What Is Stellar (XLM)?

Launched in 2014, Stellar aims to bridge the gap between traditional financial systems and digital currencies, enabling seamless transfers of value across borders. The native cryptocurrency of the Stellar network is called Lumens (XLM), which serves as a bridge currency and helps prevent spam within the network.

How Does Stellar Work?

Stellar operates through a network of decentralized servers that maintain a distributed ledger. This ledger records every transaction made on the network, ensuring transparency and security.

Stellar's consensus protocol, known as the Stellar Consensus Protocol (SCP), allows for faster and more efficient transaction validation compared to traditional Proof of Work (PoW) blockchains.

SCP achieves consensus through a process of quorum slices, where each node selects a set of other nodes it trusts, leading to a decentralized agreement on the state of the ledger.

SCP is written in a variety of popular blockchain programming languages, including Java, JavaScript, Python, Ruby, .Net, Scala, C++, and Go.

Who Are the Founders of Stellar?

Stellar was co-founded by Jed McCaleb and Joyce Kim.

Jed McCaleb is a well-known figure in the cryptocurrency space, having previously founded the now-defunct Mt. Gox exchange and co-founded Ripple. Joyce Kim is an experienced venture capitalist and lawyer who has worked extensively in the tech industry.

Together, they envisioned Stellar as a solution to the inefficiencies and high costs associated with traditional financial systems.

What Makes Stellar Unique?

Several features make Stellar stand out in the crowded cryptocurrency space:

1. Focus on Financial Inclusion: Stellar aims to provide financial services to the unbanked and underbanked populations worldwide by reducing transaction costs and increasing accessibility.
2. Partnerships with Financial Institutions: Stellar has forged partnerships with various financial institutions and fintech companies, enhancing its credibility and reach.
3. Stellar Development Foundation (SDF): The non-profit organization behind Stellar, SDF, is dedicated to the growth and development of the network. SDF’s focus on fostering innovation and collaboration sets Stellar apart.
4. Low Transaction Fees: Stellar's network fees are extremely low, often costing a fraction of a cent per transaction, making it an attractive option for micropayments and remittances.

What Gives Stellar Value?

The Stellar (XLM) price is derived from several factors:

1. Utility: XLM is used to pay for transaction fees and as a bridge currency in cross-border transactions.
2. Adoption: Stellar’s partnerships with major financial institutions and integration with various fintech platforms drive its demand and usage.
3. Technology: Stellar’s efficient consensus protocol and focus on financial inclusion make it a valuable asset in the blockchain ecosystem.
4. Scarcity: The limited supply of XLM, coupled with its utility and adoption, contributes to its value.

How Many Stellar (XLM) Coins Are in Circulation?

As of July 2024, there are approximately 29.3 billion XLM coins in circulation out of a total supply of 50 billion. Initially, Stellar previously had a supply of 100 billion XLM, but the Stellar Development Foundation burned 50 billion coins in 2019 to streamline the tokenomics and increase the value of the remaining coins.

Stellar FAQ

How is Stellar different from other cryptocurrencies?
Stellar differentiates itself through its focus on facilitating cross-border transactions and financial inclusion. Unlike many cryptocurrencies that primarily serve as digital assets or stores of value, Stellar aims to integrate with existing financial systems and provide affordable financial services to underserved populations.

Can you mine Stellar (XLM)?
No, Stellar Lumens (XLM) cannot be mined like other cryptocurrencies like Bitcoin or Ethereum because the entire supply was pre-mined when the Stellar network launched. When it launhced, Stellar used inflation to create new lumens. However, in 2019, the project implemented a protocol upgrade that ended inflation.

What is the purpose of the Stellar network?
The primary purpose of the Stellar network is to enable fast, low-cost international transactions. Stellar aims to connect financial institutions, payment systems, and individuals, allowing for seamless transfers of value across borders.

How can I buy Stellar (XLM)?
You can buy Stellar (XLM) on various cryptocurrency exchanges such as Binance, Coinbase, and Kraken. After creating an account on one of these exchanges, you can purchase XLM using fiat currency (e.g., USD, EUR) or other cryptocurrencies (e.g., BTC, ETH).

What are the benefits of using Stellar (XLM)?
Stellar (XLM) offers several benefits, including:

1. Low Transaction Fees: Stellar's transaction fees are minimal, making it an attractive option for micropayments and remittances.
2. Fast Transactions: Transactions on the Stellar network are processed quickly, often within a few seconds.
3. Financial Inclusion: Stellar aims to provide financial services to underserved populations, promoting global financial inclusion.
4. Interoperability: Stellar's ability to connect different financial systems and facilitate cross-border transactions enhances its utility and adoption.

How does Stellar's consensus mechanism work?
Stellar's consensus mechanism, the Stellar Consensus Protocol (SCP), relies on a process of quorum slices and federated Byzantine agreement to achieve consensus.

Each node in the network selects a set of other nodes it trusts, and these quorum slices overlap to form a network-wide consensus. This approach allows for faster and more efficient transaction validation compared to traditional proof-of-work (PoW) systems, making Stellar a highly efficient and secure blockchain platform.

Conclusion

Stellar (XLM) is a unique and valuable blockchain platform designed to facilitate fast, low-cost international transactions. Its focus on financial inclusion, efficient consensus mechanism, and strong partnerships make it a standout in the cryptocurrency space.

Whether you're interested in using Stellar for cross-border payments or investing in its native cryptocurrency, XLM, Stellar offers a range of benefits and opportunities for users worldwide.

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