In cryptocurrency world, there has always been competition for increased use of new digitalized assets. Among the world’s top five currency codes, Stellar stands out. Stellar is a blockchain-based payment protocol that was originally launched with the aim of building a network of micro-finance institutions in developing countries and serving areas that are bank-free. But it later shifted its focus to connecting established financial companies to the blockchain.
The currency used in the Stellar network is Lumens (XLM) which perform various functions on the network. XLM can be used to pay for transactions and can serve as a communication bridge to exchange currencies. The Lumen is currently valued at about $ 0.059, with the market size of about $ 1.5 billion, ranked as the tenth currency in the market. In this article we will introduce Stellar in complete.
Stellar and the emergence of this currency
The Stellar Network was launched in July 2008 with the Stellar Nonprofit Development Foundation. The foundation was started by three people named Jed Mccaleb – founder of Mr.Gox, founder of Ripple XRP and Joyce Kim. In 2007, Starr also hired former Mozilla CEO Daniel Dixon to complete the Stellar’s team.
They decided to distribute the initial 100 billion XLMs to different people. 50% XLM with rate of 50 to 300 per person, to people who signed up for the invitation link, 25% to different partners, 20% to Bitcoin and XRP owners, and 5% to operational goals. After distributing the initial $ 100 billion XLM, Stellar Network created new coins at no cost at 1% circulation rate. In the following we describe the Stellar features.
Features of Stellar
In this part, we are going to review 5 features of Stellar’s currency code.
- Decentralized Network: The first thing to know about the Stellar system is that the Stellar network is decentralized and this decentralized network is peer-to-peer. In a decentralized network, there is no centralized entity that makes all the decisions in the system. It relies on people (nodes) to communicate over the Internet and collaborate on the network.
- Digital Distribution Office: Just like the Bitcoin blockchain, all the details of Stellar transactions are stored in a blockchain that acts as a transparent and open digital distribution office. Anyone on the network can look at the manual and see all the details of past transactions.
- Consensus Protocol (CSP): we need to know that all decisions and approvals made by the network are made through the Consensus Protocol (CSP). The process of reaching consensus throughout the network occurs every 2 to 5 seconds.
- Transaction Validation: Following on with the introduction of Stellar, we need to get acquainted with an important concept called Anchors. Anchors are people in the Stellar network who can validate transactions if necessary. As the Stellar website states, they act as bridges between different currencies and the network. All network financial transactions (except Lumen Digital Currency) are performed by credit issued by the presenters. The Stellar Mechanism is heavily dependent on anchors, and one must trust the anchors to do their job for you.
Anchor is not really a new concept. Paypal is a great example of this system. Let’s take a look at how Paypal works. Suppose Alice and Bob are trading through PayPal. Alice sends some money to her PayPal account and her account balance is updated. Alice decides to send Bob some money from his PayPal account balance. As a result, Bob’s PayPal account is updated. Then Bob can return the account balance to his bank account. This is almost how anchors work in Stellar, despite one major difference. All anchors are connected to the same block with the same network, which will eventually make the system faster and more powerful.
- Multi-currency trading: One of the biggest features of Stellar is its multi-currency trading, meaning Alice can send his USD in euros to Bob. These integrated decentralized exchanges are the beauty of Stellar. To understand this, we need to know what the “suggestions” are. Proposals are in fact general obligations to exchange a type of credit at a predetermined rate. In fact, Stellar fund becomes a distributed currency that helps us buy and sell different currencies.
In this article, we are introduced to Stellar cryptocurrency and describe its features. The protocol that this digital currency uses is the Stellar Consensus Protocol, which can support a significant number of smart contracts. The currency of the transaction is the Lumen, which is worth $ 4.9 billion with a market size of about $ 1.2 billion.