Stellar XLM should give Ripple XRP a run for its money
Abraham George Crypto Musings
I have been writing about XRP for a long time and continue to write. What I have not talked much about is Stellar or XLM. I am invested in XLM too but not to the extent of XRP. There’s a lot of history between XLM and XRP and they continue to make more stories. I had covered much of the history in my past writings but I will highlight some of the main points here again.
While XRP is being projected as a banker’s or business to business coin (B2B), XLM is looked at as a peer to peer (p2p) coin. Both their platforms already helps people and companies to move value around the world. Stellar or XLM is in a potential move to acquire the money transfer business company MoneyGram. This is important for various reasons. The proposed deal would improve XLM’s usage by combining its blockchain technology with MoneyGram’s remittances services. The fact that a blockchain company is taking over an 81 year old traditional money transfer company is somewhat unprecedented. Naturally we would expect it to be the other way around.
Another reason is MoneyGram’s relationship with Ripple. A couple of years back Ripple acquired 9% of MoneyGram for $30 mio. The two aimed to use Ripple’s cross boarder transfer tech to reduce the cost of international money transfer transfers from around $30 to just a few pennies.
This partnership was promising until about seven months ago the SEC filed a lawsuit against Ripple. The SEC accused Ripple of selling unregistered securities in US. As of now, Ripple is doing very well with the regulators which could turn out to be a historic ruling for the blockchain industry. So far, Ripple is doing much better than the SEC in the battle.
Yet, while Ripple is fighting the lawsuit and even the government on behalf of the blockchain industry, Ripple’s partnership with MoneyGram started to suffer. This was unfortunate but it didn’t come as a surprise under the circumstances. The two announced that their partnership was ending in March of this year. Now Stellar is entering into the foray to steal some of Ripple’s business.
As I mentioned at the outset, Ripple and Stellar have a bit of a backstory already. The cofounder of Ripple is Jed McCaleb, who left Ripple in 2013 to start Stellar. When he left, he also took Ripple’s blockchain technology with him to start Stellar. And now he is making the attempt to buy MoneyGram.
As per the parting contract from Ripple, Jed McCaleb was entitled 9 bio coins of XRP. Jed threatened to sell all his coins in the market which was not a good idea for him and Ripple. So they worked out a deal that he could sell to a maximum of 1.5% of Ripple’s daily volume. So Jed has been selling XRP since 2014. Last year alone he sold 400 mio XRP coins and this year so far 2.4 bio coins. Believe he has a total of another one billion coins which should be all done by end of Sep this year at the rate at which he is selling. So Jed McCaleb is loaded with cash.
The deal with MoneyGram should be promising. In the early days of Stellar, the payment processor Stripe invested $3 mio in its seed funding round. If the two form a partnership on the heels of the MoneyGram deal, one could see widespread blockchain usage in the payments industry.
MoneyGram has more than two bio accounts around the world. Stripe has 1.98 mio websites using its technology. The potential for these three entities to facilitate cross- border transactions is fairly huge.
This is especially good for Stellar and with more than $2 bio worth of XLM in its treasury and plenty of cash on hand, Stellar can easily get the deal done for $900 mio for what MoneyGram is being valued.
Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.