Summary
- Jed McCaleb, the co-founder of Ripple, created another decentralized and open-sourced network called Stellar back in 2015.
- Stellar concentrates on people who do not have access to banks or are in less-developed areas with limited banking solutions.
- Similar to Ripple, Stellar intends to make international transactions more reliable, faster, and accessible.
- Stellar’s digital currency is called lumen (XLM). Lumen is blockchain-based, and Stellar started with a supply of 100 billion lumens.
Launched in 2015 by Ripple’s co-founder Jed McCaleb, Stellar is a decentralized network that offers sending, receiving, and trading money in any form of fiat or cryptocurrencies.
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The Stellar network is open-sourced, which means that any person or a developer can modify the network as they please; and most importantly – it is available for everyone. Stellar’s network was created to allow all financial systems to work on one platform.
As an open network, Stellar is “owned” by the public and has no official owner. Like most other cryptocurrencies, it is based on blockchain technology, but unlike Bitcoin or Ethereum, it is a lot faster and offers its services for a fraction of a penny. Stellar also claims to be more sustainable than other blockchain-based networks.
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Since its launch, Stellar has completed more than 450 million transactions that were requested by more than 4 million individuals. Multiple transactions are being closed every day within a matter of only a few seconds.
Similar to Ripple, Stellar is focusing on easily accessible international transactions that are affordable for everyone. Businesses, corporations, and start-ups have been using Stellar for its speed, transparency, and reliability.
Like most other cryptocurrencies, Stellar has a ledger, but it does not have an accountant. It instead has a unique system that involves independent computers that are checking if the network is running correctly. Stellar does not have a central authority, which means the network is operating 24/7 and is being updated every five seconds.
Stellar is using Stellar Consensus Protocol (SCP) to keep the software in sync.
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No – Stellar does not have any preference when it comes to what currency to use.
Stellar’s intent was to improve already existing systems, not to replace them. People of all incomes are welcome to use the network, without any pressure of converting all their money to a Stellar cryptocurrency.
Stellar additionally stated that it did not want any currency preference. This is because if a currency is finalized, the price would be fixed for the source nation whereas the other nations would have to deal with exchange rate fluctuations.
Just like any other blockchain-based software, Stellar has its own currency named lumen (XLM, previously known as stellars). Every account on the Stellar network needs to have a small number of lumens for two reasons:
- The digital currency is used to cover for small fee transactions, which makes sure that the software runs smoothly, without any scam interference. The exact number of lumens per fee is 0.00001 XLMs.
- Lumens exist because they act as a bridging currency during all transactions that require two different currencies.
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When the Stellar network was launched, 100 billion lumens were created and put into the network, with a 1% annual increase of their supply in the first five years. In November 2019, the total supply of lumens got reduced due to the community vote held in October 2019. After November, the lumen supply was lowered to 50 billion, and no more lumens are planned to be made.
The remained 50 billion lumens are spread almost equally – Approximately 20 billion XLMs are available to anyone in the open market. Stellar Development Foundation holds the remaining 30 billion lumens for the development and promotion of the Stellar network. The Foundation’s lumens will become a part of the open market gradually in the future.
Where to buy lumens depends on the individual’s country. They are available for purchase on the Stellar network and are required to have to use Stellar.
People in the US can buy lumens over exchange markets Coinbase and Kraken. Other countries can use another market called Binance. The first Stellar trading market Lobster permits Stellar users to get lumens directly on the network.
Stellar warned its users to be cautious about purchasing digital currencies as their value could always change in fiat currencies but are making sure that lumens will always be acceptable on the Stellar software.
Just like any other currency, Stellar requires the use of wallets for storing its digital currency. Some third parties provide digital wallets for Stellar users, and they come in three types:
- Hardware wallets
These wallets are not connected to the Internet, so in theory, they are the safest. Stellar is offering Ledger Nano S and Trezor on its webpage.
- Downloadable wallets
Downloadable wallets come as an app that stores the private key. People can download those wallets either on their smartphones or computers. Stellar recommends Keybase, Solar Wallet and Lobstr, all of them with advanced encryption systems.
- Web wallets
Probably the least safe as they can be accessed online, web wallets allow conducting all the transactions on the Internet. Stellar webpage suggests using Coinbase.
If interested in other digital wallets, one can refer to the Stellar webpage for more information.
Stellar and Ripple have many similarities, hence why they are each other’s biggest competition. The two were created by the same person after all.
Ripple put their focus on attracting banks and big corporations so systems like SWIFT could be replaced because they are outdated. On the other hand, Stellar is focusing on monetary literacy.
Stellar is more blockchain orientated, while Ripple does not have miners that run the network. The two networks also use different consensus mechanisms – Stellar uses Stellar Consensus Protocol (SCP), while Ripple uses Proof of Correctness (POC).
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