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Due to the abundance of platforms and businesses releasing their own cryptocurrencies nowadays, any experienced or beginner trader may be tempted to purchase any one of them. To determine if a cryptocurrency is a good investment or not, you must understand the specifics behind the project.
You should always keep in mind the volatile nature of cryptocurrencies. This is why we offer this guide on Stellar, and its native currency token Lumen (XML). Once you learn about the features of XLM crypto, you can make an informed decision about whether you will invest or not.
1. The History of the Stelar Project
Stellar is a decentralized, open-source network that links people, banks, and payment systems. This platform was created to allow easier, faster, and more affordable cross-border transactions.
Jed McCaleb, the Ripple co-founder, and Joyce Kim, a former attorney and co-founder of the trading startup SimpleHoney, established Stellar. Its blockchain system is similar to that of Ripple because Jed McCaleb borrowed several models from his earlier effort. However, the main difference is that Ripple was primarily designed for bank-to-bank transfers, whereas Stellar is primarily a tool for the average user and developing countries.
On July 31, 2014, Stellar made its debut with the help of a nonprofit, the Stellar Development Foundation. This organization was established in collaboration with Patrick Collison, the CEO of Stripe. In return for its initial investment, which currently is equal to $2 billion, the corporation also received 2% of the initial bonuses.
2. Lumen (XML)
Lumens are the Stellar platform’s tokens. Since the digital asset’s original name was Stellar, many people have continued to call the company’s cryptocurrency by that name. By converting any money into Lumens upon admission into Stellar and back into another currency upon exit, Lumens (or XLM) serve two crucial purposes: they enable smooth multi-currency transactions and they deter DoS attacks on the network by adding a small price of 0.00001 lumens on each transaction.
DoS attacks are typically nefarious attempts by individuals who act unethically to try and flood the network. Investors are interested in XLM because of the practical applications of the Stellar network.
3. The Stellar Consensus
Blockchain technology consists of a decentralized network of servers that run distributed ledgers, and the Stellar network is based on this technology. These ledgers are complete and available on each server, and they are updated following each transaction. Every 2 to 5 seconds, the servers speak with one another and synchronize the ledger. Even without visiting their website, it’s easy to see that the organization places a high priority on the openness of blockchain transactions. In the world of cryptocurrencies, this communication process is called consensus.
Stellar has experienced amazing expansion since its beginnings. It attracted 3 million distinct users in January 2015. The Stellar Development Foundation modified the network to use a new consensus algorithm in April 2015, around a year after launch. The new consensus method went operational in November of that same year. This new method makes use of the SCP (Stellar Consensus Protocol), developed by Stanford University professor David Mazieres.
4. Anchors
“Anchors” are used in the Stellar network to send payments. You must exchange debit for credit with an anchor in the network to use any particular currency with the Stellar network because anchors effectively serve as a link between the two. Credit will be granted to your virtual wallet in exchange for your deposit, allowing you to send and receive money among other users on the network.
The fact that Stellar supports a distributed exchange architecture is a significant advantage. Despite having credit in USD, this enables users to submit payments in certain currencies, like Euros. The currency conversion is carried out automatically by the Stellar network at the most competitive rates. A partner institution, like a bank, can be used by the recipient of the payments to withdraw the money.
5. Stellar dApp Development
The Stellar platform, like Ethereum, enables users to create additional decentralized applications (dApps) and coins. There have also been other stablecoin proposals that are entirely backed by fiat currencies, most notably USD Anchor. Stellar makes it clear on its original website that it was built for developers who wish to build their projects swiftly.
Fiat to cryptocurrency transactions are made easier by stablecoins, which minimizes the dangers of the volatility of cryptocurrencies. All of the initiatives made on the Stellar platform raise the visibility and allure of XLM.
Conclusion
Stellar leads the sector with a real-time execution of 2 to 5 seconds. The business has set the standard for international money transfer integration. IBM, Deloitte, Parkway Projects, and TEMPO Money Transfer are some of the network’s major partners. And as more partners join, the demand for XLM will probably increase.
Photo by Art Rachen on Unsplash