Stellar is a blockchain network that acts as an intermediary platform allowing users to trade nearly all types of currencies, be it fiat or crypto assets. The project aims to make money transfer simple and secure.
The distributed ledger network connects banks, payment systems, individuals, and other institutions to facilitate cross-asset and low-cost value transfers.
Today we are going to take a look at the Stellar blockchain and its native token Lumens (XLM) to understand the project and determine whether it is real or fake.
So, without further ado, let us get started.
What is Stellar?
Stellar is an open-source and decentralized global value exchange network founded by Jed McCaleb and operated by the Stellar Developmental Foundation. The blockchain also allows cross-border financial transactions using any form of currency.
The main advantage Stellar has over other blockchain-based financial access and inclusion systems is that it is faster, cheaper, and more efficient. The blockchain is powered by the Stellar Lumens (XLM) token that facilitates cross-border transactions.
Users can trade money or other cryptocurrencies using the Stellar Consensus Protocol, which is a decentralized and distributed network that links nodes within the blockchain with each other. Anyone can become a node on the blockchain, which is responsible for verifying transactions using its consensus protocol.
How Does Stellar Work?
Stellar functions similarly to any other blockchain where transactions are recorded on a shared and distributed public ledger. The protocol uses a consensus algorithm called the Stellar Consensus Protocol (SCP) that is based on a Federated Byzantine Agreement (FBA).
The consensus protocol enables faster transactions at lower costs with the help of the network’s participants or nodes who reach an agreement about a transaction’s validity within seconds. Each node that adds transactions to the Stellar ledger is also able to create its own mini-network of other trusted participants. These mini-networks are known as Quorum Slices
The Stellar network can reach a consensus on valid transactions and add it to the ledger quickly as long as its Quorum Slices overlap.
How Does the Payment System on Stellar Function?
For example, if you are someone living in the US and want to send money to a friend who lives in the UK. Imagine you want to send $5,000 to your friend who will convert it into pounds sterling (GBP).
If the banks managing both of your accounts are linked to the Stellar blockchain, then they are what is known as “Anchors”.
What happens is that your bank sends a transaction to your friend’s bank to see whether the recipient is compliant. The moment your bank receives approval from the recipient’s bank, the $5,000 will be deducted from your account. The whole process takes place in a matter of seconds.
The USD amount is transferred to your bank’s pool account on the Stellar network and converted into XLM. The blockchain then looks for the best exchange rate to convert the XLM into GBP. Once converted to pounds, the $5,000 worth of funds is credited to your friend’s bank account.
What is Lumens (XLM)?
Lumens or XLM is the native cryptocurrency of the Stellar blockchain. The token facilitates cross-border payments on the network and can be used to pay fees.
Out of a maximum supply of 50 billion XLMs, currently, there are 28.2 billion XLMs in circulation that are valued at $6.17 billion. The blockchain attained a 24-hour trading volume of $136.4 million and has a total market capitalization of $3.49 billion.
At the time of writing, XLM is trading at $0.1232 – up 6.2% in the last 24 hours.
Is Stellar Real or Fake?
Stellar is a decentralized and distributed blockchain network that facilitates low-cost, cross-border, and cross-asset financial transactions, including in fiat and cryptocurrencies. The protocol was created to connect individuals with banks, payment systems, and other people.
The blockchain is powered by the Lumens (XLM) token that can be used to conduct transactions and also as a medium of exchanging other forms of currencies.
Stellar Development Foundation, a non-profit group that operates the network, partnered with global payments infrastructure firm TransferTo to support cross-border payments to more than 70 countries. Likewise, the blockchain became the first distributed ledger technology to obtain a Shariah-compliance certificate for payments and asset tokenization services in Muslim countries. Stellar was also selected as a partner by IBM for a double-pegged stablecoin project that is currently under development.
All things considered, I can surely say that Stellar is a legitimate cryptocurrency project that truly serves the purpose it promises. The cross-border payment and currency exchange protocol enables anyone located anywhere in the world to perform international remittances without having to depend on intermediaries such as banks or payment systems that are not available all year round.
However, as is the case with any crypto project or token, it is vital to do your own research when it comes to investing. Therefore, always be wary of the volatile and dynamic nature of the crypto market and make sure to put your money in legitimate projects like Stellar Lumens.
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