What is Stellar Lumen (XLM)??
Stellar Lumens (XLM): The Basics
Stellar is a decentralized payment network that allows cross-asset value transfer by using a distributed ledger on the blockchain. The Stellar project intends to provide a faster, cheaper, and secure platform for money transfer that helps to fill the gap between cryptocurrenciesand traditional payment networks. Stellar is managed by a non-profit organization, named Stellar Development Foundation.
Lumen (previously “Stellar”) is the digital currency of Stellar network. It is represented by its ticker “XLM” in the global market. Lumen is used in multiple ways across the Stellar network. Users are required to keep a minimum balance of 0.5 lumens in their accounts in order to help the network to identify inactive accounts. Lumen is also needed to pay a minimal transaction fee of 0.00001 lumens.
Stellar Development
Stellar projected was started by Jed McCaleb (co-founder and Ex CTO of Ripple) and Joyce Kim (former lawyer) in 2014 with the creation of a website "Secret Bitcoin Project", which served to recruit alpha testers for the project.
In July 2014, the Stellar Development Foundation was established with the collaboration of Patrick Collison (CEO of Stripe), which also secured $3 million as an initial investment for the project. This also marked the official launch of Stellar platform.
In April 2015, the Stellar Development Foundation upgraded the Stellar network with the introduction of a new consensus protocol. The upgrade became live during November in same year. With this upgrade, the token name (Stellar) was changed to “Lumen”.
2 What are the benefits of Stellar?.
Stellar Technology & Features
Money flow in the Stellar Network.
Decentralized:
Similar to all cryptocurrencies, Stellar network also leverages blockchain for decentralized advantages that come with blockchain. The network operates on several computers or servers, called nodes, which are connected via internet. These nodes can be anyone, from individuals to organisational entities. Since, whole network is decentralized, it is not controlled by a single party and anyone can join the network to become a node by running a software, called Stellar Core.
Distributed Ledger:
A decentralized ledger is the key benefit of blockchain technology. Stellar network also features a distributed ledger that serves to record all the details about every transaction and account that exists of happens in the network. Every node or server in the network hosts its own copy of the ledger that is in sync with all the other nodes across the network. Node helps to validate the transaction and maintaining records on the ledger.
Stellar Consensus Protocol (SCP):
Consensus is a process in which, all parties are required to reach an ambiguous agreement over a piece of data or information. Stellar network requires a consensus mechanism to facilitate the synchronization and validation of transactional data across all nodes in the network. In the Stellar network consensus is reached by leveraging Stellar Consensus Protocol (SCP) in 2-5 seconds. SCP uses Federated Byzantine Agreement (FBA) algorithm, which was created by David Mazières, professor at Stanford University.
Distributed Exchange:
The Stellar network allows users to place currency exchange offers on the ledger. These offers act as a commitment for exchanging currencies at the rates determined by the users. These exchange offers are arranged in orderbooks with a separate orderbook for each currency. Users can view these orderbooks to have a look on exchange trends followed by currencies. Stellar networks allows exchanging of both fiat and cryptocurrencies, which also include cross transactions between both currency types.
Multi-currency transactions:
A key advantage of Stellar network is its ability to facilitate cross-currency transactions, which means a payer can send payments in his desired currency while the payee can receive the same payment in his desired currency. Users have the liberty to choose either fiat currencies or cryptocurrencies. These transaction can take place in three wars:
– Conversion through an offer
– By using lumens as an intermediary currency
– Through a chain of conversions
Anchors:
Anchors play an important role in the transaction process. They function as a bridge that connects Stellar network and currencies. Anchors are entities (banks and payment processors) that are responsible for taking deposits and issuing credits to the corresponding accounts. Users are required to trust the anchors to honor their deposits and withdrawals of credits issued by the anchors.
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