Can Stellar Lumen (XLM) Reach $1? | The Motley Fool (2024)

With the dust settling on Ripple's (XRP 4.58%) SEC saga, many of us are eyeing up the next potential star of the crypto stage. Today, I'm turning the telescope toward the Stellar Lumen (XLM 2.58%), a cryptocurrency with roots in the Ripple ecosystem that saw a price surge of 46% on the day of Ripple's courtroom win.

But with its current value hovering just below $0.15 per Lumen, could Stellar ever reach the $1 mark? Let's find out.

A tale of two cryptos

First, let's take a quick history lesson. Stellar and Ripple share a lot of digital DNA. They were both co-founded by the same crypto-visionary, Jeb McCaleb, two years apart. They share a genesis but have followed different orbits and pursue different goals today.

Ripple (and its associated XRP token) has always been the business-suited banker of the two. Used within Ripple's payment ecosystem, XRP acts as a bridge currency, enabling efficient exchanges between different national currencies. It facilitates real-time global transactions, allowing financial institutions to transfer money across borders swiftly and at a low cost. Ripple sets up local currency translation services with banks around the world, and its systems are primed to serve billion-dollar transactions between financial whales in different countries.

Stellar, on the other hand, positions itself as the people's champion, a Robin Hood in the digital finance space. Its mission is not to cozy up with big banks, but to make financial services accessible to the unbanked, using its XLM tokens as keys to financial inclusion. It provides a platform for developing financial products and services accessible to individuals and small businesses. Stellar will gladly fuel financial products and services for a localized population, with international payments available as a beneficial side effect rather than a sharp business focus.

The two projects are also managed in dramatically different ways, and that's important. McCaleb started the Stellar project as a Ripple clone in 2014 chiefly because he didn't like the management style that ended up running the Ripple network.

• The XRP token is managed by Ripple Labs, a for-profit company under CEO Brad Garlinghouse, with profit-making ambitions. There is a company, a CEO, and a board of directors pulling the strings of development and future plans. The servers powering Ripple's blockchain network are the property of Ripple Labs.
• The Stellar blockchain network and its Lumen token is fully decentralized, owned and managed by a public community. Like Ethereum and Bitcoin, Stellar's future direction is managed by voting and technology adoption among the project's developers and transaction validation nodes.

Is $1 in the stars for the Stellar Lumen?

So, back to the million-dollar (or should I say, the one-dollar) question: Can Stellar make the cosmic journey to $1?

Doing the quick math, a $1 Stellar token represents a stratospheric leap of approximately 570%. Sounds daunting, but remember, the crypto market earned its reputation for volatility the hard way. You won't see this token rally 46% in a single day very often -- perhaps never again -- but a more reasonable growth trend should eventually get there. If the Lumen token can gain 15% a year, it'll reach $1 in 11 to 12 years. At a less realistic average growth rate of 30%, it'll take 7 to 8 years instead.

Nobody said getting rich would be quick and easy.

The road ahead may be profitable, but it won't be easy

So, Stellar should be able to pull off an 8-bagger return from here. In fact, I expect it to happen in due time. However, the journey probably won't be quick. We may be looking more than a decade into the future here.

Even then, some hitherto-unknown threat could knock the Ripple alternative out of contention. You never really know what curve balls the unpredictable crypto market might throw in our direction, as the scandal-packed 2022 season showed. And innovation never stops. Another crypto network could come up with a payment processing system that puts both Ripple and Stellar Lumen to shame.

As with any investment, patience is your best co-pilot, paired with a healthy respect for the risks involved. Lumens may very well pass the $1 price point in the future, especially if developing nations adopt it as an efficient payment system.

Just don't hold your breath waiting for that distant mirage to materialize -- and that's perfectly fine. Wealth-building investments should be allowed to take their sweet time. Risky get-rich-quick schemes tend to crumble before you make any real money, anyway.