What is Stellar?
Stellar is an open source, decentralized payment technology built on the premise that the international community needs a global financial network open to anyone. Stellar wants to make currency transactions cheaper, faster and more reliable than current systems. Additionally, their protocol connects people from all over the world by enabling more efficient cross-border payments.
Stellar shares many similarities with Ripple, because its founder, Jed McCaleb, is also a co-founder of Ripple.
Like Ripple, Stellar is also a payment technology that aims to connect financial institutions and significantly reduce the cost and time required for cross-border transfers. In fact, both payment networks use the same original protocol.
However, a fork in the Stellar protocol in early 2014 ended with the creation of the Stellar Consensus Protocol (SCP). Both systems also have fundamental differences. While Ripple is a closed system, Stellar is open source.
They also have different customers. Ripple works with established banking institutions and banking consortia to streamline their cross-border remittance technology. In contrast, Stellar is focused on market development and has many use cases for its technology, including remittances and bank loan distribution to unsupported banks.
How does the Stellar blockchain work?
The basic operation of Stellar is similar to that of most decentralized payment technologies. It runs a decentralized network of servers with a distributed ledger that is updated every 2 to 5 seconds among all nodes. The most prominent distinguishing factor between Stellar and Bitcoin is its consensus protocol.
Stellar’s consensus protocol does not rely on the entire mining network to approve transactions. Instead, it uses the Federated Byzantine Agreement (FBA) federated consensus algorithm, which allows for faster processing of transactions. This is because it uses quorum slices (or part of the network) to approve and validate transactions.
Each node in the Stellar network chooses a trusted set of other nodes. When a transaction is approved by all the nodes in this set, it is considered approved. The shortening process has made Stellar’s network incredibly fast and is said to handle up to 1,000 network operations per second.
How many institutions are using the Stellar Blockchain?
Stellar made headlines in October 2017 after it announced a partnership with IBM. The partnership envisages the establishment of multiple currency corridors between countries in the South Pacific.
The project has the stated goal of processing up to 60 percent of all cross-border payments in the region, which includes countries like Australia, Fiji and Tonga. This will allow connections between small businesses, nonprofits, and local banking institutions to accelerate commercial transactions. For example, a farmer in Somalia would be able to connect and conduct transactions with buyers in Saigon.
Jed McCaleb is the face of Stellar. He is the founder of Mt.Gox, sold it to Mark Karpeles before the hack of more than 450 million USD. Then, he joined Ripple, quickly bringing Ripple into the Top 10 largest coins in the market. In 2013, he left Ripple due to ideological differences from the rest of the leadership team. Shortly after, he started Stellar, Ripple’s rival.
Stellar has one of the most impressive advisory boards of any other project in the crypto space. This list includes Patrick Collison (CEO of Stripe), Matt Mullenweg (Founder of WordPress), Naval Ravikant (Founder of AngelList) and Sam Altman (President of Y Combinator).
Why is Stellar better than what exists?
The modern money system has evolved over hundreds of years and has picked up a lot of baggage along the way such as:
- Must hire a middleman to control the transaction
- Complicated currency control.
- Outdated record keeping.
- The rules are opaque, unclear, easily manipulated
- Silent transaction.
Nearly every international payment system, for example, is handled by something called a correspondent banking system. Very few banks can deal directly with each other, so your money has to move from one bank to another, and so on until you find the one you want to move to. In many places, step-by-step transfers still happen by hand. In any case, it’s still very slow and expensive.
Stellar was designed from the ground up to solve problems like this.
- Stellar is a global payment system, not a country. So users can cross their national economy and interact directly with the world market. On Stellar, one’s limit is not determined by borders, anyone on earth can own, hold and send dollars, or euros, or IPY, for example.
- Stellar is a network of peers. It allows any user to talk (transact) with any other user. So, for example, banks can work directly with each other, instead of people corresponding with each other through middlemen.
- Stellar is owner and belongs to everyone. No one organization controls the network, so no one can shut it down, monopolize its functionality, or hoard its data.
