Stellar, also known as Stellar Lumens (XLM), is an open-source protocol primarily used for cross-border payments that serves as the native currency of the Stellar payment network. The main goal of the currency is to provide a decentralized platform that generates fast, inexpensive, and efficient international transactions. Founded by Jed McCaleb, the founder of Mt. Gox and the co-founder of Ripple, Stellar was created in collaboration with Joyce Kim after Kim and McCaleb left Ripple in 2013. In July 2014, The Stellar network was officially launched and it befits all potential buyers to intimately understand the critical aspects of Stellar and how it functions.
Stellar utilizes a decentralized network of nodes, with each maintaining a copy of the distributed ledger which ensures transparency, resilience, and security against single points of failure. The network uses a consensus algorithm known as the Stellar Consensus Protocol (SCP), which allows for the fast and secure confirmation of transactions. However, what sets the network apart is that it manages to do this without needing the traditional mining process. As a result, this makes Stellar more energy-efficient than other standard cryptocurrencies like Bitcoin which are proof-of-work (PoW) based. The most prominent components of the Stellar network include its native currency, XLM, which serves as a bridge between different currencies and anchors. The Stellar network’s anchors, which are specific entities such as banks or payment processors, issue digital representations of fiat currencies like USD, EUR, and other stablecoins. Anchors also issue digital assets that users are able to trade.
As an open-source protocol primarily used for cross-border payments, Stellar, also known as Stellar Lumens (XLM), is the native currency of the Stellar payment network. The currency was created specifically to provide a decentralized platform that enables fast, inexpensive, and efficient international transactions. Founded by Jed McCaleb, also known as both the founder of Mt. Gox and the co-founder of Ripple, Stellar was created in collaboration with Joyce Kim after Kim and McCaleb left Ripple in 2013. The Stellar network was officially launched in July 2014, and it befits all potential buyers to intimately understand the critical aspects of Stellar and how it functions.
Stellar operates on a decentralized network of nodes — each maintaining a copy of the distributed ledger — ensuring transparency, resilience, and security against single points of failure. The network uses a consensus algorithm called the Stellar Consensus Protocol (SCP), which enables the fast and secure confirmation of transactions. What’s more impressive, however, is that the network accomplishes this without needing the traditional mining process. This makes Stellar far more energy-efficient than other standard cryptocurrencies like Bitcoin that are proof-of-work (PoW) based. The most significant components of the Stellar network include its native currency, XLM, which serves as a bridge between different currencies and anchors. The Stellar network’s anchors are specific entities such as banks or payment processors that issue digital representations of fiat currencies like USD, EUR, and other stablecoins. Anchors also issue digital assets that users can trade.
One of the most significant attractants to Stellar is its utilization of cross-border payments, which is what enables its incredible speed and more cost-friendly transactions. Using cross-border payments, Stellar utilizes the consensus algorithm to confirm transactions rapidly. Furthermore, Stellar’s decentralized exchange grants users the ability to convert one asset to another on the network. This exceptional feature is especially critical for cross-border payments involving various currencies and financial institutions. Stellar is designed to be interoperable with existing financial systems, and anchors play a crucial role by integrating traditional financial institutions with the network. Essentially, anchors facilitate the transfer of value between the systems. With its low-cost platform for storing and transferring value, Stellar seeks to provide financial services to the underbanked and unbanked populations.
Looking a bit deeper, Stellar is well-suited for remittances, which enables individuals to send and receive payments across borders rapidly and at a much lower cost than traditional remittance services. Going beyond cross-border payments, the Stellar network aims to support the creation and transfer of various tokenized assets. This makes it far more versatile for a broad range of financial applications. Overall, XLM and Stellar’s open-source protocol are vital in providing a highly efficient platform for cross-border payments, focusing on speed, interoperability, and cost-effectiveness. However, Stellar faces competition from other blockchain-based platforms and traditional financial systems simultaneously exploring solutions for cross-border payments. With a live XLM price of $0.1215 USD and a 24-hour trading volume of $67.71M, it currently has a circulating supply of 28.16B XLM coins and a maximum supply of 50.00B XLM coins.
