Article by Colin Harper Coin Desk

A Beginner’s Guide

On its website, Stellar Lumens advertises itself as an open-sourced, distributed payments infrastructure, built on the premise that the international community needs “a worldwide financial network open to anyone.” Stellar Lumens will fill this need, connecting individuals, institutions, and payment systems through its platform.

In doing so, the Stellar Lumen’s team wants to make monetary transactions cheaper, quicker, and more reliable than they are under current systems.  In addition, their protocol would connect people from all over the world by allowing for more efficient cross-border payments.

How It Works

Like (most) all other cryptocurrencies, Stellar Lumens bears that beautiful buzzword that has become the hallmark of blockchain technology: decentralization.  The Stellar network runs on a web of decentralized servers supported by an international consortium of individuals and entities.  These servers support the distributed ledger that keeps track of the network’s data and transactions.

In practice, the Stellar protocol will function like a more inclusive, more flexible PayPal.  To start using Stellar, you would need to upload funds to an anchor on the network.  Much like a bank or PayPal, this anchor then holds your money and issues credit to your virtual wallet in its stead.

You might be wondering why you need to exchange debit for credit with an anchor in the first place.  Well, anchors serve as a bridge for any given currency and the Stellar network.  The swap allows you to formally convert your funds into Stellar’s public ledger.

This integration means you can send funds instantly on the network without having to wait for a bank transfer, as with PayPal.  It also streamlines cross border payments.  Let’s say you wanted to send funds to your impoverished expat brother living in France.

You would use your credited USD balance to shoot him funds through the Stellar network.  Stella would then automatically convert the USD to EUR using the lowest exchange rate, and your brother’s account would be credited with the exchanged amount in EUR.  After receiving the transfer, he can withdraw the funds from an anchor that supports EUR and go about living his Bohemian lifestyle.

Distributed Exchange

Stellar also offers users the option of placing exchange orders onto the public ledger to sell or buy other currencies.  All rates are pre-determined by the individual placing the order, so they are not subject to the automatic exchange rate that Stellar applies to personal transfers.

If you wanted to exchange, say GBP for EUR, you’d place an order in Stellar’s orderbook.  That order then enters the global marketplace, which you can also consult to see how your order stacks up against others like it.  Note that this exchange is not limited to fiat currency only.  It will include cryptocurrency and fiat trading pairs as well.

Multi-currency Transactions

As we previously noted, Stellar allows you to freely send money across borders without the hassle of formal banking procedures or currency exchange.

In order to accomplish this, the network does one of three things when you request a currency transfer:

• Stellar converts the funds with a previous offer on its order book and automatically facilitates the exchanage

• Stellar uses Lumens, its coin, as an intermediary for the exchange.  It converts the funds from currency A into Lumens on the global marketplace, and then it takes those Lumens and converts them to currency B for the user receiving these funds.

• If there are no trading pairs in the exchange for the two currencies, Stellar searches for offers on the network that will lead to a chain conversion into the desired currency (e.g., USD to EUR, EUR to GBP, BGP to AUD, AUD to JPY)

This multi-currency exchange process is pretty ingenious, and it offers users a flexible approach to easily swap currencies on an international scale.

Stellar Lumens Trading History

As of writing, Stellar Lumens is cooling off after an impressive bullish streak. Throughout most of November, the asset floated in the $0.02-0.03 range, but after breaking $0.04 on November 22nd, it began climbing to a December 7th all time high of $0.169.

Since this runup, it hasn’t dropped below $0.12, finding steady support in the ~$0.14 range.

Where to Buy Stellar Lumens

Stellar Lumens trades under both the XLM and STR ticker.  The Stellar team changed the ticker from STR to XLM a while back, but some exchanges, such as Poloniex, hasn’t bothered to change it.

Bittrex, Poloniex, and Binance account for the overwhelming majority of Stellar Lumen’s trading volume, logging 35.19%, 36.15%, and 16.79%, respectively, in the past 24hrs.

Binance and Bittrex support both ETH and BTC trading pairs, while Poloniex supports BTC and USDT only.

Where to Store Stellar Lumens

Most of the wallets used to store ledger are either ledger specific or exist within Stellar’s network for use with its global marketplace.  Stronghold, for instance, is the distributed exchange built into Stellar’s system, and StellarTerm is a client that allows you to access the distributed exchange to trade or send funds.  The Stellar team has also created the Stellar Desktop Client that is specific to the Lumens currency.

If you’re looking for a non Stellar-exclusive wallet, the Ledger Nano S is probably the safest bet, but if you don’t have this hardware wallet, you could check out stargazer, Papaya, and Saza.

Roadmap and the Way Forward

Stellar Lumens does not have a concrete roadmap on their website, but they do keep a regular blog.

In this blog, they post monthly roundups of that month’s biggest developments.  For the October roundup, for instance, they recapped their partnerships with IBM and KlickEx for cross-border payments. They’ve also secured partnerships with Remitr, MSewa Software Solutions, PesaChoice, and Chaneum ICO Advisory Services.

In the vein of ICOs, the Stellar team believes that their network would be ideal for overseeing ICOs and blockchain startup fundraising.  There’s a strong case to be made for the flexibility Stellar’s network offers to startup ventures, as it could facilitate a multitude of cryptocurrency and fiat payment options.

Final Thoughts

If Ripple was built for financial institutions and banking giants, then Stellar Lumens goes to work for the common man.  It has the potential to revamp how we process peer-to-peer transactions on a global scale.

Its versatility and use cases make it function like a financial Swiss Army Knife. With Stellar, you can handle micro-payments with nominal fees, send remittances without fretting over currency exchange or bank transfers, and settle payments in real time (2-5 seconds).

If the IBM and KlickEx partnerships weren’t enough to impress you, Deloitte, Parkway Projects, and Tempo have started building services on Stellar’s network.

Between these companies using Stellar for real-world adoption, its official partnerships, and the vision Stellar has for the future of currency exchange, we’re excited to see what 2018 and beyond has in store for the layman’s Ripple.

We won’t tell you to put your life-savings into it, but it’s worth getting to know.

Written by CryptoCurrencyClarified

CryptoCurrency & Altcoin News, Insights & Explanations- For The Rest Of Us

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