What is Stellar? Detail Explanation for Beginners

The stellar network was founded in early 2014 by Jed McCaleb, the co-founder of Ripple, and Joyce Kim.
The system was founded when McCaleb got into philosophical differences with the rest of the Ripple board. Earlier, McCaleb created the first bitcoin exchange-Mt. Gox, a Tokyo based Bitcoin exchange that was handling over 70% of all Bitcoin transactions in 2014. He also developed a decentralized, server-based, peer-to-peer file sharing system called eDonkey. It can thus be seen that he has vast experience with managing blockchain projects.
The Stellar Development Foundation (SDF), is a registered non-profit organization incorporated in Delaware. It was created in collaboration with the CEO of Stripe, Patrick Collison to support the network. The WordPress founder Matt Mullenweg, AngelList CEO Naval Ravikat, the Y Combinator president Sam Altman and Keith Rabois, a technology entrepreneur and investor, comprise the advisory board of the network. The SDF’s funding comes from the initial creation of the Stellar Lumens. The foundation controls 5% of all Lumens.
While Ripple is concentrated on providing solutions to banks, Stellar aims to provide an open platform for building financial products that connect people everywhere using blockchain technology. Nonetheless, Stellar is seen to share many similarities with Ripple since it was formed by the same person behind Ripple as explained earlier. Ripple is also said to be the third’s biggest cryptocurrency according to the market capitalization.
Stellar’s performance
The tokens used in this network are called Stellar Lumens also referred to as XLM, which is its ticker symbol. A transaction using Lumens costs 0.0001 XLM, which is said to be a fraction of a penny. Currently, there are about 20 billion coins in circulation. This is a huge figure compared to Bitcoin’s maximum of 21,000,000. Initially, 100 billion lumens were created, and the Stellar Development Foundation holds the remaining supply.
The stellar network was among the cryptocurrencies platforms which made headlines last year. The price of Stellar’s cryptocurrency, Lumens had risen 41,900 percent, making it one of the best performing cryptocurrencies of that year.  The cryptocurrency has obtained gains of about 5.26% since the start of 2018. Today, XLM has a market cap of $7.5 billion, making it listed in the top 10 cryptocurrencies worldwide by the total market cap. Although it’s market cap has been to have skyrocketed over the years, there are concerns that the crypto “does not command volumes in the daily trading charts.”
The Stellar consensus protocol (SCP)
The Stellar servers communicate and sync with each other to ensure that transactions are valid and get applied successfully to the global ledger, thus forming a global value exchange network. For payment directly by Stellar, users must work with a network anchor, which is a trusted intermediary that holds and converts funds. Fiat is exchanged for digital credit either in the form of dollars or euros then sent to another anchor that is trusted by the receiving party.
For example, if you would like to send $10 to a friend on the network, a list of trusted servers (anchors) will begin the process to agree on the validity of your $10 payment. The majority of these servers will have to admit that you do own $10 worth of credit on the network before they mark the transaction as valid.
Transactions via the network are speedy- they take less than 6 seconds to be settled.
Stellar’s decentralized network
One can use the decentralized network to trade anything held by Stellar’s system of anchors. You can, therefore, buy and sell everything through the Stellar market including both fiat and cryptocurrencies.
The network has decentralized servers around the world that run a public ledger. You can think of the decentralized ledger as a database that can store more than just account balances and payments. Just like the blockchain systems, the ledger is publicly available and keeps a record of every single transaction. The servers pass information between each other to verify transactions and update the ledger simultaneously.
Stellar’s decentralized exchange system is more of the decentralized version of trades such as GDAX, Bittrex, and Finance; platforms which allow you to buy XLM directly using fiat currency. You’ve got to sell orders, purchase orders and order matchmaking. Coming up with such a platform which is open source and decentralized creates equal access and economic participation.
Since the network allows sending, receiving and trading of anything or kind of currency, buying and selling Lumen is quite easy. However, unlike fiat, you cannot hold Lumen in your hands; thus, one requires a Lumen wallet to store your Lumen. There three different categories of Lumen wallets available. They include desktop XLM wallets, mobile wallets, and online XLM wallets.
Institutions that have partnered with the network
Generally, the Stellar network has been seen to be competitive with other cryptocurrencies on many levels. Major companies such as IBM have been seen to partner with the organization in the launching of blockchain banking across multiple countries. The partnership aims at setting up numerous corridors (up to 60% of all cross-border payments) among nations in the South Pacific including countries like Australia, Fiji, and Tonga. This partnership brought the network into the spotlight, opening doors for more partnerships with other companies. Moreover, Jesse Lund, the head of Blockchain solutions and Global Finance services at IBM confirmed that “…Stellar is a wonderful, scalable, high performance publicly accessible digital asset registry.”
Deloitte also had earlier announced it’s partnership with the network back in 2016 to develop a payment app. McCaleb, the co-founder of the system, confirmed that more than 30 banks have signed up to use Stellar’s protocol for cross-border transfers. As from 2017, a good number of banks, financial institutions and countries have signed up to use the Stellar protocol in some capacity. Other partners include Stripe, SatoshiPay, Lightyear.io among others.
 
In Conclusion
Stellar is similar to Ripple in its ability to attract significant financial institutions. However, Stellar is an open source platform while Ripple is a closed one. The network also focuses on developing markets and has multiple use cases for its technology, including money remittance and bank loan distribution to the unbanked.
Stellar has its unique features such as the consensus protocol and its built-in decentralized exchange as seen earlier. The network’s growth since it’s inception is admirable.
The stellar network as a financial payment platform enables one to move money across borders: quickly, more reliably and at a relatively low fee (i.e., the fraction of a penny) using Stellar lumens.

 
【Reference】
Blockgeeks
Stellar Homepage

Cryptocurrencyfacts

cryptodigestnews.com

 
 

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