Last year was a tough one for stellar (XLM), and other cryptos as well. However, now that the market seems to be stabilizing, this is a good time to start investing in good altcoins. That’s because, in all of Bitcoin’s history, every subsequent bull market has been bigger than the last one. In such a case, good quality altcoins are likely to gain by thousands of percentages from their current prices. But is stellar one of them? To try and make a decision on whether Stellar (XLM) is good as an investment or not, let’s look at its strengths and potential risks.
Stellar (XLM) potential strengths
One of the biggest strengths to Stellar is that it has a strong use case in asset tokenization, and it’s a huge market. The number of companies moving to tokenize on stellar is growing, and it cuts across all industries. For instance, real estate companies have shown interest in tokenizing on the stellar blockchain.
The biggest benefit to asset tokenization that incentives companies is liquidity. By tokenizing on the stellar blockchain, a company is able to generate liquidity that would be impossible to raise through traditional markets due to strict regulations. In essence, asset tokenization on Stellar could be huge in the future, and could possibly replace the IPO model in the future.
Another big aspect to Stellar (XLM) is in cross-border payments. Stellar (XLM) could play a role as a crypto for cross-border payments. Stellar has made a major headway in this market through IBM. IBM has close to 97% of the banking industry as its clients. As such, the IBM Blockchain World Wire could see the stellar blockchain play a major role in transforming the cross-border payments in the future. This could be huge for Stellar in the long haul.
Stellar (XLM) potential risks
Like all other investments, Stellar (XLM) has its risks. One of the biggest risks to Stellar (XLM) is that the stellar blockchain can be adopted without necessarily requiring adoption of stellar (XLM). For instance, the IBM blockchain world wire runs on the stellar blockchain, but it doesn’t require the use of stellar (XLM). Banks can use the IBM blockchain world wire to settle in fiat or other cryptos.
Due to the stability that comes with fiat currencies, there is a good chance that banks may use the stellar blockchain, but not the coin. The same case goes for asset tokenization. It is possible that the stellar blockchain can be adopted for asset tokenization, without necessitating demand for stellar (XLM). This means that stellar could receive so much good news about adoption, without necessarily impacting on Stellar (XLM)’s price.
However, even with these risks, Stellar still comes across as a worthy crypto. That’s because there is a huge demand for the stellar blockchain, and on this basis, the forces of demand and supply could possibly drive up the value of stellar (XLM). In a crypto Bull Run, this demand could see the value of Stellar (XLM) rise beyond its all-time highs.