The development of the cryptocurrency market has only increased the manifestation of problems in centralized trading platforms. The main ones are:
- Regular attacks by hackers;
- Owner fraud;
- Attacks from government regulators;
- Lack of access to users’ wallets.
This pushes developers to create distributed exchange trading platforms.
The Stellar project should provide users with free, secure and cheap access to currency exchange transactions and payments. The system offers to perform the following operations with money on its platform:
- Easy conversion of assets;
- Exchange of cryptocurrencies at favorable rates;
- Lending and deposits;
- Secure storage of funds.
Stellar Coin (XLM) and its main features
Cryptocurrency Stellar Lumens was introduced in order to ensure the smooth functioning of the platform. The founders of the project do not aim to turn it into a full-fledged means of payment. XLM coin is used to charge for transactions and to invest in the project.
Based on this, to assess the prospects of this cryptocurrency, it is necessary to consider the entire Stellar platform.
The main feature of the project can be considered the use of open source code and its high scalability. Testing has shown the possibility of several thousand transactions per second with a confirmation rate of 3 to 5 seconds.
The use of SCP’s own consensus mechanism allows exchanges between cryptocurrencies, tokens, fiat money or other assets within one platform. This distinguishes the Stellar project from similar projects based on the POW algorithm. Even more features on the project will be available through the introduction of smart contracts and multi-signature technology.
The Stellar project allows the exchange with a negligible commission, that is almost free of charge. The use of modern high-quality technology attracts the attention of large companies to the project. This greatly expands the scope of its dissemination and application. With the growing number of attracted partners the demand for the internal currency XLM will increase, which will certainly be reflected in its value.
History of the project, its authors and management
The first launch of the Stellar network took place in 2014 as a result of the separation from the Ripple blockchain. The entire software part of the project was based on it, but a year later its own open-source protocol was finalized, and the internal coin was renamed from Stellar to Lumens (XLM). In fact, the story of Stellar’s birth is quite dramatic, as is the career of its creator Jed McCaleb. These things deserve a separate article. If you want, you can read about how Stellar cryptocurrency came to be by following this link. Just a few words about other key figures of the project.
In addition to Jed McCaleb, the founder of the project is Joyce Kim. Stellar is a non-profit company, run by a four-person board of directors:
- Keith Rabois is a well-known investor and former top executive at PayPal;
- Jed McCaleb is Co-Founder and Chief Architect at Stellar Development Foundation;
- Lin-Hua Wu – VP Global Communications and Public Affairs for Google;
- Ronaldo Lemos is Professor of International and Public Affairs and Partner at PNM Advogados
There are 11 permanent team members and six brought in advisors working on the project.
The company has several openings for programming and marketing specialists.
The issue volume of cryptocurrency Stellar Lumens
The project had a one-time issue of Stellar Lumen coins in the amount of about 100 billion. In the future there will be a weekly issue of coins in the amount of 1% of the total volume per year. The distribution of Lumens is carried out according to this plan:
- 50% are reserved for free distribution to as many people as possible;
- 25% will be distributed to non-profit organizations and companies;
- 20% to be distributed to Bitcoin and Ripple owners;
- 5% is set aside to cover company expenses.
No new coins will be mined.
How the project works
The Stellar ecosystem is a distributed consensus platform used to exchange any coins or assets with each other. The internal cryptocurrency XLM plays the role of a measure of value in transactions with different values. It can be thought of as a bridge through which counterparties can make payments in a form that is convenient for them.
For example, a user wants to pay for an item in bitcoins and a seller wants to receive ether. To make a transaction, it is necessary to register in the Stellar system, select the direction of the exchange, and the system will automatically conduct the transaction.
The work of the entire transaction system is provided by the decentralized exchange of the project. It operates on an algorithm of its own design SCP, which is a protocol for achieving consensus in the network.
At the core of the system Stellar lies a decentralized database (ledger). It securely records and stores all data on the transactions and deals.
Functioning is provided by a peer-to-peer network of nodes, independent of each other. Failure of some of them will not affect the operation of the entire system.A fee of only 0.0001 XLM is charged for conducting transactions.
The basis of success on the currency exchange market for the Stellar project is considered a number of key features:
- Open access source code, and a fully decentralized platform;
- a peer-to-peer network within which each participant has the same rights;
- high throughput – about 1000 transactions per second and minimum transaction confirmation time of about 4-5 seconds;
- support of almost all cryptocurrencies and the ability to synchronize with third-party financial systems;
- high degree of security through the use of cryptographic security methods.
Some of the disadvantages of the platform can be considered the mandatory minimum amount on the balance. It is 20 XLM and is set to protect against bot attacks, which can negatively affect the speed of the entire system.
Where you can buy XLM cryptocurrency
You can buy Stellar Lumens XLM cryptocurrency on many popular crypto exchanges, such as:
- Kraken – Lumens is traded in pairs with bitcoin and ether;
- Bittrex – Lumens can be bought for ether or bitcoins;
- Poloniex – Lumens is only available to exchange for bitcoins;
- Binance – Lumens coins can be bought not only for bitcoins or ether, but also for the internal token of Binance Coin exchange.
How to mine XLM
Classic mining for Stellar Lumens coin is not provided. In order to compensate for inflation and the possible loss of coins there will be a weekly issuance of up to 1% per year. The distribution of new coins will be done by direct voting. But starting with the protocol version 12 Stellar canceled the inflationary mechanism.
Prospects for the cryptocurrency
An analysis of the cryptocurrency Stellar suggests that this coin still has the potential to take a leading place among digital assets. However, the developers still need to put a lot of effort to make this happen. At the time of writing (end of 2021), Stellar is 25th in terms of capitalization (which of course is also a great result), but we must remember that a year ago it was firmly in the top 20.
Yes, the world of cryptocurrency does not stand still, so even a small halt in the development of the project immediately gives a serious advantage to competitors. Obviously, the development of the Stellar platform will depend on the number of partnership agreements signed. Especially agreements with large companies will have an impact, for example, after concluding a partnership agreement with IBM, you could see an unprecedented increase in the value of XLM. Therefore, if you are going to invest in Stellar (XLM), keep a close eye on the news regarding this crypto asset.