Star definition

What is stellar

The term Stellar cryptocurrency refers to a digital or virtual currency developed by the Stellar Development Foundation. The organization’s currency, called the Lumen, is traded on various cryptocurrency exchanges under the symbol XLM. Lumens can be used by merchants on the Stellar Network, a blockchain-based distributed ledger network that connects banks, payment systems, and people to enable low-cost, cross-asset transfers of value, including payments.

The central theses

  • Stellar is a decentralized protocol for open source code for transferring digital currencies domestically and across borders in fiat money.
  • The cryptocurrency on the Stellar blockchain is called Lumen, a token that trades under the symbol XLM.
  • Stellar is one of the top performing altcoins in the past five years, with a market cap of just over $ 1 billion.

Understanding Stellar Cryptocurrency

Cryptocurrencies are digital or virtual currencies that were developed for trading in decentralized networks, so-called blockchains. This ensured that they couldn’t be forged like normal currencies. It also prevented them from being issued twice.

Unlike fiat money, cryptocurrencies are not issued by central banks, which means that governments do not interfere in their trading activities. After the success of Bitcoin – which was founded in 2009 – a variety of cryptocurrencies emerged, including the Lumens.

As mentioned above, the Lumen is Stellar’s cryptocurrency. There are approximately 22.5 billion coins in circulation, with a maximum supply of 50 billion. The Stellar Foundation originally had over 100 billion lumens but burned about half of its outstanding coins in November 2019. The move resulted in a short-term spike in XLM price, although the rally quickly subsided. Coin burns are controversial because they imply the type of manipulation that decentralized systems are supposed to protect against.

Although the value of Stellar’s Lumen fell by more than two-thirds by May 2020, it is still one of the top performing altcoins and ranks 11th on CoinMarketCap. The market capitalization of the coin was around $ 8.3 billion as of March 25, 2021.

Each Lumen transaction has a standard mining fee of 0.00001 Lumen.

Story of Stellar

Stellar is operated by the Stellar Development Foundation, a nonprofit organization founded by Jed McCaleb. The Stellar project received initial funding from payment startup Stripe, as well as donations from organizations such as BlackRock, Google, and FastForward. The organization covers its operating costs by accepting tax-deductible public donations.

In 2018, Stellar signed a contract with TransferTo for cross-border payments in more than 70 nations. It was also the first distributed technology ledger to receive a Shari’ah Certificate of Compliance for payments and asset tokenization, and was selected by IBM as a partner on a dual-targeting stablecoin project.

Stars future

Stellar’s main focus is on developing countries in the areas of remittances and bank lending to those outside the scope of banking services. Stellar does not charge individuals or institutions for using the network.

Stellar supports a distributed exchange mode. This allows users to send payments in specific currencies, even if they may have funds in a different currency, while the network does the currency conversion automatically. The recipient can withdraw their currency equivalent through a partner institution such as a bank.

As a cross-border transfer and payment system that connects financial institutions, Stellar aims to significantly reduce transaction costs and time delays. While Stellar works just like technologies like Bitcoin, its main differentiator is its consensus protocol. Today’s Stellar is the result of a 2014 fork that created the Stellar Consensus Protocol (SCP), after which Stellar became an open source system. With this protocol, the transaction authentication process is limited to a selected set of trusted nodes, rather than being left open to the entire network of nodes.

Each node on the network selects a set of trusted nodes, and a transaction is considered approved once it has been authenticated by all of the nodes that are part of that selected group. This shortened approval cycle enables the Stellar network to process transactions faster and keep transaction costs lower.

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