them the best return.”
However, the sudden surge in value for XRP and XLM have worried some cryptocurrency observers and made the speculative nature of the market clear. In terms of fully diluted market capitalization, Ripple’s network effect is suggested to be more valuable than bitcoin’s. Also, critics point to the supply held by Ripple founders as a single point of failure as well as centralized servers.
Here’s how logical crypto markets are – Ripple’s fully diluted market cap is now larger than Bitcoin’s, and Stellar’s is nearly tied with Ethereum’s pic.twitter.com/VZjdUx7diL
— Ryan Shea (@ryaneshea) January 4, 2018
The rise of XRP and XLM have led to proposals for a new metric to measure the cryptocurrency market, as market capitalization is misleading, with calls for measures of decentralization and liquidity to give a more accurate reflection of cryptoassets and their worth.
Contributions by Jamie Holmes.