- Describing Stellar
- Working of Stellar
- Stellar in future
Cryptocurrency can be defined as a digital peer-to-peer system, allowing financial transactions from anywhere by anyone. Complete record of all financial transactions under cryptocurrency is kept purely in digital form stored in an online database. All transactions in cryptocurrency are verified by using encryption to ensure complete security and safety.
Stellar (XLM) is one such cryptocurrency which has made a formidable impact in the market; it is an open blockchain-based payment system network.
Stellar cryptocurrency was developed by Stellar Development Foundation in 2014. It was developed with an objective of providing enterprise solutions by allowing all financial institutions to connect with one another to carry out large transactions. Earlier, large transactions between financial institutions took several days to process, costing a lot of money as a lot of intermediaries were involved. Stellar has completely changed the landscape for large transactions as now they can be done instantaneously without any intermediaries and at a very little cost.
As of November, Stellar has a market capitalization of $8 billion and are valued at $0.33.
- Stellar trades under the symbol XLM and the Stellar blockchain’s cryptocurrency is called Lumen.
- It is used to transfer digital currency to fiat money domestically and internationally.
- Stellar has led the market of cryptocurrency among all the altcoins in the last five years with a market cap of around $8 billion.
Working of Stellar
Most of the ideas for Stellar are borrowed from Bitcoin with only one distinction. The Consensus Protocol used in Stellar is different from that used in Bitcoin. Where Bitcoin uses proof-of-work for the security of blockchain, Stellar uses stellar consensus protocol or SCP.
A group of “trustworthy nodes” are used by SCP for the validation of blocks and transactions. The trustworthy nodes are selected through elections and are open to anyone on the network. The most trustworthy notes are chosen and given the responsibility of validating transactions.
SCP empowers Stellar to carry out financial transactions at a faster rate and at very low price, SCP doesn’t require any costly mining machines for running computations and in comparison to other blockchains, Stellar is a more eco-friendly blockchain project.
Stellar in future
Stellar has been continuously working on providing better financial services to its clients. The principal emphasis of Stellar is on developing countries, in areas related to transfer of funds and bank loans, targeting those who are outside the scope of banking services. No charges are charged from institutions or individuals for utilizing the Stellar network.
Since a distributed exchange mode is supported by Stellar, Users are allowed to make transactions in any currencies even though they may hold credits of another currency. Forex conversion is automatically performed by the Stellar network. Withdrawal of money can be done easily by the receiver through a partner institute like a bank.
Being a domestic and international payment and transfer system that connects different financial institutes, Stellar aims to significantly reduce the cost associated with transactions and any time lags.
Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investmenting.
Photo by – 33cryptonews