When it comes to cryptocurrencies outside of Bitcoin, Ethereum, and their variants, many people get a bit lost.

After all, many people wonder: Why have a blockchain, if it isn’t to create a cryptocurrency? Why have so many different coins, anyway? Don’t they do anything useful?

Stellar is one of those cases that seems to fit the definition of a blockchain, a coin, and a token all in one. But there’s more to it than that. Stellar is a decentralized network made for the purpose of exchanging money.

So then is it an exchange?

Keep reading to find out the answer to all of those questions and more!

How Much Is Stellar Worth?

The Stellar price has never gone higher than a tick above $0.84, on January 4, 2018. After that, if you were to look at a logarithmic chart of its price and market cap, you would see a sawtooth pattern emerge.

What’s interesting is it never went below its previous high before the initial skyrocket.

The point of Stellar is not to have a huge price on its native coin, the XLM or Lumen. In other words, the coin will never have a price like ETH or BTC — it’s not designed to.

There are 24.3 billion coins in circulation and a max supply of 50 billion. They’re created and destroyed as needed.

With that many coins, even $0.45 represents a value to the tune of about $8.3 billion hosted on the Stellar network. A trading volume on Stellar averages just under $700 million daily.

The XLM coin only facilitates the trading of other tokens on the Stellar network. You define a currency, deposit that currency into the Stellar network and receive a token version of it.

Once you have that token, you change that for the token of a currency you desire, ask to cash out, and then receive that currency in your account if it supports it.

While the “price” of XLM roughly matches the market cap of the Stellar network, its value goes much further. It’s a utility network that:

  • FinTech platforms use to transfer currency under compliance
  • Bypasses traditional financial institutional remittance structures
  • Helps support stablecoin acceptance
  • Helps facilitate cross-border payments
  • Helps exchange CBDCs (Central Bank Digital Currencies)
  • Keeps exchanges compliant with on and offramp services to the appropriate local currency of their user

Is It a Coin, a Token, or a Blockchain?

Let’s rewind a bit, to the birth of Stellar in July and August of 2014. At this point, Ethereum was only about a year old. Coins and tokens started popping up all over the place and people wanted to trade these tokens but not use an exchange to do it.

Stellar was already in the works, predicting an explosion of cross-blockchain tokens and coins popping up, without any way to easily and reasonably exchange them. Not to mention the headache of on and offramps.

So important was this role that Google, Stripe, BlackRock, and FastForward all helped cover startup and operation costs.

XLM is a native currency to Stellar, the Lumen. It creates other tokens on its network that you can trade for other tokens. These tokens represent 1:1 versions of the currencies that back them.

Rather than replace currencies, Stellar works to enhance them.

What Is Stellar: A Starry-Eyed Surprise

So what is Stellar? When it comes to investing in cryptocurrency Stellar Lumens help you to quickly and easily adapt to changing markets. This is true whether you’ve invested in Bitcoin or some other open-source protocol.

Not only that, but it’s also true whether you’re a large corporation or a small independent investor.

Need to know more before jumping into the deep end? Keep browsing our other crypto articles to find out more!