What Is Stellar?

Stellar is a blockchain network developed by Stellar Development Foundation. The organization's currency, called the lumen, is traded under the symbol XLM on various cryptocurrency exchanges.

Lumens are designed to be used on the Stellar network to pay transaction and account initialization fees. The network was created to connect banks, payment systems, and people to facilitate low-cost, cross-border, cross-asset financial transactions.

KEY POINTS

Stellar is a decentralized protocol on open-source code to transfer value domestically and across borders.

The Stellar blockchain's cryptocurrency is called the lumen, a token that trades under the symbol XLM.

Stellar is one of the best-performing altcoins, with a market cap of just over $3.3 billion.

History of Stellar

Stellar is operated by the Stellar Development Foundation, a nonprofit organization founded by Jed McCaleb. The Stellar project received initial funding from the payments startup Stripe and other organizations' donations. Stellar also covers its operational costs by accepting tax-deductible public donations.

In 2018, Stellar signed a deal with TransferTo for cross-border payments to more than 70 nations.

It also became the first distributed technology ledger to obtain a Shariah-compliance certificate for payments and asset tokenization and was selected as a partner by IBM (IBM) for a double-pegged stablecoin project.

Concerns About Stellar

There are roughly 27.3 billion coins in circulation, with a maximum supply of 50 billion.

The Stellar Foundation originally had over 100 billion lumens in existence but burned roughly half of its outstanding coins in November 2019.

The move caused a short-term rise in the price of XLM, though the rally quickly faded. Coin burns are controversial because they imply the kind of manipulation that decentralized systems are supposed to protect against.

Each lumen transaction has a standard mining fee of 0.00001 lumens.

The Future of Stellar

Stellar's primary focus is on developing economies in the areas of remittances and bank loans to those who are outside of the scope of the banking services. Stellar doesn't charge individuals or institutions for using the network.

Stellar supports a distributed exchange mode. This allows users to send payments in specific currencies even though they may hold credits in another, while the network automatically performs the forex conversion. The receiver can withdraw their currency equivalent through a partner institute like a bank.

As a cross-border transfer and payment system connecting financial entities, Stellar aims to reduce transaction costs and time lags significantly. While Stellar works similarly to technologies like Bitcoin, its key distinguishing feature is its consensus protocol. The present-day Stellar is a result of a 2014 fork that created the Stellar Consensus Protocol (SCP), following which Stellar became an open-source system. Under this protocol, the transaction authentication process is confined to a select set of trustworthy nodes rather than being left open to the whole network of nodes.

Even with the similarities and improvements, it is unclear whether Stellar will garner popularity, although its trading volume and market cap slowly continue to increase with time.

Is XLM Crypto a Good Investment?

Stellar's cryptocurrency XLM is used for on-chain transactions but can be purchased as an investment. You should thoroughly investigate Stellar and XLM before deciding to make a purchase for investing purposes. Also, a professional investment advisor can help you decide whether XLM is suitable for your portfolio.

What Is XLM Cryptocurrency?

XLM is the token used in the Stellar blockchain to pay transaction fees. It can also be purchased on select exchanges for other purposes.

Is XLM Better Than XRP?

Cryptocurrencies are generally designed with a purpose in mind. XRP is the Token used by Ripple to facilitate banking transactions, while XLM is used to facilitate cross-border and cross-asset transactions on the Stellar blockchain. Which one is better depends on your opinion.

The Bottom Line

Stellar is a blockchain network designed to allow payments across borders without involving third parties. It also attempts to bypass the constraints generally associated with converting between all the different currencies and coins available, making payments quicker and easier

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