Stellar XLM

The evolution of the cryptocurrency sector is amazing and it has made even the industry experts astonished. The sector is growing at a staggering rate worldwide, and some developments are really hard to anticipate. Now, newer generation crypto projects are launched after meticulous planning, unlike first-generation ones. Moreover, these projects are built to resolve specific needs. One such example is the Stellar project. It is ranked among the most promising cryptocurrency-powered financial solution systems.

The basics of Stellar

Stellar is a kind of decentralized network using which it is possible to generate and trade various types of cryptocurrency. Unveiled in 2015, the network aims to bring financial systems of the world under one umbrella. It relies on a decentralized system powered by Blockchain technology. It is meant to develop a distributed payments network supporting inexpensive, fast, secure cross-border payments. You can also use the network to issue your own tokens and there are options for using it as an ICO platform. 

The creators are Joyce Kim and Jed McCaleb. There are some reputed engineers, technologists, scientists, designers in the core team as well. The Stellar Foundation has branches in NYC and San Francisco but the team members are located in varying countries. Over the years, Stellar Development Foundation has gone from strength to strength. It has been able to tie up with some coveted institutions in this sector since its inception. It, for example, has tied up with entities like Flutterwave and Moneygram.

You may use the network to send cross-border payments to any place within a few seconds. Stellar does not rely on Proof of Work and deploys the Stellar Consensus Protocol. 

The working methodology

Stellar’s distributed network is made of a number of servers, and each runs the Stellar Core software. The servers are spread all across the world, owned by different organizations. The Stellar Consensus Protocol enables reaching consensus where it does not use a closed system. Stellar’s Consensus Protocol is defined as a type of federated Byzantine agreement system. The SCP is leveraged to offer a consistent transaction history view to all the participants.

Stellar’s Consensus Protocol deploys 4 main properties at the same time. These include:

• Decentralised Control
• Flexible trust
• Low latency
• Security

What is XLM?

The Stellar platform accepts crypto assets of varying types but it also has a digital currency named Lumens, or XLM. It serves as the foundation of the Stellar network. Lumens are used largely for paying transaction charges on the network. Besides, it serves as the network’s intermediate currency for trading execution. Lumens are available on the top crypto exchanges. Stellar Lumens can handle up to 1000 TPS and the cost is a fraction of one penny.

There is an embedded protocol through which money sent through Stellar gets converted into Lumens. Then it is converted into the desired currency. The nice thing is the conversion requires only a few seconds. 

The total supply of XLM is set at 50 billion while the circulating supply is half of that amount. Notably, the early investors of XLM have gained tremendously. Those who bought stakes at the beginning of network rollout have got returns worth 15,000%. The market cap is $7.5 billion.

Is there any link with Ripple?

Stellar does have some resemblances with Ripple, another popular cryptocurrency platform. If you have used both platforms it is hard not to notice the similarities! They actually rely on near similar Blockchain code and they do not support currency mining. Both networks also support very fast transaction execution. These resemblances are owing to the fact Jeb McCaleb, was involved with Ripple and after a conflict with the management, he joined Stellar. 

However, there is a major difference between the two platforms as well. Ripple was created to enable the banks to make transfers overseas at low rates. Stellar, on the other hand, was meant for average users and more for those in developing nations without much access to traditional banking systems. However, banks can use Stellar while an average person can use Ripple. Another big difference is that both systems use different consensus mechanisms for transaction execution. 

The growth and future prospects of Stellar

Stellar has made some good progress over the years as far as strategic alliances and deals are concerned. Visa, along with Tala, a FinTech start-up is bringing USDC stablecoin on Stellar Blockchain. Bankhaus von der Heydt, a reputed European bank launched EURB, the euro stablecoin on the Stellar Blockchain. These developments show the growing faith of the financial sector in stellar network. In the long run, it aims to create an interoperable financial ecosystem spanning traditional and crypto sector transactions and networks. 

Stellar Lumens is being used widely in the South Pacific region. Stellar and IBM have joined hands to bring banking facilities to the residents of isolated islands in the region. IBM’s World Wire is a new era and revolutionary payments system powered by Stellar technology. Unveiled in March 2019, it supports 47 currencies and is operational in over 70 countries. Other notable strategic alliances bagged by the stellar network include SatoshiPay in Europe, Remitr in the USA, and Tempo in France. Additionally, the Government of Ukraine has chosen Stellar to develop its central bank digital currency.

Stellar Lumens scores well on the security front as well. The network and its exchange have not faced any hacking attack so far. The small fee charged for each Stellar transaction is deployed to thwart the risk of DDoS attacks. 

Summing it up

The stellar network gets many things right, for sure. This promising cryptocurrency payment system has been able to garner the support of some big players in both the crypto and traditional finance sector. A tech behemoth like IBM has chosen it too. The advantages offered by it are too big to ignore. The super-fast transaction and minimal charge will draw in a lot of users. It is ideal for people in developing nations but others can gain from the network too. The unique consensus mechanism is another USP of the project. The flexibility and ease of use make it a platform worth using, especially if you are into sending and receiving money overseas using varying currencies.