A General Guide to Stellar (XLM)
What is Stellar?
Stellar is an open-source blockchain-based payment protocol that was launched by Jed Mccaleb, co-founder of ripple and Joyce Kim. Stellar shares many similarities with Ripple, and like Ripple, Stellar is a payment technology that seeks to bring financial institutions together and greatly reduce cost and time on cross-border transfers. Both payment networks as a matter of fact initially used the same protocol.
However, that is all they share together.
In early 2014, a Stellar fork led to the creation of the Stellar Consensus Protocol (SCP). Stellar and Ripple are quite different in their foundations. While Stellar is an open source, Ripple is a closed source. Also, their customers are different. Stellar works mostly with developing markets and has its technology used for many things which include money remittances and distribution of bank loans to the unbanked, while Ripple works with established banking institutions and organizations to help them streamline cross-border transfer technology.
History of Stellar
Jed McCaleb along with former lawyer Joyce Kim launched Stellar network in July 2014. There were 100 billion Stellar on the release of the network. 25% of this went to non-profits that work towards financial inclusion for all. 2% or 2 billion of the initial Stellars went to stripe in return for its seed investment. Stellar was later called Lumens or XLM.
The first Brazilian bitcoin exchange, Mercado Bitcoin in August 2014, announced the listing of Stellar network on its platform. By early 2015, there were more than 3 million registered Stellar on the platform with a market capitalization of almost $15 million.
An upgraded protocol with a new consensus algorithm was released by the Stellar Development Foundation in April 2015 and went live in November 2015.
In May 2017, Lightyear.io, a non-profit Stella entity launched as the ommercial arm of the company. As part of its Stellar Partnership Grant Program, Stellar announce a benefits program in September 2017. The program would award up to $2 million worth of Lumens to partners for development of the project.
How Does Stellar Work?
Stellar’s mode of operation is not dissimilar to that of other decentralized payment technologies. It’s network of decentralized servers have a distributed ledger updated 2 to 5 seconds on all nodes. The consensus protocol is what distinguishes Stellar and Bitcoin the most. This consensus protocol is not reliant in the whole miner network for transaction approval. Rather, it uses the Federated Byzantine Agreement (FBA) algorithm, which makes transactions processed faster.
Each Stellar network node chooses another set of nodes deemed “trustworthy”. Once all the nodes with a set approve a transaction, then it is said to be approved. This shortened process is responsible for Stellar network’s high speed and said to process up to 1000 network operations per second.
Why is Stellar better than what exists?
Over hundreds of years of evolution, the modern money system picked up a lot of baggage along the way. Some of these include rent seeking middlemen, and complex currency controls, archaic record keeping system, siloed transactions etc.
Very few banks interact directly and international wire transfers have to pass from banks to banks till the money reaches its destination. A slow and expensive system. Stellar was created to solve these and more kinds of problems.
- Stellar is global and not a national payment system, which means users can move above their local economy to interact directly with the world market. The limit to what you can do is not defined by borders with Stellar. Anyone, wherever they may be on the planet can hold and send fiat currencies.
- As a peer-to-peer network, Stellar let’s users transact with one another, rather than through middlemen.
- Stellar belongs to everyone, therefore, the network is not controlled by any organization so no single entity can shut it off, hoard data or monopolize its functionality.
- Stellar is unlike many distributed systems. It is agnostic, in fact one of its most important feature is that it is easy to tether a token to a traditional asset like the dollar. In essence, Stellar supports all of the world’s currencies, not just cryptocurrencies.
- Transaction fees with Stellar are very low which is a major benefit to its users. Because these low fees, cases like micropayments that aren’t feasible with other systems are possible with Stellar.
The face of Stellar is founder Jed McCaleb. He is well known as the creator Mt. Gox which is infamously remembered for a hack of over $450 million, although Jed was no longer involved with the company. He went on to found Ripple soon after that. He started Stellar shortly after leaving Ripple in 2013 due to ideological differences with the leadership team.
Stellar’s advisory board is made up of some of the most impressive names in the crypto space. They include Matt Mullenweg (Founder of WordPress), Patrick Collison (CEO of Stripe), Naval Ravikant (founder of AngelList) and, Sam Altman (Y Combinator President).
Stellar (XLM) Trading History
Stellar is represented by its coin name XLM and has had an interesting history since its launch. At the end of 2014, the coin had increased by five times, but that runup wasn’t sustained as its price started to fall all through 2015, 2016 until early 2017 when things began picking up for the coin. Within four days in May 2017, the price had shot from $0.00547 (~0.00000363 BTC) to just over $0.047 (~0.0000283 BTC). It is still not clear yet what must have caused such a sharp jump. It is thought, it may have been due to an airdrop by the team, more people learning about the project, or just typical market movements.
Just after that early May rise, the price of XLM basically followed the rest of the market. It grew to an all-time high of $0.91 (~0.000061 BTC) in January 2018 falling for the rest of that year. Having said that, compared to most altcoins, XLM has weathered the bear market better. In fact, while the BTC value of many coins have dropped by 90%, XLM has lost only 50%. It is expected that price should be more positively impacted with the addition of more anchors, partners, and obviously users.
Where to Buy XLM
Stellar Lumens used trade under the XLM and STR ticker. However the sticker was changed permanently to XLM sometime ago, but some exchanges like Poloniex have kept with the old ticker.
The largest XLM trading volume can be found on exchange platforms such as Binance, Bittrex and Poloniex. BTC and ETH trading pairs are supported on Binance and Bittrex while Poloniex supports BTC, USDT and USDC only.
Where to Store XLM
Most of the wallets that are used in storing XLM are either specific to XLM or exist within the Stellar network. One of these called Stronghold, is the distributed exchange built into Stellar’s system. StellarTerm is a client that lets you access the distributed exchange to trade or send funds. A Desktop client specific to XLM currency has also been created. A powerful non-Stellar exclusive wallet is the Ledger Nano S but if you want other hardware wallets, other options are Papaya, Saza and Stargazer.