At the same time, the network also prevents transaction spam. Stellar is constantly looking for the best exchange rates to make the transactions as cheap as possible.Īs mentioned earlier, XLM is used for transaction facilitation and currency exchange. For instance, airline miles or reward points can be converted and transferred using the Stellar network. In addition to fiat currencies and cryptos, users can also send their own currencies with Stellar. The development of Stellar is to enable transactions in a variety of currencies, with its XLM token acting as the bridge. We’ll discuss these in more detail below. Structurally, Stellar hardly differs from many other blockchain projects, although the underlying protocol has some unique features. In this context, a consensus mechanism always guarantees the integrity of the entire blockchain. Subsequently, these are sent through the network to be converted into the target currency on the recipient’s end.Įvery transaction is recorded on the Stellar ledger. This means that when a payment is made, the outgoing currency is first converted into Lumens. To understand the inner workings of Stellar Lumens, one must first internalize the following concept: Stellar is at its core a system for cross-border currency transfer, with Lumen (XLM) used as a means of transferring value. McCaleb is currently the Founder and Chief Architect of the Stellar Development Foundation. Supported by the Stellar Development Foundation, a nonprofit, the Stellar Lumens protocol also serves as a driver of the Foundation to provide greater access to financial services worldwide. The network was officially launched in July 2014, receiving $3 million in seed funding from Stripe. Gox, and co-founder of Ripple - and Joyce Kim founded Stellar after leaving Ripple back in 2013. Jed McCaleb - commonly known as the founder of Mt. It provides the perfect exchange rate between different currencies to ensure seamless global money transfer. XLM serves as the backbone of the whole network. Funds, both cryptocurrency and fiat currency, can be converted into Lumens and sent via Stellar’s blockchain. XLM is used to transfer money within the Stellar payment network. Although it was later changed, cryptocurrency exchanges still typically list it as Stellar. Originally, its name was the same as that of its parent blockchain - Stellar. Lumen (XLM) is the native currency of the Stellar payment network. It allows for cross-border transactions of both fiat currency and cryptocurrency, connecting banks, payment providers and people worldwide and across national borders with its payment platform and making money transfers more transparent. Stellar’s network serves to ensure almost instantaneous settlement of transactions with no intermediaries, lowering the overall cost. On average, it takes several days to transfer large amounts between financial institutions with remittance systems such as SWIFT, and these transactions typically involve several intermediaries, making their cost high. Stellar Lumens is an open blockchain aimed at facilitating large transactions between financial institutions and smaller entities alike. Rather, Stellar wants to equip organizations, financial institutions and people with a cheap, fast and decentralized payment method. Stellar has a similar approach to Ripple (XRP), although its focus is not exclusively on banking. Stellar, also known as Stellar Lumens, is an open-source protocol mainly used for cross-border payments.
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