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This article aims at analyzing what XLM (Stellar) is, how it functions, its features, and the person behind the cryptocurrency. It is one of the top cryptocurrencies in the market and has been in existence since 2014.
What is XLM (Stellar)?
Stellar is a coin that was created by Joyce Kim and Jed McCaleb in 2014. It was initiated after Jed co-founded Ripple and Mt. Gox., a cryptocurrency exchange. The XLM Exchange connects people, banks, and payment systems, and its main purpose is to offer cheap and speedy transfers to individuals and companies who use blockchain technology.
Advancement in technology allows people to share information globally in a quick and easy way. And this has been helping many companies to improve their performance as well as making society more efficient. However, at some point, the movement of funds from one country to another country became difficult – slow and expensive.
Jed has been trying to improve people’s access to cryptocurrency and the way they handle digital assets. As a result, he created a huge crypto exchange, Mt. Gox. He became a co-founder of Ripple, the main competitor of Stellar; he also co-founded Stellar.
Stellar has a decentralized, open database. It allows people to receive and send funds within 3-5 seconds. The platform also supports up to a thousand transactions per second. This makes it faster than other platforms like Ethereum and Bitcoin.
Additionally, the network moves funds around the world using Lumens, a big cryptocurrency denoted by XLM. Banks connect to the network to enable individuals to send money in a quick and less stressful way. Thus, they incorporate blockchain technology and cryptocurrency into the traditional system of banking.
You can send money to another country using the fiat currency of your own country and the receiver will cash it in their own local currency. This kind of transaction is possible with XLM assets or other coins in the Stellar network.
How Does the Network Function?
We mentioned earlier that Stellar operates as a decentralized platform. This implies that it has no central authority that controls the transactions. With the use of blockchain technology, people can safely store all received and sent XLM information. The transactions are verified in the network via the consensus protocol owned by Stellar. You may want to read more about the consensus protocol here.
Furthermore, anchors in the network allow users to obtain credits when they need them. The anchors hold deposits made by individuals and companies and issue credits for them. They also ensure that people can send money in one currency while the other party receives it in another fiat currency.
The network uses a mechanism known as the conversion chain. This makes transactions between 2 illiquid currencies possible. For instance, when transacting between INR and MXN, you can exchange MXN for USD. You can then change the USD to BTC before exchanging it for XLM. At this point, you can trade XLM for INR.
Features of the Stellar Blockchain
The features of the blockchain are:
- It has a decentralized, open database
- The confirmation time for each transaction is around 3 – 5 seconds
- The platform allows up to a thousand and more transactions each second
- It uses its own consensus protocol
- It allows smart contracts and multi signatures
- Its token is known as Lumen, denoted by XLM
- It has a fixed 1% annual inflation
You may want to read more on the Stellar blockchain here: https://www.investopedia.com/news/what-stellar/.
What are Lumens?
Lumens are the digital currency for the Stellar network. They are built into Stellar’s platform and you can consider them as the unit of cryptocurrency just like Bitcoin. The coin came on board in 2014 and the team issued a hundred billion Lumens. Previously, Lumens were called Stellars until 2015 when the name was changed.
Lumens serve dual purposes. First, they serve as anti-spam since people use them to pay for transactions as well as deposit funds in their Stellar accounts. Hence, they stop users from staggering the network. They also aid in prioritization.
Second, they facilitate transactions in multiple currencies. This means that you can trade between different currencies where you cannot find a direct market. Hence, Lumens act as a bridge. However, a liquid market must exist between them and the other currencies involved.
Conclusion
XLM (stellar) is among the most popular cryptocurrencies that you can find. Despite the fact that its competitors are many, it has different features that distinguish it.
