The crypto market has taken the world by storm over the last five years, and many investors are trying to figure out how to get into the industry.
If you aren’t knowledgeable about cryptocurrency, knowing where to invest your money can be challenging. Thankfully, we can help with this by comparing various currencies. In this piece, we’ll be comparing Bitcoin to Stellar.
History
As an investor, it is essential to know more about the company or project you are planning to invest money into. Looking at a cryptocurrency’s performance history, generally speaking, is a great place to start.
Bitcoin (BTC)
Bitcoin was created in 2009 and has been making waves inside and outside the crypto industry ever since. Bitcoin was created by an entity called Satoshi Nakamoto, which could be a single person or several people – the true identity of the creator or creators has never come to light.
The crypto asset was created after the global financial crisis that was experienced from 2007 to 2009 because many members of the public had lost faith in banks and the government.
Bitcoin became an alternative payment system that would operate independently but could still be used in the place of many traditional currencies.
Stellar (XLM)
Stellar and its tokens, Stellar Lumens, were created in 2015 by the Stellar Development Foundation. The project aims to create a new cryptocurrency with low-cost transactions and the ability to act as a bridge between fiat and digital currencies.
The project was founded by Jed Mccaleb, Joyce Kim (who is no longer a part of the project) and David Mazières. They banded together to create the Stellar network to make it easier for people to send different currencies anywhere in the world.
What It Does, And Why It Was Created
If you’re planning on investing in any digital currencies, it is a good idea to understand how they work and why they were created, as this can help you determine whether a crypto asset will be a good investment.
Bitcoin (BTC)
Bitcoin was initially created as a way for people to complete money transfers with one another over the internet.
This digital currency was born of the financial crisis or “Great Recession” between 2007 and 2009, as the economic catastrophe caused people to distrust brick-and-mortar banks and their governments.
It was originally intended to be an alternative to fiat currency that operated independently, but it has since become an investment that people hold on to.
Stellar (XLM)
Both Stellar and XLM were created to make a new cryptocurrency that would feature instantaneous transactions lower in cost than many other digital currencies.
They also wanted the Stellar platform to bridge the gap between fiat currencies and the currencies of other decentralized platforms. Stellar verifies its transactions using its algorithm called the Stellar Consensus Protocol.
Another reason for the project’s creation is that Stellar users can complete money transfers with one another even if they don’t have access to traditional banking services in the country they are based in, as it acts as a decentralized network.
Stellar and the nonprofit Stellar Development Foundation stated in a whitepaper that Stellar was also designed to help deploy Central Bank Digital Currencies once they became more commonplace in the crypto world, which will significantly help the world’s financial systems.
Price History
If you are interested in purchasing either Bitcoin or Stellar Lumens, then looking at their price history will be a good idea, as it can help you determine how stable each digital currency is.
Bitcoin (BTC)
Bitcoin has come a long way since it started in 2009, as one Bitcoin was only worth a quarter of a cent ($0.0025) back in 2010.
In April 2011, one Bitcoin was valued at over $1 – only the beginning of the rise of this crypto asset.
As more and more people began to hear about Bitcoin, its price continued to rise, as it reached the $1,000 threshold in November 2013, the $10,000 threshold in November 2017, and the $20,000 threshold in December 2017.
Bitcoin would eventually reach its peak in October 2021, valued at $66,974.77. After this peak, some external factors began to affect the value of Bitcoin, which is why one Bitcoin is currently worth $19,628 in October 2022.
Stellar (XLM)
Back in 2015, when Stellar launched, if you wanted to buy Stellar Lumens, you would only have needed to pay $0.00047612 for a single token, which is also the lowest price a Lumen has ever reached.
At its peak in January 2018, one Lumen was worth about $0.87. Since then, the Stellar price has spiked and dipped multiple times, which is why one Lumen is currently worth $0.11 in October 2022.
Market Cap
Market capitalization is an important factor to consider when investing in a company or digital assets, as it will help you to determine the total value of that currency and whether it will be worth investing in.
Bitcoin (BTC)
Bitcoin has been at the top of the crypto world for many years, and there is little possibility of this changing any time soon, which is why it has the highest market cap of any digital asset, currently set at $367.96B.
Stellar (XLM)
The Stellar platform was only made accessible to the public in 2015, which is why it has a significantly lower market cap of $2.83B.
This makes Stellar the cryptocurrency with the 25th-highest market cap.
Similarities
Stellar had a similar intention to Bitcoin when it was first created, as it was initially a means to send money over the internet. There are also a finite number of both Lumens and Bitcoins in circulation.
Both currencies can be purchased from most crypto exchanges and must be stored in a digitalized wallet. Neither Bitcoin nor Stellar is regulated by banks or governments.
Differences
While Bitcoin started out with a similar goal in mind, it has become very different from Stellar, as it is now more of an asset that people hold onto to sell for a profit later.
Lumens facilitate virtual currency trading without banks’ involvement: someone can convert their money into Lumens and send it to someone else, who can choose to receive this “money” in whatever digital currency they prefer.
This is why people generally don’t hold on to Lumens and instead use them to trade and complete money transfers.
Risks
Like any other investment, cryptocurrency is prone to risks, which is why we will discuss the risk attached to both Bitcoin and Stellar.
Bitcoin (BTC)
One of the most significant risks of investing in Bitcoin is that its value could spike or plummet at a moment’s notice, leaving you with either an impressive bank balance or significantly less than what you started with.
Investing in any cryptocurrency carries significant risk, as the market is unregulated and decentralized, so you cannot complain or file a claim if you lose your investment.
Stellar (XLM)
The Stellar network comes with all the usual risks associated with cryptocurrencies. However, one of the advantages Stellar offers is that it facilitates trades instead of being an asset in and of itself – making it slightly more secure.
Unfortunately, this also means that Stellar might not be a good option if you are looking for an investment that will increase in value.
Where You Can Buy It
Bitcoin (BTC)
You can easily purchase Bitcoin from PayPal, eToro, Kraken, Robinhood, Binance, and Uphold.
Stellar (XLM)
You can purchase Lumens from Coinbase, Kraken, Binance, Bitfinex, Upbit, Coincheck, Crypto.com, Huobi, and NovaDAX.
How Can You Exchange BTC For XLM
You can easily exchange Bitcoin for Lumens and vice-versa by using almost any of the exchanges listed above.
Future Plans
Bitcoin (BTC)
While Bitcoin has dropped in value significantly compared to October last year, many analysts predict that the tokens should be valued at close to $64,000 come early next year.
Stellar (XLM)
The Stellar price is predicted to reach $0.40 per token by the end of 2024. Still, once again, so long as the currency stays somewhat stable, it will not be much of a problem, as Lumens are intended to be used instead of kept squirreled away in digital wallets.
References
https://www.cryptonewsz.com/forecast/stellar-price-prediction/
https://coinmarketcap.com/currencies/stellar/
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