STELLAR (XLM) – A BRIEF INTRO FOR INVESTORS
A decentralized peer-to-peer payments network poised to be a better version of PayPal that’s more flexible and secure.
- Stellar is a fork from the Ripple protocol
- Operated by the non-profit Stellar Development Foundation (SDF)
- Blockchain consensus occurs every 2 to 4 seconds
- Already partnered with developing nations in Africa and Asia, along with corporate partnerships with IBM and Deloitte
- It’s coin, Lumens, are the native network token and are used to power the blockchain and facilitate transactions
- The Stellar Decentralized Exchange allows users to find the best rates for foreign exchange transactions without a centralized third-party
Initially, 100 billion tokens were created and slowly distributed to the market through airdrops, giveaways, and auctions. An inflation rate of 1% per year (in perpetuity) is to be expected. In 2014 Stellar received a $3 million loan from Stripe in exchange for 2 billion tokens. Additionally, the Stellar Development Foundation (SDF) owns 5% of the coin supply.
Stellar has much of the same functionality as Ripple but has implemented its own Stellar Consensus Protocol, which requires communication between network servers instead of energy intensive proof-of-work mining.
Stellar operates on a public blockchain where all transactions are visible along with pseudonymous user information.
Founder Jed McCaleb founded cryptocurrency exchange Mt. Gox and Ripple before having a falling out with its board and leaving to start Stellar. A team of advisors including Naval Ravikant and Stripe co-founder Patrick Collison bring a great deal of clout.
Instantaneous foreign exchange transactions with cheap fees make Stellar a prime target for cross-border payments and micro-transactions.
Stellar utilizes trusted financial institutions known as ‘anchors’ in the system, to help secure global transactions in record times for a fraction of the cost of competitors.
Instead of waiting for banks to take days to verify transactions, they can now be instantaneous once verified on the blockchain. Additionally, fees for transacting, which are calculated in Stellar’s native Lumen token, are a fraction of the bank transfer fees seen in the finance industry today.
Lumens also operate as a bridge currency to facilitate trades across markets with very little liquidity. These factors could play a large role in the developing world, making microtransactions a reality for the unbanked.
HOW TO BUY
Stellar Lumens can be purchased for fiat currency, as well as Bitcoin or Ether on major cryptocurrency exchanges. After depositing the appropriate currency, follow the directions of the applicable exchange to purchase Lumens. Note that Lumens are referred to by two different symbols depending on the exchange, XLM and STR.