- Stellar handles any asset. Unlike many distributed systems, Stellar is currency agnostic. In fact, the most important feature of Stellar is that it is very easy to link the XLM Token to a traditional asset like the dollar. So Stellar can support all the currencies the world cares about, not just cryptocurrencies.
- Stellar is cheap. In fact, the transactions are almost free. Low transaction fees bring more benefits to users of Stellar. Given the low cost of Stellar, it will be able to reach a lot of people in the future.
Applications built on top of Stellar give users access to a borderless, frictionless marketplace; many advantages of Stellar can be understood as, it is a very efficient money transfer tool.
How can Stellar promote cross-border remittances?
The current process for cross-border money transfers is a complicated one. It requires domestic banks to maintain accounts in foreign jurisdictions in local currency. Their correspondent banks must operate a similar account in the country of origin.
The Nostro-Vostro process, as it is known, for cross-border transactions with fiat currencies is a lengthy one involving conversion and account reconciliation. Since it allows concurrent validation, the Stellar blockchain can shorten or eliminate the delay and complexity involved.
XLM coin (Stellar’s Lumens Cryptocurrency) can also be used to provide liquidity and streamline processes. According to some reports, banks will use their own cryptocurrencies to facilitate such transfers in the future. According to David Mazières, Stanford University professor and SCP creator, the protocol has modest computational and financial requirements. This allows even organizations with minimal IT budgets, such as nonprofits, to join its network.
Should you invest in Stellar Lumens?
Stellar Lumens offers the following specific benefits:
- Low transaction fees: XLM’s transaction fee is close to zero while Bitcoin’s transaction fee is between 3-5 USD.
- Anti-Money Laundering: The Stellar system has tools to help banks perform anti-money laundering operations.
- Dispute resolution: Stellar transactions can freeze mistransmitted assets to prevent abuse, and resolve disputes quickly.
- High security: All transactions are done and saved on a public ledger.
- Scalability: The Stellar system allows up to 1000 transactions per second, higher than both Bitcoin and Ethereum.
Stellar brings outstanding technologies as well as outstanding advantages to help future technology go further. However, each investment decision lies with each individual, the cryptocurrency market always has a lot of potential risks so you should consider before investing.
Where to buy, sell, trade Stellar (XLM)?
Currently XLM is being listed on many major exchanges: Binance, Bittrex, HitBTC, Poloniex, Cryptopia and many more, With the main trading pairs being: XLM/BTC, XLM/ETH and XLM/ USDT.
If you want to invest and need to buy XLM, you can load BTC, ETH or USDT into the above exchanges for trading. If you don’t have BTC, ETH or USDT, you can buy them on the exchange in Vietnam Remitano, or floor Huobi OTC. If you do not know how to register to trade on these 2 exchanges, you can check out the following 2 articles:
Where to create a Stellar Hosted Wallet (XLM)?
Wallet Centaurus: Android and iOS integration. It is specially designed for Stellar and integrates well with it.
The following wallets also support XLM:
- Ledger Nano WILL
- Stellar Desktop Client
- Stellar Portal
And here are two popular wallets commonly used to store Stellar Lumens:
- Stronghold: wallet built in the style of a star network, supporting Bitcoin, Ethereum, Lumens.
- Lobstr: is a wallet used on the web, it is also supported for android and IOS, Lobstr transactions are very safe, sending and receiving STR quickly.
XLM . transaction history
XLM has had an interesting trading history, to say the least. The coin experienced a 5-fold increase in value at the end of 2014. However, that bull run was short-lived and the price steadily declined throughout 2015, 2016 and even early 2017.
It wasn’t until May 2017 that things really started to turn around the coin. That month, the price spiked from $0.00547 to over $0.047 in four days. Information about the airdrop is what drives its price.
Stellar price today by: Coinmarketcap
After the early May rally, the XLM price more or less followed the rest of the market. It rose to an all-time high of over $0.91 in January 2018 and declined for the rest of that year. In fact, it has lost about 90% of its value since its peak (January 3, 2018) during the 2018 crypto winter to the present.
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