About 10 years ago, the blockchain technology was mainly used for financial transactions. Since then, computing experts have explored other areas of applications to make Cryptocurrencies more compatible with fiat currencies and support more services. The fast rate of new currencies being released into the market has brought sharp competition in the evolving niche. In this post, we look at one of the latest Cryptocurrency, Stellar.
What is Stellar?
Stellar is an open-source protocol founded in 2014 for value exchange. The idea was conceptualized by Joyce Kin and Jed McCaleb who is also the creator of eDonkey. Stellar started as a not-for-profit organization with a mission of providing low-cost financial services that are accessible to everybody in the globe.
Since the first blockchain technology in 2008, many people have found it difficult to link the cryptocurrencies to fiat currencies. While ensuring that all transactions remain untraceable, Stellar’s goal is to make cryptocurrencies a daily reality by providing links to banks, common payment systems, and individuals.
Stellar coins are referred as Lumens (XLM) and can be bought from top exchanges such as Poloniex. 1 XLM allows users to make 100,000 transactions.
The Cryptocurrency was based on Ripple Protocol at launch but was later updated to incorporate new consensus algorithm that included new codes.
How Stellar Works?
Stellar is built on the premise of gateways that allow people to get into and out of the network. Here, you have to trust the gateways but not other participants. This means that you can decide to what extent to trust the network regarding the quantities of Lumens.
Because it is a distributed network, any person can get their gateway and identify which one to trust. First, you are required to sign up on the Stellar website and downloading their wallet to get the interface on your computer. The wallet holds all your lumens whether for trading or payment. To get some Stellar Lumens, a user can buy directly from the exchanges or wait for the 95% given by the network to all users in tokens.
The orders for conversion between stellar and other currencies allow anyone on the network send credits to gateway users. Note that a lot of conversions are taking place behind the scenes to guarantee the right currency exchange rates. This means progressive monitoring to establish the performance of other cryptocurrencies and fiat currencies.
Stellar utilizes its own distributed ledger maintained by a special algorithm as opposed to common mining that is applied by other cryptocurrencies. The algorithm uses consensus between nodes that are believed will not collude. The consensus between trusting and not trusting various nodes in the network operate through an interactive process completed every few seconds. This means that all transactions complete almost instantly without requiring mining.
Main features of Stellar
This is the native asset of the stellar network. Lumen is to stellar just like Ether is to Ethereum. The stellar currency helps to serve two purposes. First, the lumens are used in the network’s anti-spam efforts. Every transaction comes with a small fee of 0.00001 lumens that helps to keep off users with bad intention such as flooding the network. They serve as the security token to mitigate any DoS attacks that might intend generating wholesale transactions or consume a lot of space. Note that Stellar requires all users to have a minimum of 20 lumens.
The second role of Lumens is facilitating transactions with other assets. In addition to trading in top exchanges, Lumen is also used to form a bridge to the common fiat currencies. This is perhaps the greatest component that is making Stellar gain a lot of popularity in the market today.
This is a set of tools that are used for developing software applications in the stellar network. It is a RESTful API that targets helping users submit transactions to the network, subscribe to the event streams, check the status of its accounts, and even subscribe. This feature has played a crucial role in advancing various components of the blockchain.
The Stellar platform is a distributed network that uses servers that run the core software. The servers are maintained by different entities and individuals distributed in the network. The Stellar Core is the main server that maintains the original copy of the Cryptocurrency ledger, carries direct communication, and stays in sync with other instances of the core in the blockchain.
Pros of using the Stellar network
- The Cryptocurrency is designed to link well with fiat currencies. This has made it easy for more people to appreciate the operations of cryptocurrencies and use them to send cash.
- Confirmations of transactions in the network are done very fast compared to other networks. Because the blockchain algorithm confirms the transactions as opposed to mining, users are assured of getting their transactions confirmed within a few seconds.
- Because Stellar does not rely on mining to confirm transactions and insists that all nodes are considered as untrusted parties, the risk of one party conducting wholesale mining is eliminated.
- The operational model of the Cryptocurrency of not trusting any node and enhancing direct connection with fiat currencies has helped to raise its popularity.
- Stellar has articulately linked the fiat currencies to the fiat currencies so that users can easily buy them from the main exchanges.
Cons of using Stellar network
The main issue of Stellar Cryptocurrency is that it is relatively new and ultimate stability cannot be ascertained. This has made some people to prefer older cryptocurrencies such as Bitcoin and Ethereum.
Where to Buy and Sell Stellar in Australia?
Crypto Currency for Fun recommends buying Stellar at CoinSpot. CoinSpot is a multi cryptocurrency wallet with built-in trading features. Users can store many coins, including Stellar and they offer Instant Delivery or your coins right into your account.
When Satoshi invented cryptocurrencies platforms in 2008, the platform was marred with suspicion and major flaws. Stellar has demonstrated the capability to address these issues such as scalability and speed of transactions. More importantly, is the responsive capability to handle issues that might arise on the way. If you are looking for a great Cryptocurrency to join, Stellar is one of them.