Stellar is a blockchain that’s starting to get noticed. Designed for transferring money easily, and sitting at the number four spot of cryptocurrencies by market capitalization, here’s everything you need to know.
Stellar tokens are known as “lumens” and trade under the moniker of “XLM”. There’s a lot of them around—104,522,958,750 to be precise. That’s 100 billion. Here’s why you might want to start using them.
What Is Stellar?
Stellar is marketed as “the future of banking”. It’s a blockchain project on a mission, aiming to make money transfers fast, reliable, and cheap. In some ways, Stellar overlaps with Bitcoin and many other money transfer projects, but there’s room in this market for many providers, for now at least. Stellar is available for anyone to use, but it’s specifically targeting the unbanked.
If you’re in a country with an unstable economy, or you don’t have or cannot get a bank account, then it’s very difficult to transfer money. Even if you find a service to perform the transfer, significant fees easily eat into your funds. These fees aren’t little either, averaging 20-30%. Stellar aims to reduce these fees down to an insignificant amount.
Stellar was co-founded by Jed McCaleb. Jeb created the Mt. Gox exchange and is the former Chief Technology Officer (CTO) of Ripple/XRP. If that’s enough to put you off, let me explain why this is a non-issue. Would you rather have someone such as Jeb who has previously worked in some huge businesses, and has made all the mistakes in the past, or an unknown person who has yet to make any mistakes? You can be sure that Jeb has learned from his experiences and mistakes of previous companies.
Besides that, a highly experienced team of developers, board members, and advisors all work together on Stellar, including the founder of Stripe, the CEO of Stripe, the founder of WordPress, and the director of the Apache Software Foundation. Now that’s a serious team.
How Does Stellar Work?
Steller works on a decentralized distributed ledger, so exactly like the 2000+ other blockchain projects. If you’re not sure how blockchain works in the first place, then take a read of our really simple guide to blockchain.
Stellar uses a public blockchain, and the Stellar Consensus Protocol whitepaper outlines the technical details, but be warned, it’s very technical, and goes into great detail on specific implementation details, and math. Here are the key details you need to know:
- Decentralized: Anyone can join the network, and there’s no central authority to regulate participation.
- High speed: The network should be able to settle payments in less than a few seconds.
- Flexible trust: Users can trust any number of third parties they need.
- Secure: The digital security can be tuned to provide resilience to increasing computer power.
Most of these concepts are not particularly new or novel, and many blockchain projects aim to accomplish the same thing. What’s special about Stellar is the team driving these concepts. This brilliant group of engineers and visionaries have the foresight to compare and judge different blockchain consensus algorithms.
Stellar charges a tiny transaction fee, to help prevent malicious attacks. This is currently 100 Stroops (0.0000100 XLM) per transaction. This is small enough to be insignificant for the vast majority of uses, but enough to prevent someone from flooding the network with tens of thousands of spam requests.
It’s not possible to mine XLM. 100 billion Stellars were issued at launch, and each year a fixed 1% of new Stellars are created. These account for inflation and economic growth, along with replenishing any lost Stellars. The Stellar Development Foundation is a non-profit organization charged with managing and distributing these new coins. The way they do this is through a series of regular giveaways and airdrops.
How Much Does Stellar Cost?
One Stellar currently costs $0.11, but that’s significantly down from its all-time high of $0.87, which was reached during the wild highs of January 2018. It was only in May 2017 that Stellar started to gain any traction on the price at all, so climbing to nearly a dollar in less than a year is quite impressive.
You can buy Stellar from most of the big exchanges. It’s the fourth largest cryptocurrency by market cap, so you won’t have any problems with the big players. There’s no local Bitcoins equivalent website for Stellar, and you can’t buy it on beginner-friendly website Coinbase… yet.
What’s Stellar’s Future Potential?
When you look at the number of successful companies founded by key members of the Stellar team, it’s easy to imagine a bright future. With computer giant IBM working on their own Stellar-powered blockchain, it’s clearly doing something right.
With near-instant settlement speed, a steady supply of tokens, and no Proof of Work consensus algorithm to consume vast amounts of electricity, Stellar swiftly sidesteps many of the problems plaguing other similar projects.
In my opinion, Stellar will continue to grow as a strong yet stable cryptocurrency, even if that means going at a slower pace when compared to some of the more “lively” cryptocurrencies. I’ll take strong and stable any day over dramatic and dangerous.
By targeting the unbanked, Stellar has a chance to corner the market in a potentially huge way. Naturally, there will always be naysayers who hate it. By its very nature, pre-mined coins (all coins distributed at the project launch) attract a lot of scrutinies, but if a project can’t handle the pressure from the haters, then there’s no way it can handle any real pressure such as government regulation.
Join the Stellar Community
There’s no shortage of ways to get involved with Stellar. The Stellar website is a good place to start. If you’re a technically minded person, you can visit the Stellar GitHub repository and start contributing immediately. Here are several of Stellar’s online communities:
There’s not currently an active Stellar Slack community, maybe you could start one. Let us know in the comments below what you think of Stellar, and if there are any thriving Stellar communities we should know about.