Stellar is known as a decentralized payment technology, focusing primarily on connecting users and financial institutions, as an open-source platform. Jed McCaleb – the co-founder of RippleNet, founded the Stellar network in 2014 as a non-profit organization, which at first was named the Stellar Development Foundation. Providing financial services to people that previously didn’t have any access to banking is the main goal of the Stellar protocol.
The native cryptocurrency, Lumens or XLM makes it possible to transact on the Stellar network. This cryptocurrency, among other things, serves as a bridging mechanism between fiat currencies. When referring to this cryptocurrency, we capitalize the name of the network or organization, while the term ’stellar’ in lowercase is used when referring to its tokens.
The way in which Stellar works is enabling the transfer of digital and fiat currencies as a peer-to-peer network, as well as making cross-border transactions easier.
Sometimes there are more than two participants in these transactions and there can be many currency conversions, sort of like a chain. As a simple example, a transaction from euros (EUR) to US dollars (USD) could involve transactions from EUR to Bitcoin (BTC), BTC to XLM, and then XLM to USD.
The smart contract features of Stellar are constantly developing and also projects like stablecoin focused Stronghold, are being released, in addition to launching and hosting a good number of ICOs.
Stellar (XLM) all-time price movements. Source: Coinmarketcap
What are the Main Advantages of Stellar (XLM)?
Stellar’s three main advantages are:
- Fast transaction speed
- Multi-currency support
- Extremely low transaction fees
Let’s take a deeper look into these advantages
1. Fast transaction speeds
About 2000 transactions per second can be processed by Stellar and because of this, only a maximum of 5 seconds are needed in order to validate each transaction. This high transaction speed makes Stellar a great tool when you need to make fast and secure cross-border payments.
2. Multi-currency support
With Stellar, you are able to carry out multi-currency transactions, as Stellar has multi-currency support. An anchor system is used for this feature. It works by accepting any money for a deposit and a loan is issued in the currency that is required by you. To make it simple, if you sent Monero, for example, the recipient receives Bitcoin or another cryptocurrency that is needed in that particular case. A profitable course is independently selected by the system.
3. Extremely low transaction fees
Stellar is a payment protocol that is not developed to prioritize profit as much as other cryptocurrencies on the market. Moreover, due to the fact that it’s very efficient when operating and also due to the low transaction times, Stellar makes it possible to reduce the overall cost of transaction fees.
Should I Buy or Trade Stellar?
If you’re interested in acquiring Stellar, it is possible for you to buy and sell Stellar Lumens (XLM) on quite a few exchanges these days. In the United States, however, it is not possible for you to purchase XLM with US dollars or another fiat currency. Instead, if you want to purchase Stellar then you will have to buy it with another cryptocurrency. You can use Bitcoin or Ethereum in order to do so.
Takeaways
- Stellar is known as a decentralized payment technology, focusing primarily on connecting users and financial institutions, as an open-source platform.
- Jed McCaleb – the co-founder of RippleNet, founded the Stellar network in 2014 as a non-profit organization, which at first was named the Stellar Development Foundation.
- Providing financial services to people that previously didn’t have any access to banking is the main goal of the Stellar protocol.
- The native cryptocurrency, lumens or XLM makes it possible to transact on the Stellar network. This cryptocurrency, among other things, serves as a bridging mechanism between fiat currencies.
- The way in which Stellar works is enabling the transfer of digital and fiat currencies as a peer-to-peer network, as well as making cross-border transactions easier.