Stellar bills itself as “a platform that connects banks, payments systems, and people.”
Stellar’s competitive advantages
1) Leadership. There are just a handful of names in crypto that are as well-known as Stellar co-founder’s Jed McCaleb. McCaleb created the bitcoin exchange Mt. Gox (which was sold to Mark Karpelès and re-coded long before its infamous collapse). In 2011, McCaleb founded Ripple. He left in 2013 and, one year later, launched Ripple competitor Stellar. Stellar’s board reads like a who’s who of Silicon Valley. A few of the names? AngelList founder Naval Ravikant, WordPress.com founder Matt Mullenweg, Stripe CEO Patrick Collison, Apache Software Foundation Director Greg Stein, and Y Combinator President Sam Altman.
2) Partnerships. Stellar recently announced a partnership with IBM to move fiat and digital currencies across borders throughout the South Pacific. The move “will reportedly process up to 60 percent of all cross-border payments in the South Pacific’s retail foreign exchange corridors by early (2018),” Fortune reports.
3) Mission. One reason McCaleb broke off with Ripple was to shift digital currency’s focus from the developed world (where modern financial tools are prevalent) to less developed parts of the world where the impact will be exponentially greater. “SDF’s vision is an open and affordable financial system where people of all income levels can access simple-to-use, secure, and low cost financial services,” the organization writes.
The Oracle’s Stellar price prediction/target
In Goldman Sachs’ 2018 Investment Outlook, the firm argues the bitcoin and cryptocurrency “mania” already dwarfs the famous Dutch “tulipmania” in the 1600s and the March 2000 dot-com bubble.
At the very end of the piece, they include this gem:
At the peak of the dot-com bubble in March 2000, the combined market capitalization of Nasdaq and S&P 500 information technology stocks was 101% of U.S. GDP and 31% of world GDP. The aggregate market capitalization of cryptocurrencies is 3.2% of U.S. GDP and 0.8% of world GDP.
If there’s one thing I’ve learned in more than a decade of investing in various assets, it’s this: markets go higher and fall lower than we generally imagine they will. While I don’t see cryptocurrencies ever hitting 101% of the U.S.’s GDP, I still envision at least one more extraordinary rise in prices for cryptocurrency.
Why? Because the public still thinks of crypto as a currency and a currency alone. The average investor hasn’t heard of ethereum yet (not to mention interesting projects like Golem, Gridcoin, Waves and more than 1,000 others). 2017 was the year of bitcoin. 2018 will be the year of blockchain.
My personal target is a $2 trillion market cap for all cryptocurrencies. If we hit that number, we’d be at just 10% of the $20 trillion U.S. GDP. Under that scenario (assuming current coin ratios stay the same), the price of Stellar (XLM) would be around $1.9305235. If we hit 50% of the U.S. GDP, we’d be at $9.75 per XLM. At 101% of U.S. GDP, we’d be looking at a future Stellar price of $19.51.
I don’t disagree with Goldman. We’re in the midst of an extraordinary bubble. I just disagree that we’ve already seen the top.
Side note: The U.S. debt-to-GDP ratio for Q4 2017 stood at 104 percent. Perhaps the true bubble we’re witnessing is government debt.
Caution: This post is does not account for currency inflation. Price predictions were calculated as if the total coin supply were capped at the time of publication.