Stellar is an open-source protocol for value exchange founded in early 2014 by Jed McCaleb (creator of Ripple and eDonkey) and Joyce Kim, supported by a nonprofit, the Stellar Development Foundation. Being a completely decentralized consensus platform, Stellar, in simple words, is an open-source protocol for exchanging money, which connects people, payment systems, and banks, allowing to not only buy and sell currencies in a foreign exchange, but also to convert currencies seamlessly during transactions.
The network consists of peers that run independently of each other, meaning that Stellar does not depend on any single entity, any of which, by the way, can run a Stellar server. The idea is to have as many independent servers in the network as possible, so that it will run successfully even in case some of servers fail. The consensus process happens at a regular interval of every 2 to 4 seconds.
Like any traditional ledger, Stellar’s one records all the balances and transactions of every single account on the network. A complete copy of the global Stellar ledger is hosted on each server running correspondent software.
Stellar network’s native asset is Lumen. The standard token contributes to the ability to move money around the world and to conduct transactions between different currencies quickly and securely.
In essence Stellar is a distributed hybrid blockchain platform that aims to help facilitate cross-asset transfer of value at a fraction of a penny. Stellar is aiming to be an open financial system that gives people of all income levels access to low-cost financial services. These services include, but are not limited to:
- Mobile Branches
- Mobile Money
In addition to these services, one very powerful feature of the network is their Distributed Exchange.
Through use of its intermediary currency Lumens (XLM), a user can send any currency that they own to anyone else in a different currency.
For example, if Alice wanted to send EUR to Bob using her USD, an offer is submitted to the distributed exchange selling USD for EUR. This submitted offer forms what is known as an order book. The network will use the order book to find the best exchange rate for the transaction in-order to minimize the fee paid by a user.
This multi-currency transaction is possible because of what are known as Anchors. Anchors are trusted entities that hold people’s deposits and can issue credit. In essence, Anchors act as a bridge between different currencies and the Stellar network.
Lumens are the native asset (digital currency) that exist on the Stellar network. They currently serve two distinct purposes:
- Facilitate multi-currency transactions
- Anti-spam role
Multi-currency transactions: Lumens is the digital currency that acts a bridge in-order to facilitate multi-currency transactions. Transactions such as: sending money in EUR, and then receiving it in USD. XLM is the digital intermediary that allows for such a transaction to occur at a low cost.
Anti-spam: In-order to prevent DoS attacks that would inevitably occur on the Stellar network, a small fee of 0.00001 XLM is associated with every transaction that occurs on the network. This fee is small enough so it does not significantly affect the cost of transaction, but large enough so it dissuades bad actors from spamming the network. The collected fee is then redistributed and added to an inflation pool. This inflation pool releases Lumens at a rate of 1% each year.
In-order further facilitate the growth of the Stellar eco-system, Stellar currently offers the following incentive programs:
- Stellar Build Challenge
- Partnership Grant Challenge
Stellar Build Challenge: This is an ongoing program that is intended to encourage and reward innovation on the Stellar network. With rewards of up to 2,000,000 XLM, developers are encouraged to innovate in areas such as: Wallets, remittance applications and token issuance. By providing a monetary incentive, the eco-system is able to quickly develop into a reputable and established distributed system.
Partnership Grant Challenge: This program is intended to encourage leading organizations to build on the network and therefore promote a more inclusive financial system. Grants of up to $2,000,000 worth of Lumens may be awarded to an exceptional organization.
With partners such as: IBM, Deloitte and Stripe, there is clear demand for the services currently offered by Stellar and its network.
The Future of Stellar
With its growing list of partnerships, as well as its quickly developing eco-system, there is no doubt that Stellar has the potential to be a very reputable player in the space. The services it offers are straightforward and offer practical real-world applications. This, in combination with and the sense of professionalism that currently surrounds Stellar, leaves it as the cryptocurrency to watch in 2018.
Where to Buy Stellar
A list of popular cryptocurrency exchanges that currently list Lumens (XLM) include:
If This Article Was Beneficial In Any Way feel free to Subscribe to Our Blog! (It’s Free)
If you are looking for an exchange to join, we would certainly appreciate it if you used our referral links to join.
Happy Trading! If you’re just here to learn that’s great too!
To register for Binance use the link below. My referrals link are here and I would appreciate it, if you used them!
If Binance Is Still Closed to New Member Registration, You Can Get Access and Register Now Here
Invitation code: 28uxs
The information provided on this website does not constitute investment advice, financial advice, trading advice or any other sort of advice and you should not treat any of the website’s content as such. CryptoCurrencyClarified does not recommend that any cryptocurrency should be bought, sold or held by you and nothing on this website should be taken as an offer to buy, sell or hold a cryptocurrency. Do conduct your own due diligence and consult your financial advisory before making any investment decision.
Accuracy of Information
CryptoCurrency Clarified will strive to ensure accuracy of information listed on this website although it will not hold any responsibility for any missing or wrong information. You understand that you are using any and all information available here AT YOUR OWN RISK.
The price of Bitcoin and other cryptocurrencies are highly volatile. It is common for prices to increase or decrease by over 20-100% in some coins in a single day. Although this could mean potential huge profits, this also could mean potential huge losses. DO NOT INVEST ALL YOUR MONEY IN CRYPTOCURRENCIES. Only invest money which you are willing to lose.
Cryptocurrency trading may not be suitable for all users of this website. Anyone looking to invest in cryptocurrencies should consult a fully qualified independent professional financial advisor.