Stellar (XLM) 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’s official digital currency asset is called Lumen (XLM). XLM represents the Stellar network and operations, similar to what XRP brings to the Ripple network.

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 platform that connects financial institutions and significantly reduces the cost and time required for cross-border transfers. In fact, both payment networks use the same native protocol.

However, a fork in the Stellar protocol in early 2014 ended with the creation of the Stellar Consensus Protocol (SCP). Both systems are also fundamentally different. While Ripple is a closed system, Stellar is an open source. They also have different customers. Ripple works with many reputable institutions and banks to streamline their cross-border remittance technology. In contrast, Stellar is focused on market development and has many applications for its technology, including remittances and distribution of bank loans to unbanked banks.

How does the Stellar blockchain work?

The basic operations of Stellar are similar to most decentralized payment technologies. It operates 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 Byzantine Consensus (FBA) algorithm, which allows for faster processing of transactions. This is because it uses authorization slices (or parts of the network) to approve and validate transactions.

Each node in the Stellar network chooses a set of trusted nodes. When a transaction is approved by all nodes in order, it is considered approved. The shortening process has made Stellar’s network extremely fast and is expected to process up to 1,000 network transactions per second.

Partnerships

Stellar became the center of attention in October 2017 after announcing a partnership with IBM. This partnership has initiated the establishment of many digital currency corridors between countries in the South Pacific.

The primary goal is to process up to 60 percent of all cross-border payments in the region, which includes countries like Australia, Fiji and Tonga. This will enable 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 transact with a buyer in Sydney.

Stellar’s Distinctive Features

Most international payment systems are handled by an intermediary banking system and your money needs to go through it until it reaches the target bank. In many places, money transfers are still done manually, and are slow and expensive.

• Stellar is a payment system designed for global rather than national scale. Thus, users can directly interact with the worldwide market.
• Stellar belongs to everyone. No organization controls the network, so no one can shut it down, monopolize its functionality, or store 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’s consensus method allows for fast transactions, with everyone on the network reaching an agreement on transaction validity within seconds.
• Stellar is cheap. In fact, the transactions are almost free. Low transaction fees provide more benefits to Stellar users. With Stellar’s low cost, it will be accessible to a lot of people in the future.

Features of Stellar Lumen

XLM offers the following specific benefits:

• Low Transaction Fees: XLM’s transaction fee is almost zero while Bitcoin’s transaction fee is between 3 and 5 USD.
• Anti-Money Laundering: The Stellar system has tools to help banks with anti-money laundering activities.
• Dispute resolution: Stellar transactions can freeze mistakenly transferred assets to prevent abuse, resolving disputes quickly.
• High security: All transactions are done and kept on public books.
• Scalability: The Stellar system allows up to 1000 transactions per second, which is higher than both BTC and ETH.

Development team

Jed McCaleb is the face of Stellar. He founded Mt.Gox, then sold it to Mark Karpeles before the hack of more than 450 million USD. Jed then joined Ripple, quickly placing Ripple in the top 10 of the largest coins on the market. In 2013, he left Ripple due to a mindset difference in working with the rest of the leadership team. Not long after, Jed launched 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).

Stellar brings outstanding technologies and advantages, helping future technology platforms go further. However, all investment decisions are made individually, the crypto market is always risky, so you should consider carefully before investing.

You can see XLM pricing here.

According to AZCoin News

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