Why is Stellar a Banker’s coin?

An Altcoin was hidden in plain sight which has kept a relatively low profile has completely taken us by surprise. When you look at its roadmap, the way it’s headed might change the cryptocurrency world forever. Stellar is a cryptocurrency founded by Jed McCaleb who is the co-founder of Ripple Labs and their coin name is Lumens(XLM). Be tuned in for more mind-blowing information on Stellar Lumens. For those who are commencing to understand crypto and to start investing in it, this blog will help you make an informed decision.

What is Stellar?

Smart contract cryptocurrency that is designed to do just one thing, transfer of value i.e. Lumens (XLM) or tokenized assets. Stellar is not trying to replace the traditional banking systems instead integrates and optimizes payment channels between entities like central banks. It quotes that all world’s financial systems can work together on a single network. Although it is considered a banker coin along with the likes of Ripple. Ripple was co-founded by stellar founder Jed McCaleb, 2 years before Stellar in 2012. He is also the founder of Mt.Gox, a cryptocurrency exchange. Long story short, Jed had some conflicts, so he moved out of Ripple and founded Stellar in 2014. What do they each focus on, because there is only a subtle difference between them? Ripple is corporate centralized and focused for-profit whereas Stellar is intended to be public decentralized and non-profit. The Stellar development foundation, a non-profit organization based out of California develops Stellar.

Launch Details of XRP – Ripple’s Currency

  • 100 million XRP was pre-mined in 2013
  • 20% was retained by the founders with each 9.5$Billion XRP
  • 8% was allocated to Ripple
  • 0.2% was airdropped as an experiment to try and expand usage as part of the launch.
  • Jed still owns 4.5$Billion XRP that makes the XRP investors nervous as he is a legal agreement not to dump his shares into the market.

History of Stellar in 2019

In Mar 2019, Dinelle Dixon took the reigns as CEO of Stellar. She concentrated on technology and decentralization, they will also focus on marketing initiatives and ecosystem development. But geared not with the crypto world but with financial institutions and regulators with whom stellar want to engage as much as possible. In Sep 2019 stellar announced that it will allow its network of validators to vote in to disable the annual inflation of Lumens. They voted in favour of the proposition and it was removed in upgrade 12 of XLM.

XLM initially had an inflation of 1% per year, this decision to have inflation in the first place is odd, given that validators on the Stellar network do not actually earn money rewards instead, they are incentivized to run the network, by the benefits it brings to them. Consequently, almost all Stellar validators are corporate entities which are its target demography. Furthermore, around 80% of XLM’s initial supply of 100 Billion was allocated to Stellar development foundation, which means they were the ones affected most due to annual inflation. In addition to coming to their senses about XLM inflation, Stellar also burned over 55 Billion of their XLM tokens in Nov 2019 and reallocated the remaining 30 Billion XLM to marketing, user acquisition and other expansion initiatives. Even though 50% of the tokens were burned, it did not have a big impact on price because none of them in circulation was burned. This change in tokonomics paid off for stellar, by the end of 2019 Stellar team grew from 11 to 56, the number of XLM account doubles and the number of validators on the stellar network increased 5X.

2020 for XLM

In 2020 Feb stellar completely redesigned their website more user-friendly, they also released their mandate that has an extensive split on how they are spending their 30 Billion XLM and also the current balances of their various accounts.

In April 2020 Stellar partnered with Elliptic, a blockchain analysis firm, backed by Wells Fargo. The goal of this partnership is to ensure that all businesses using Stellar including cryptocurrency exchanges are abiding by the financial rules and regulations of the respective countries. During the Consensus distributed event in May, Dinelle Dixon made it clear Stellar is looking to be the blockchain on which central banks will build their central bank digital currency over the next 5 years. In case you missed it, almost all major government around the world is planning to roll out the CBDCs(Central Bank Digital Currency) over the next few years and they are turning to stable coin companies to help and build the tag. While returning to the crypto space to find the blockchains on their CBDC it will be built on.

In June 2020 Stellar introduced Fine-grain control as part of its protocol upgrade 13, this made it possible to automatically block accounts built on Stellar from engaging in transactions that violate financial laws and regulations. This will make it very easy to enforce something like the recent proposal like FinCen to require KYC for all digital transactions involving more than $250USD, which doesn’t sound very crypto.

In Sep 2020, Dinelle Dixon spoke at a virtual event about blockchain hosted by United States House financial services committee. In it, she flaunted about numerous fiat currencies that have been tokenized on Stellar by institutions in countries such as Mexico, Argentina, Brazil and Nigeria. She also emphasized the use of KYC in all of Stellar’s institutional endeavours.

