What is Stellar (XLM)?

For Beginners

What is Stellar (XLM)?

Stellar is the name for an incredibly popular platform used to host decentralized finance institutions, among other things. Its token, also a widely-sought product, is called Lumen (XLM),  although a lot of people just call it Stellar after the home network. So, what is this platform all about?

Origins of Stellar

Stellar was created in 2014 as a fork of the existing Ripple network, supposedly to address some structural issues. Its creators are considered some of the oldest crypto minds that were involved in many early projects, including the very first crypto exchange, Mt. Gox. 

The main issue Stellar wanted to address was the inadequate access to Ripple for the underserved groups of the population, as well as the cross-border transactions that could be improved. The Stellar Development Foundation (SDF), a non-profit organization, oversees the protocol's development even now.

Defining Stellar 

At its core, Stellar operates as an open-source blockchain platform that enables the issuance, exchange, and transfer of various assets, including its native cryptocurrency, XLM. Stellar's network is built on a consensus algorithm known as the Stellar Consensus Protocol (SCP), which allows for quick and secure transaction settlement.

One of Stellar's defining features is its focus on bridging together traditional financial systems and blockchain technology. It aims to create a global payment network that facilitates seamless, low-cost, and near-instantaneous transactions between individuals and institutions, regardless of geographical boundaries.

Stellar has its own blockchain. As a Ripple fork, it uses many of the founding principles of that network, which include low transaction fees, a larger throughput, increased scalability, and greater security. Stellar has all of this, in addition to features that were implemented specifically to provide a better experience for moving money. 

Key Advantages and Use Cases 

Stellar is used by countless individuals and businesses worldwide and there are several good reasons for this demand: 

  • Fast transaction processing time, typically ranging from 2 to 5 seconds, enables quick cross-border settlements and makes micropayments more efficient.
  • Stellar's low transaction fees make it cost-effective for both individual users and businesses, making it a viable solution for financial inclusion in developing regions. 
  • Its built-in decentralized exchange allows for easy conversion between different assets, which massively improves liquidity

It doesn’t just provide a place for people to do cross-border payments. It’s also great for developing tokenized assets, including stablecoins and digitized real-world assets. It makes Stellar an excellent place to develop fundraising projects, as well as to create asset-representative solutions.

The network houses Stellar’s central product – the payment system with the same name that enables transactions between any two users through blockchain using any two at least somewhat relevant fiat or crypto funds. This function brings incredible value besides the benefits of the network itself.

The blockchain has many advantages of its own in terms of its structure, parameters, and what it can offer to developers. It’s an incredible foundation for payment solutions, including money reception in stores and businesses of all stripes. There is a lot of flexibility and potential in Stellar.

The Future of Stellar 

As the blockchain and cryptocurrency industry continues to grow and evolve, Stellar's future appears promising. With an emphasis on financial inclusion and cross-border payments, there’s bound to be a lot of demand for this platform and its token as time goes on.

Collaborations with various financial institutions, non-profits, and tech companies expanded Stellar's network. It can be applied to an even larger number of purposes now. Moreover, its adaptability and scalability make it well-suited to address the changing needs of the digital economy.

Stellar continues to be developed. There are still more features and services scheduled for later release. It means that the network won’t stop expanding in the near future, especially considering that crypto as a whole experiences an unexpected boom in popularity right now.

Summary

Stellar shows great potential. It’s a lucrative target for investments at the moment. It has utility, an established well-tuned network, and a big user base. It’s currently the 21st biggest currency by market capitalization and, hence, popularity. Considering how many cryptocoins there are, it’s an excellent level.