Is It a Good Idea to Convert Stellar to Bitcoin?
https://eclipcoin.com/blog/stellartobitcoin
Written by Ethan Goldenberg
Financial expert @ Global Asset Finance Limited, 10+ years in the finance and cryptocurrency market
In the last ten years, blockchain solutions have entered various spheres of life. Many people still associate this technology with the financial sector or crypto market.
The first decentralized currency, Bitcoin, appeared back in 2009, and it was the beginning of an entirely new era in finance. Bitcoin is not convenient for everyday use. For this reason, other projects that aim to satisfy daily use needs have entered the market lately. While the reasons for buying bitcoins are clear, you may wonder whether its competitors are worth your attention. In 2012, the first blockchain startup, Ripple Labs, was launched; it was focused on the banking sphere. It is behind the XRP cryptocurrency. Ripple coins have their drawbacks, the main being the lack of decentralization. In 2014, a group of Ripple developers created a hard fork to fix some XRP problems. The new project was called Stellar Lumens (XLM).
What Is Stellar? How Does It Work?
Stellar is a decentralized payment system used for rapid and low-cost monetary operations between banks, payment systems, and people. Initially, the project was created as a decentralized clone of Ripple, but without its main disadvantage of a centralized management system.
Unlike Ripple, the Stellar source code is open-source so any programmer can contribute to the platform development. Stellar blockchain has a decentralized control system. Here, each user can independently run the code and start checking transactions. The user can choose any network participant to cooperate with. Together they can form the so-called fraction, which can become a “parliamentary majority”.
The Stellar blockchain can also produce new tokens and equivalents of all assets.
How Are Stellar Transactions Confirmed?
- The user creates a transaction.
- It is picked up by one of the active nodes.
- The node checks the sender’s wallet balance and transmits the transaction with the following free node to avoid a double write-off.
- The last node enters the data in the blockchain.
- The operation is considered to be completed when 80% of the validators agree in five seconds.
Stellar’s native token is Stellar Lumens (XLM). The XLM cryptocurrency was created for two primary purposes, which are as follows:
- Spam prevention. The system charges a fee in the amount of 0.00001 XLM from each transaction. It protects against network overload and launching a large number of transactions (spam attacks).
- Multicurrency transactions. XLM is a bridge between currencies in cases where the direct transaction between them is impossible. For example, when sending money to the UK from the United States, you can use dollars, and the addressee will receive local pounds thanks to the built-in order books that facilitate the exchange.
For swapping XLM, one may perform the XLM to BTC exchange on a decentralized platform like Godex.io. It is swift, safe, and very profitable even for a beginner trader who has no experience swapping coins.
Stellar`s Partners
Stellar Development Foundation has recently entered into a partnership with the German company Vonovia. As a result, blockchain bonds worth $20 million were issued. Cryptocurrency Stellar Lumens has entered into a partnership with the world’s largest software manufacturer, the American giant IBM.
Together, they have developed a solution that can be used for all types of payments. Now financial institutions can carry out instant clearing and cross-border payments thanks to IBM’s new Blockchain World Wire. This is very important for Stellar and for the entire crypto industry. What matters is that it is not just another concept but it really technically works.
A good example is Stellot, a platform for e-voting. The system was developed in 2020, and its functional testing will begin in April 2021.
Should I Change XLM to BTC?
It is a rather complicated and ambiguous question. Even experienced traders say that there is no correct answer. It all depends on your investment strategy. We have compared other popular cryptocurrencies before.
As a matter of fact, Stellar’s cryptocurrency XLM has good prospects for the future. The project runs in a pretty popular niche. It actively develops since the team introduces new technologies and works to eliminate flaws. Its further development will depend on the competitiveness of Stellar.
Many experts advise keeping at least a few promising cryptocurrencies in a portfolio. If you are an experienced trader, you probably know it. This approach will allow diversifying risks and possible profit.