In Oct 2020, the consortium announced that they would be launching the USDC stable coin on the Stellar network in Jan 2021, the same month Dinelle was a panellist for the IMF online event about cross-border payments. At the end of the month, Stellar revealed the 3rd quarter accomplishments where Stellar was engaging with World Economic Forum since July. According to the video update, Stellar had over 25 meetings with the WEF, OCC and other national and international monetary bodies in Q3 alone. Stellar will also be playing a pivotal role in the fourth industrial revolution which is an integral part of the WEF’s great reset. On top of all this Stellar’s annual meridian event featured the WEF’s head of blockchain and digital currency along with the former president of the world bank.

This brings down to what this all means in terms of Lumens cryptocurrency. For starters every transaction on the Stellar network is paid for using XLM, thanks to Stellar’s willingness to bend to the wishes of every financial institution, they have actually managed to make some head weight when it comes to being the blockchain for cross-border payments and CBDCs. Stellar has made incredible strides and adoptions since Dinelle took over and every single bank, business and government use Stellar today and tomorrow will pay fees in XLM.

USDC integration

USDC is becoming pretty popular with large financial institutions, for example, Visa would be integrating USDC in its payment network with over 60 million merchants. All USDC that is sent on Stellar incur a fee in Lumens. Moreover, Stellar’s decision to rework the tokonomics of XLM by removing inflation and burning more than half of its supply suggests that they are looking to support the value of XLM. This is only logical considering the higher the XLM price, the more is the money that the Stellar foundation will have to play with. We know that Stellar’s validators technically voted for this change in tokonomics but considering most of these validators are being operated by the Stellar foundation and the same legacy institutions that they are in line with is not exactly true.

Why XLM is not trustworthy for investors or holders?

Eventhough, It’s superb on the short to medium-term pricing of XLM, it’s not crypto I’m very comfortable with, in the long term. To back this up, Stellar is very slowly moving towards the very same legacy financial institutions that cryptocurrency is supposed to replace and with each upgrade, holders of XLM gets lesser and lesser financial freedom, also Stellar is serving itself to the International organization (WEF) that do not seem to have our best interest at heart.

All the same, the reason why I invest in smaller altcoins, let’s stack up on some stats. After all, it seems like Central controlled digital currencies are coming and the only way we can truly protect ourselves is by putting our wealth into cryptocurrencies we know and trust. In my books taking advantage of the banker coins like XLM is a good way to do just that. We can easily separate failed short and medium-term tokonomics from the long-term motivations of the Stellar development foundation. One can both appreciate the promise of Stellar technology to transform Global payment while still be concerned about the entities it is aligning itself with. To add things up, I want to give you my take on what I think is going to happen with Stellar over the coming years.

Future for Stellar

Stellar will be going to have success in partnerships with government and financial institutions and borderline international organizations. We will also see many CBDCs built on the Stellar. It will play around with tokonomics and use it to appease the stakeholders and regulators. But there will also be a lot of pushback from the crypto community for 2 reasons:-

  1. While Stellar is catering to the fat cat bureaucrats, thousands of other cryptocurrency projects are working day and night to create truly decentralized platforms that will replace the centralized ones Stellar has aligned with. It’s only a matter of time before a cryptocurrency like Bitcoin or Ethereum becomes too large or too powerful to shake it down.
  2. The likelihood of happening on the above point is comparatively higher than the centralized authorities would have to think. Certainly, higher is the chance of the WEF or IMF getting all their integration with Stellar to launch the sort of totalitarian system they envision. When that day comes banker coins like Stellar may become obsolete as they never truly serve the interest of the afflicted person, to begin with.

On the bright side, there is a sort of fail-safe that is pre-programmed in the centralized system and that is as power becomes more concentrated in the hands of the few the reward for breaking ranks and rallying the many become higher and higher. In my estimation, this is what has made the cryptocurrency so successful.


Cryptocurrency is something that is outside of the financial system, that breaks away from a centralized system where power lies in the hands of very few individuals or corporations or organizations. If these systems were perfect, Bitcoin would never have been invented and even it had been, nobody would have seen a need fit and it would have faded into obscurity. But as we all know that need is there and it will continue growing stronger as the existing monetary system becomes more corrupt and unstable. But definitely Stellar is not into cryptocurrency space because it declared its allegiance with International monetary bodies which is why it’s called the Banker’s coin.

Why is Stellar a Banker's coin?
Article Name
Why is Stellar a Banker's coin?
Why is Stellar a Banker's coin?
Publisher Name
Lets Talk
Tags from the story
Lets Talk
Written By
More from Lets Talk

How to mine Ethereum in 2021 for Profit?

Wait! What! Have people started mining Ethereum now as opposed to Bitcoin,...
Read More