Who is behind the idea of Stellar?
The Stellar Ecosystem was born in 2014 with the help of Mt. Gox exchange founder and co-founder of Ripple, Jed McCaleb, and lawyer Joyce Kim. Shortly after, the Stellar Development Foundation was created, in collaboration with Patrick Collison, the CEO of Stripe, a company that develops an electronic payment system. Finally, in July 2014, Stellar was officially launched, with Stripe’s initial investment of $3 million.
The project launched an ICO and managed to raise $39 million for its development, and 100 billion coins were deployed. When Stellar was launched, the name of its tokens was the same as the network itself. In 2015, it was changed to Lumen to avoid confusion with the name of the foundation. The Lumens XLM cryptocurrency has exceeded all expectations with an impressive takeoff which has earned it a position among the 10 most popular cryptocurrencies.
How Stellar works
Stellar is built in a way to protect its network, preventing it from a DDoS attack. Additionally, all accounts require a minimum balance of 0.5 Lumens. This way, users are pushed to keep the blockchain clean from the elimination of abandoned accounts. Consequently, all the accounts that make up this network have an economic profit.
Stellar is a decentralized network consisting of pairs of servers operating independently of each other, which means that it does not depend on any individual entity. The idea is to have as many independent servers participating in the network as it takes to run correctly even if some servers fail.
There is a list of all the balances and transactions that belong to each account in the network. A full copy of the ledger is housed on each server running the Stellar software, the data is synchronized and validated by the consensus system, Stellar Consensus Protocol (SCP).
The money for each transaction is found in the so-called “anchor”, a type of bridge between an X coin and the Stellar network. After the money transaction is validated and reaches the receiver, it goes through a pool that automatically exchanges Lumens for the required currency.
Advantages and disadvantages of Stellar
+ Stellar dramatically reduces the fraction of time between interbank financial operations, and the transaction costs do not exceed 0.001 USD. This saving of time and costs leads to an increase in users, sales, and confidence in the network. Stellar supports more than 1,000 transactions per second with the help of 1 trillion accounts.
+ The team that makes up the Stellar Foundation is one of the best on the market. One of its main partners is the well-known IBM. Their qualifications guarantee the technical knowledge and financial experience necessary for a project of this nature.
+ The system does not use mining for its verification process and uses the SHA-256 algorithm for security. This provides a much more energy-friendly ecosystem. The platform also offers high scalability and has the ability to launch ICOs for other projects.
– One of the reasons why the project caught public attention was its resemblance to the Ripple project. Investors began to put funds in the project expecting very high profitability for this particular reason. The similarities of the projects make the prices of both fluctuate almost in unison.
– Stellar is not fully decentralized. Although the token deal is different from Ripple’s tokens, more than 90% of them are currently held by the foundation. This may cause some mistrust, and there could be a saturation of the market after a massive distribution of Lumens.
Where to buy Lumens
Like Ripple, Lumens cannot be mined, only bought or exchanged. Despite being a fairly new cryptocurrency, Lumens can be bought at any of the most popular exchange houses: Binance, Poloniex, Kraken, CEX.io, or on the exchanges specializing in Stellar, such as the Stellar Decentralized Exchange and Stellarport. The most common pairs are BTC and ETH, although you can also get Lumens in exchange for USD, EUR, GBP, and KRW.
How to store Lumens
Those who wish to send, receive, buy and sell lumens can use the Stellar Desktop Client program, available at the website. A Stellar Mobile Wallet is committed to mobile payments, and smartphone owners have Lobstr for this purpose, available for both Android and iOS. Of course, it is not as reliable as a hardware wallet. The market leader for hardware wallets is Ledger, a wallet where you can safely store your lumens.
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