Stellar: A Quick Overview
The crypto-markets, including bitcoin of course, are on the rise again. Not just mainstream cryptos like Ethereum are going up. A newcomer to the spotlight, Stellar Lumens (XLM), has increased by more than 65% in value since December 29th, 2017. It is now the 7th largest cryptocurrency with a market capitalization of nearly $12 billion (CoinMarketCap). XLM is actively trading on major cryptocurrency exchanges like Binance, Bittrex, and Poloniex. Since this crypto has shot up so quickly, some folks might not be quite familiar with what it is. Therefore, I’ll do a quick overview of it.
According to the company’s official website, Stellar is an open-source, distributed and hybrid blockchain. With its technology, users can conduct international monetary transactions, involving different currencies. So, how is this different from using traditional methods? Well, if you use Stellar’s technology, they claim that the same transactions are supposed to be more cost effective (low transaction fees) and faster.
Confirmation times are reported to be between three to five seconds. In addition, thousands of transactions can be processed per second. Compare this to bitcoin, which has 10 minute transaction times. So, how does it manage to do this? As most crypto-enthusiasts are aware, bitcoin uses the proof-of-work algorithm (PoS). Instead of PoS, Stellar uses the Stellar Consensus Protocol (SCP).
Where Did It Come From?
It was founded in 2014 by Jed McCaleb and Joyce Kim and started off by using Ripple’s protocol. After there was a fork in the Stellar’s Network, the SCP was introduced. It’s different from Ripple’s protocol in that it uses federated Byzantine Agreement (FBA), another type of consensus protocol. Therefore, the source code for Stellar is completely different from that of Ripple.
Lumens (XLM) cannot be mined, like bitcoins. All Lumens are created right from the very beginning, just like on the NXT platform. One of main ideas is to turn it into a better version of Paypal. It’s supposed to be better than Paypal and traditional bank transfers because fund transfers can happen more securely and with much less latency. These are all claims stated in the company’s whitepaper. So, a lot of people are not entirely convinced by these claims.
Possible Reasons behind Stellar’s Surge
Stellar’s Lumens was recently added to OKEx, a large cryptocurrency exchange based in Hong Kong. The announcement came on December 28th, 2017. After the news hit the markets, XLM prices increased dramatically. Pundi X, a blockchain startup that aims to enable people to sell cryptocurrency at any physical store worldwide, also partnered with Stellar.org on December 21st, 2017. This news has also been received well.
Both Pundi X and Stellar will be integrating each others technologies, which should greatly open up markets for XLM in the South East Asia region. Pundi X is based in Indonesia and China. Indonesia has the largest economy in South East Asia, and it’s growing rapidly. The country also has a population of over 261 million. So, these strategic global partnerships could be highly beneficial to Stellar’s growth and popularity, as long as the technology behind it can truly prove itself.