Stellar is a financial platform that uses the cryptocurrency, XLM, to initiate quick and secure global payments. This decentralized, open-source protocol has been a leading cryptocurrency by market capitalization. It has multiplied in popularity due to its wide range of applications. Several of the world’s leading financial institutions have adopted their technologies since Stellar’s inception.
Stellar was derived from a fork of the Ripple payment protocol. In 2014, Ripple co-founder Jed McCaleb launched the network under their nonprofit organization, Stellar Development Foundation (SDF). The Stellar Development Foundation began when McCaleb joined forces with payment processing mogul, Patrick Collison. Collison was the CEO Stripe and invested 3 million dollars of seed funding in Stellar in exchange for 2 billion Stellar.
Stellar’s native cryptocurrency was eventually changed from “Stellar” to Lumens (XLM). In 2015, The Stellar Foundation released an updated protocol which was developed by Stanford professor, David Mazières. In 2017, Lightyear.io was launched as Stellar’s for-profit, commercial global protocol. Lightyear.io is almost an entirely separate company from Stellar, with a different board of directors and staff of employees. However, both entities are heavily in support of Stellar’s common goals with their own set of specialized tasks.
The Stellar Consensus Protocol (SCP), or Federated Byzantine Agreement is Stellar’s backbone for accurately recording financial transactions. The system uses a “consensus” process to determine which transactions apply to the current ledger, which keeps everything in sync. Some of SCP noted features are low latency, high security, and decentralized control.
One of Stellar’s overarching differentiators is to provide a real-world application with their platform. Additionally, Stellar can separate themselves from other cryptocurrencies with their impressive transaction times. Stellar can initiate transactions within 2 to 5 seconds, which is significantly faster than other altcoins that can take several minutes.
XLM is the abbreviated ticker for Stellar’s native cryptocurrency, Lumens. While the currency itself was previously named synonymously with the company, they changed it to Lumens in 2015. Stellar wanted to make sure that their native currency was not to be confused with the Stellar network or their nonprofit endeavors. With 100 billion Lumens created at the launch of the company, there is currently a 1% inflation rate every year. Unlike other cryptocurrencies such as Bitcoin, Lumens cannot be mined. There is a fixed number of the currency which is controlled by the organization itself. This commonality can be found in other cryptocurrencies such as Ripple.
As of current, US residents will not be able to find an exchange to purchase Lumens directly. You’ll need to register with an official online exchange (Coinbase, Bitstamp, Kraken, etc.). Second, you will need an account with a cryptocurrency exchange like Binance or KuCoin. You can then use Bitcoin or Ether to purchase Lumens. Some exchange platforms are easier to navigate than others. Therefore, it is always wise to do extensive research to decide which best suits your needs.
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