Stellar Day Trading – Tutorial, Brokers and Buying guide
Stellar is a distributed, hybrid blockchain. It works as a decentralised cryptocurrency based on Lumens, with the ticker symbol ‘XLM’. This page will break down everything you need to know about Stellar, including the cryptocurrency’s history, wallets and future price projections. Finally, some top tips on how to start day trading with Stellar coins will be given.
What is Stellar?
Before considering the cryptocurrency’s potential, how precisely it works needs to be explained. Essentially, Stellar is an open-source payment technology that seeks to connect financial institutions, while seriously reducing the cost and time associated with cross-border transfers. For that reason, it is somewhat like the Ripple network. In fact, they both share the same initial protocol.
The stellar protocol is actually supported by a nonprofit, the Stellar Development Foundation. The Stellar blockchain enables users to generate their own tokens and Stellar can manage as many as 1,000 transactions each second.
The cryptocurrency itself is based on Lumens. Each Lumen is a single unit of the currency. Initial supply was to be around 100 billion. 18 million or so XLM were swiftly in circulation.
One of the clear advantages of the cryptocurrency is that buying Lumens allows users to interact with a number of fiat currencies with ease. For example, both forex traders and travellers can capitalise on swift and straightforward access to the US dollar or Euro.
Overall then, their vision is clear if not challenging – they seek to revolutionise global financial transactions. Specifically, they want to allow developing nations to take part in global finances, starting in the South Pacific.
History
The Stellar team came to life in 2014. The cryptocurrency creators were the co-founder of the Ripple, Jed McCaleb and former lawyer Joyce Kim. In fact, the company was launched when McCaleb left Ripple after a number of disagreements. But while this may have dampened the outlook of Ripple, it ensured the Stellar owner had a point to prove.
At the initial launch, Stellar was built on the Ripple protocol. However, forking took place once a number of changes to critical consensus code were made. The Stellar Development Foundation built an updated version of the protocol, boasting a new consensus algorithm, based on a totally new code. April 2015 then saw the release of the white paper. The updated coin network then went live in November 2015.
Stellar Partnerships
Future value predictions for this cryptocurrency often hinge on information about potential partners. Fortunately, the company has secured investment and deals with a number of high profile enterprises, including:
- Stripe – The payment service has removed blockchain, allowing access to Stellar on its platform.
- Ordain – The cloud-based banking software company Ordain will use the Stellar network to bridge microfinance institutions in Nigeria.
- The Praekelt Foundation – Their aim is to integrate Stellar into their open-source messaging app, Vumi. This should allow young Sub-Saharan African girls to save money using airtime credits.
- International success – December 2016 saw the announcement of several partnerships in India, the Philippines and West Africa. The result of this was a significant increase in the cryptocurrency’s trading value on exchanges.
- Deloitte – 2016 also saw Deloitte announce a partnership with Stellar to create a payments app.
- Banking results – At a 2017 conference, McCaleb made the announcement that 30 banks had signed up to use Stellar’s blockchain for cross-border payments.
- IBM – In October 2017 the latest news on cryptocurrency coin websites and forums was Stellar’s partnership with IBM. The purpose of the deal was to create multiple currency corridors for countries in the South Pacific, such as South Africa. This would allow small enterprises, non-profits and local financial institutions to enhance commercial transactions.
- Benefit scheme – In September 2017, it became clear the coin’s value was set to increase even further. Stellar announced it was to award partners up to $2 million in a new benefits system to develop “high impact projects”.
- Word spreads – Furthermore, the cryptocurrency’s trading price and predictions in 2018 rose after graphs illustrated a huge increase in the number of people online talking about Stellar coins each week.
Stellar Live Chart
Architecture
Take the Stellar cryptocurrency vs Ripple and Bitcoin and a couple of clear differences arise. Firstly, Ripple is a closed system, whereas Stellar is open source. Servers run a software implementation of the protocol while using the internet to interact with other Stellar servers, creating a global value exchange network.
Each server makes a record of every account on the network. These details are then stored in a database, also known as a ledger. Servers will put forward changes to a ledger by suggesting transactions which move accounts from one location to another, by spending an account’s balance or altering a property of an account. All servers will then reach an agreement on which transactions to apply to the current ledger, known as ‘consensus’. This mechanism takes place regularly, every two to four-seconds in fact. As a result, each server’s copy of the ledger is synced and kept exactly the same.
The consensus protocol also means Stellar does not require coin mining pools, unlike the Bitcoin cryptocurrency.
On top of the protocol difference, Stellar’s CEO also seeks different customers. Ripple focuses on established banking institutions to enhance their cross-border transfer technology. Whereas Stellar is concerned with developing markets and has a number of uses for its technology, from money remittances to bank loan distribution to the unbanked.
