What Is XLM
Stellar network (XLM) is a decentralized, peer-to-peer digital currency network that was launched in 2015. Stellar is a payment technology aiming to connect financial institutions, payments systems, and people through blockchain technology and drastically reduce the transaction cost and time required for cross-border transfers.
The idea behind the Stellar network is to bring the world's financial systems together under one network by making it easier and faster for people to create, trade, and send different types of currencies across the globe. In addition to facilitating low-cost, cross-asset transfers of value, Stellar aims to provide banking services and liquidity to developing markets.
Stellar Lumens, traded under the symbol XLM, is the native asset of the Stellar Development Foundation. Lumens are cryptographically secured digital representations of liquid cash equivalents for nearly instant, ultra-low fee global payments, and remittances.
Stellar Founders
The network system Stellar was co-founded by current chief architect Jed McCaleb, former lawyer Joyce Kim, who has since left Stellar, and current chief scientist David Mazières.
Jed McCaleb is a longtime cryptocurrency entrepreneur who founded Bitcoin exchange Mt. Gox and co-founded blockchain-based payment system Ripple Labs.
Stellar began in 2014 when Jed McCaleb left Ripple, a platform he co-founded, to create a new financial system. McCaleb and Joyce Kim launched Stellar as a platform for low-cost cross-border payments.
The Stellar Development Foundation is a nonprofit created alongside Patrick Collison, the CEO and co-founder of Stripe, and Stripe's $3 million investment. The foundation's goal is to build a more inclusive global marketplace and unlock the world's economic potential by "making money more fluid, markets more open, and people more empowered."
McCaleb told CoinMarketCap in 2020: "The whole original design of Stellar is that you can have fiat currencies and other kinds of forms of value run in parallel with each other and with crypto assets. This is super important to drive this stuff mainstream."
How Does XLM Work
Stellar runs a network of decentralized servers with a distributed ledger that is updated every 2 to 5 seconds among all nodes. Stellar's core distinguishing factor is its consensus protocol, which uses the Federated Byzantine Agreement (FBA) algorithm to process as many as 1,000 network operations per second.
Stellar's core advantage is interoperability, helping create, send, trade, and convert digital currencies very efficiently on a single platform. It also offers affordable and fast transactions and is energy efficient.
Like most cryptocurrencies, the Stellar Lumen (XLM) has seen significant price spikes and valleys. The XLM price rose by an astounding 34,900% in 2017, less than four years after the network's launch, a massive return on investment (ROI) for early speculators and cryptocurrency enthusiasts backing the project.
In 2018, the value tumbled by 77%, but the price was relatively stable throughout 2019 and 2020. The Stellar Foundation originally had over 100 billion lumens in existence but burned roughly half of its outstanding coins in November 2019. The move induced a price jump, though the rally quickly faded.
Performance improved in 2021, with an increase of 226% from January through March. Its market cap as of Sept. 23, 2021, was $6.96 billion.
The network has a good list of partners, including IBM, Stripe, HTC Exodus, SureRemit, Bitbond, Smartlands, Tempo, Wirex, Franklin Templeton, Flutterwave, Saldo, Novatti group, and Baracoin.
In 2018, Stellar signed a deal with TransferTo for cross-border payments to more than 70 nations. Stellar also became the first distributed technology ledger to obtain a Shariah-compliance certificate for payments and asset tokenization. It teamed up with IBM to release World Wire, a digital financial infrastructure project that makes it cheap and easy for financial institutions to send any currency anywhere in the world using Stellar.
At a conference in 2017, McCaleb confirmed that 30 banks signed up to use Stellar's blockchain for cross-border transfers. If you want to purchase Stellar, go ahead and check out our article on how to buy Stellar XLM.
XLM Network Security
The network is highly secured by using Stellar Consensus Protocol (SCP), which has the main features of low latency, asymptomatic security, decentralized control, and flexible trust. Stellar's network is fully decentralized as anyone can become a validator node, thus making it very secure. That means no single individual, coordinated group, or entity can modify the blockchain with a majority of decision-making power.
Low latency means low network congestion so that transactions are confirmed within seconds and for low transaction fees.
Asymptotic security means security mathematically approaching 100% validation of legitimate changes to the distributed ledger on the Stellar network. SCP employs a combination of Proof of Authority (PoA), Proof of Personhood (PoP), Proof of Space (PoS), Proof of Stake (also PoS), and Proof of Work (PoW) to maintain consensus and secure the blockchain against bad actors.
On top of that, the project solved the main problem of many zero-transaction blockchains – void transaction spamming – by implementing a minuscule fee for each transaction.
premium
