Coin Insights: What Is Stellar?

what-is-stellar

Stellar (XLM) happens to be one of the cryptocurrencies we feature here on our trading platform on Coinberry.

Perhaps you’ve heard about it being similar to Ripple (XRP)? Perhaps you’ve heard of tokens called Stellar Lumens, or perhaps you’re just wondering what Stellar is all about.

Well, we’re going to explain it all here and cover the basics so you’re up to speed on Stellar.

What is Stellar (XLM) and what is it supposed to do?

Stellar is a decentralized application that merges banks and central institutions into a digital payment system that people can use to send and receive money across borders with efficiency and very low transaction costs.

Stellar envisions a future where a company could theoretically use Stellar to pay their employees in USD and they could instantaneously even if that person only accepts EUR in this new payment system that Stellar is building.

Now that we’ve established this:

Why was it founded and who built it?

Stellar was founded by Jed McCaleb. McCaleb formally was a co-founder position at Ripple, another cryptocurrency you may have heard of. Jed was inspired to create Stellar because through his work at Ripple (XRP), he gained insight into cryptocurrency and blockchain technologies.

However, he had fundamental disagreements with the way Ripple was being operated. He left to create Stellar. Instead he imagined a decentralized company that would operate in a non-profit way.

And that’s why he left Ripple to start Stellar. Jed is still the CTO of Stellar today. But let’s go back for a quick second and dive into how Jed was able to take his vision and turn it into reality.

How was it built?

With $3M of initial funding from Stripe and donations from Google, McCaleb and his team were able to get Stellar off the ground in 2014.

By early 2015, Stellar had already hit 3-million activated user accounts and a market cap of nearly $15B.

This rapid growth and early success led the Stellar Foundation to look at technology upgrades. Upgrades that would be able to handle the growing amount of transactions and traffic that were happening on their blockchain. They devised a plan to update their protocol later that year, and would have Stanford professor David Mazieres head up the project.

This rapid growth and upgrading progressed over a number of years, leading to the current project and protocol that Stellar has today.

Why is Stellar Interesting?

Let’s work with a hypothetical situation.

Let’s say you need to borrow money from a friend. In this example, he’s the only person who can loan you money. But he’s American (and only has USD) and you’re Canadian and you only use (CAD).

How would you be able to receive this money instantly under normal circumstances?

That is, of course, a trick question. You wouldn’t be able to. It would be quite challenging to receive that money. Here’s how it would currently work:

First your friend would need to go to his bank and would need to give the bank your international banking number. Then he’d need to provide other important details so that his bank could start the process of sending money to your bank account.

Finally you’ll also have to pay pricey exchange fees for your bank to exchange the USD into CAD. And then you’d need to wait for the money to show up in your account.

All in all, the transaction could take up to several days, and would cost quite a bit to complete.

But with Stellar you could have access to the money your friend sent you – in your own currency – immediately.  That means your friend from America could send you money in USD, and you could instantly access it in CAD without paying fees. These transactions can be approved with transaction fees of 0.00001 XLM per transaction.

Stellar is designed to be used for any currency around the world. Again, the goal of Stellar is to create the world’s first fully integrated and consolidated financial system to make the exchange of value easier and more accessible.

Now you might be thinking this all sounds too good to be true. How might they get the backings of governments and institutions? How could this possibly work in the real world?

Overview of Stellar Today

Stellar aims to integrate the existing financial system with the digital financial system of cryptocurrency – this much, we’ve already established. This means that Stellar, from the start, has aimed to partner with and help many large players facilitate the movement of money around the world.

In their drive to move finance forward, Stellar has partnered with both small and big enterprises. Some of these partners include Circle, BitBond, and ClickPesa.

At an event in May 2020, Denelle Dixon, the CEO of the Stellar (XLM) foundation made it clear that Stellar is looking to be the blockchain on which central banks will build their central bank digital currencies over the next five years.

And Stellar has been making headway in this arena, as was seen earlier this year, when Ukraine selected them to help build their National Digital currency.

All things considered, Stellar is a big platform that is making headway with their relationships with big financial and government institutions.

Currently Stellar Lumens (XLM) fluctuates in the top 30 tokens on Coin Market Cap and has a market cap approximately of $7.5B.  Stellar has a supply of $50 billion tokens. It’s ticker symbol is XLM and the coins are known as Stellar Lumens.

Will Stellar be able to accomplish their goal of creating a globally adopted platform for currencies? No one can say for sure, but they have been making strides in that direction.

Stellar (XLM) Resources

If you’re interested in learning more about Stellar (XLM) you can continue to read our educational series. We’ll be releasing more articles on this cryptocurrency, and covering various aspects of it.

You can also take a look at some of the following links:

Stellar.org

Intro to Stellar (XLM)

Coinberry.com

Stellar price

Decrypt.com

What is Stellar (XLM)

Stellar (XLM) References

The websites, articles, and content that was used to make this article:

Stellar.org

Stellar Lumens

Investopedia.org

Stellar

Coin Bureau

Stellar: XLM Could ROCKET in 2021

Decrypt.com

Stellar (XLM) transactions can now be monitored by Elliptic