What Is Stellar (XLM)?
Put simply, Stellar is an open network that allows money to be moved and stored. When it was released in July 2014, one of its goals was boosting financial inclusion by reaching the world’s unbanked - but soon afterwards, its priorities shifted to helping financial firms connect with one another through blockchain technology.
The network’s native token, lumens, serves as a bridge that makes it less expensive to trade assets across borders. All of this aims to challenge existing payment providers, who often charge high fees for a similar service.
If all of this sounds familiar, it is worth noting that Stellar was originally based on the Ripple Labs protocol. The blockchain was created as a result of hard fork, and the code was subsequently rewritten.
Who Are the Founders of Stellar?
Jed McCaleb founded Stellar with the lawyer Joyce Kim after leaving Ripple in 2013 over disagreements about the company’s future direction.
In explaining the rationale behind Stellar in September 2020, McCaleb told CoinMarketCap: “The whole original design of Stellar is that you can have fiat currencies and other kinds of forms of value run in parallel with each other and with crypto assets. This is super important to drive this stuff mainstream.”
McCaleb’s goal is to ensure that Stellar can give people a way of moving their fiat into crypto — and eliminate the friction that people normally experience when they are sending money around the world.
He currently serves as the CTO of Stellar, as well as the co-founder of the Stellar Development Foundation. This not-for-profit organization aims to “unlock the world’s economic potential by making money more fluid, markets more open, and people more empowered.”
Primary features of Stellar.
- Stellar is the distributed computer network name where transactions are sent in Stellar Lumens(XLM) cryptocurrency.
- Users may now transmit money and assets in ways that were previously only available to payment providers.
- The Stellar Consensus Protocol, based on federated Byzantine agreement, allows nodes to vote on transactions until quorums are attained.
- Stellar has also tried to portray itself as a decentralised exchange, with an order book integrated into its ledger that tracks ownership of Stellar assets.
- Developers have been working on making Stellar a marketplace for its own protocol assets, with features like buy and sell orders and favoured assets.
Fees are a sticking point for many. However, high costs when making cross-border payments aren’t just exclusive to fiat-based payments solutions such as PayPal — transaction fees have also been known to go through the roof on the Bitcoin and Ethereum blockchains because of congestion.
Stellar is unique because every transaction costs just 0.00001 XLM. Given how one unit of this cryptocurrency only costs a few cents at the time of writing, this helps ensure that users keep more of their money.
Few blockchain projects have managed to secure partnerships with big-brand technology companies and fintech firms. A few years ago, Stellar and IBM teamed up to launch World Wire, a project that allowed large financial institutions to submit transactions to the Stellar network and transact using bridge assets such as stablecoins.
Although other blockchains have community funds, meaning that grants can be given to projects that help further the ecosystem, Stellar allows its users to vote on which ventures should be given this support.
Pros & Cons of Stellar coin.
PROS
- High Trading Volume: The trading volume of Stellar Lumen (XLM) has increased in the past few months. This indicates a widespread interest in Stellar Lumens crypto.
- No Regulatory Bodies Cases: Despite its close ties to Ripple, Stellar has avoided any regulatory issues.
- Reduction of transaction costs: Stellar has reduced transaction costs and time delays associated with blockchain technology. Currently, the average transaction fees for Stellar are $0.000041.
- Partnerships: Stellar’s considerably rapid scalability has led to several partnerships. As more financial institutions adopt new transaction processing methods, more liquidity will flow into XLM via partnerships.
CONS
- Competition: Ripple is a strong competitor of XLM coins.
- Serve centralised financial institutions: Though it is more decentralised than Ripple, the cross-border payment networks serve centralised financial institutions.
Tags:
Cryptocurrency