Inflation
The coin’s rate is kept stable as Stellar has a built-in inflation system. Small amounts of free XLM are given to members. A tiny fraction of the Lumens taken from each operation goes towards inflation, as well as all other Lumens dispensed into circulation.
Benefits
There are a number of advantages to the Stellar cryptocurrency, including:
- Decentralisation – Ripple is moving away from the decentralised nature digital currencies were built on. Stellar, however, is far more decentralised. Furthermore, it is actually a nonprofit organisation.
- Low fees – As trading systems and platforms go, Stellar offers an extremely cheap way to transfer capital. In fact, the operation fee for each transaction is as little as 0.00001 XLM. Exchanging currencies is also relatively cheap.
- Security – You can freeze transfers if you accidentally entered the wrong wallet address, for example. This is unlike the majority of digital currencies where transfers are irreversible. Transactions although normally public, can also be made private via third-party plugins.
- Community-owned – The community owns the Stellar network. If the nonprofit organisation vanished, the network would still function. This also means anyone with Lumens can vote where capital comes from and how transition fees should be spent.
- ICOs – Although it doesn’t handle all software types like Ethereum, for example, it is one of the best choices for cryptocurrency ICOs.
- Promising partnerships – The cryptocurrency has secured a number of powerful partners, including IBM and the KlickEx Group. This has helped stimulate substantial growth in coin price charts and forecasts.
- Accessibility – Cryptocurrency trading in India, the UK and the rest of the world is on the rise. From trading bots to futures trading, there is a range of instruments and techniques for aspiring traders to choose from.
- Resources – There is a huge range of cryptocurrency resources you can turn to. Yahoo Finance, for example, will give you the coin’s news today and the current buy price in USD, AUD, Euro and more. Even brokers, such as eToro will give you analysis and commentary when prices drop and markets fluctuate.
Drawbacks
Before you decide to purchase any of this cryptocurrency, coin reviews have highlighted a number of drawbacks, including:
- Distribution – The founders own 90% of Lumens. Having so much of the cryptocurrency’s worth in the hands of so few can be worrying for future growth. These ‘whales’ have the ability to send prices plummeting if they sell large quantities of their digital capital.
- Competition – Regardless of current cryptocurrency live prices, it is only the technology that is likely to stand the test of time. Companies will choose one chain and stick with it. So while a few may survive, tens will not. This may mean even Stellar’s reputable name may disappear from the map if it doesn’t secure enough partners.
- Manpower – Coin forecasts and projections often assume teams will develop quickly to meet drastic growth. However, this is not always the case. The Stellar team is relatively small and rapid growth may lead to fragmentation and mistakes.
So while coin reviews are mostly positive and their purpose admirable, market history shows us price can tumble at a moments notice. Not to mention, maintaining and gaining market share when competition is so fierce is challenging to say the least.
Where to Buy Stellar Coins
Fortunately, as a result of an increasing number of coin exchanges becoming available, buying Lumens is relatively straightforward. The cryptocurrency exchanges Binance, Bittrex, Poloniex, Kraken and Coinbase all have Stellar coins available for purchase. It is also possible to speculate on price movements without using an exchange, many brokers now offer single click access to crypto trading. IQ Option offer access to over 20 different coins and tokens.
Wallets
Now you know where to buy Stellar coins. However, you will also need to store your new coins in a wallet. You get a choice between mobile, desktop and web wallets. In fact, all of the following wallets support Lumens:
- Stellar Desktop Client
- Ledger Nano S
- Stellar Portal
- Blackwallet
- StellarTerm
- Stronghold
- Centaurus
- Stargazer
- Lobster
- Papaya
- SAZA
Faucets
There is also an option for those looking to get free stellar coins. Cryptocurrency faucets, usually found on websites or apps, are effectively reward systems. They simply give away coins in return for completing a captcha or task detailed on the website. If used correctly, faucets can help increase your total number of coins, which you can then use to day trade.
What’s Next for Stellar?
Trading reviews impress with the cryptocurrency’s price history and performance. Strong partnership deals and a focus on a stronger lightning network are likely to increase the coin’s future price predictions. Furthermore, The Stellar Decentralised Exchange (SDEX) is set to enhance scalability and security. It aims to bring cheaper rates between assets as well as low trading fees.
Despite the number of positives, coin and price graphs often fail to signpost potential pitfalls. Stellar certainly does come with risks. Strong competition and a monopoly on coin ownership could all prove dangerous for aspiring traders.
For further crypto guidance, see our cryptocurrency page.