What is Stellar?
Stellar is the creation of Ripple’s co-founder – Jed McCaleb. The goal he set out was to further improve upon the initial idea of a decentralized protocol for digital to fiat currency transfers across borders. Some of the major partners in this endeavor include large companies such as IBM, Deloitte, Stripe, and others. What makes the Stellar coin unique is the ability to facilitate transactions between any currency pairs while minimizing time and transfer costs. The coin’s units are called Lumens or XLM and their supply is currently at 104 billion with a 1% inflation per year.
Advantages
Stellar’s main advantage over most other cryptos is the ability for Real-Time settlements, transactions are verified within 2 to 5 seconds. Other pros include:
- Low fees – it’s great for micropayments, $0.01 can pay for over 600 thousand transactions
- Cross-border payments – issueless transactions across countries with improved security and verification times
- Liquidity – using Stellar, users and institutions have access to an in-house payment system that allows them to transfer funds, no matter their currency and whether or not it has a tradeable fiat pair
Disadvantages
The main issue you’ll come across when deciding whether to devote yourself to the cryptocurrency Stellar is the broad competition, be that Ripple or traditional SWIFT banking. Other issues you’ll have to contend with are:
- Locked in funds – you need to have at least 1 XLM in your wallet to keep your account active
- Underdog – Stellar’s achievements will always be compared to those of Ripple
History and Evolution
We can trace the origins of Stellar back to the 31st of July 2014. That was the launch date at which Jed McCaleb and Joyce Kim released their product to the public. Initially a fork of Ripple it has had its source code redesigned from the ground up and is now a proprietary solution. Contrary to XRP, however, it’s an open-source. Since its initial inception, Stellar has partnered with many institutions across the globe bringing access to financial services in various developing regions.
Stellar Blockchain
As previously mentioned, Stellar’s blockchain was initially based on that of Ripple. While it used Proof of Stake as a consensus algorithm, in late 2015 a new, proprietary protocol was introduced. Based on the work of Stanford professor David Mazières, SCP or Stellar Consensus Protocol was born. The network remains decentralized, with block times between 2 to 5 seconds. Having in mind, there’s no mining involved, XLM’s blockchain enables fast transactions, which allow for better interconnectivity between various entities around the globe.
Stellar Nodes
To process the transaction volume in Stellar’s network, control consensus and secure the network, having nodes is mandatory. In this case, we have four types, where all submit transaction yet have additional features:
- Watcher nodes – monitoring the current state of the network and activity
- Archiver nodes – recording events on the blockchain for long-term storage
- Basic validator – they actively vote on proposed changes and take part in the consensus
- Full validator – as they can perform all functions in the network, their amount serves as a measure of decentralization and security, as more of them increase redundancy and independence
How to Get Stellar
Unfortunately, the answer to the question “How to mine Stellar coins?” is – you can’t. The only way to obtain XLM coins is via an exchange. You can choose to buy it using fiat money or swap some of your cryptos for it.
Where to Buy XLM coins
Unfortunately, the answer to the question “How to mine Stellar coins?” is – you can’t. The only way to obtain XLM coins is via an exchange. You can choose to buy it using fiat money or swap some of your cryptos for it.
Wallets for Stellar
To get started in the crypto world, the first and foremost thing you need is a wallet. It will serve as your “account number” which will designate where to and from you will transfer funds. It also serves as an access point to your earnings, as coins are not directly stored inside it. While there’s no official wallet available from Stellar, I have prepared a list of alternatives in the upcoming section.
Alternative Wallets
Compared to official releases or “stock” wallets, alternative ones offer users new or improved function. It may be a lower hard drive footprint, faster operation, higher security levels etc. Depending on the type of wallet, you may find different features. I have provided you with a table of recommendations below.
Web/Online Wallets
Hardware Wallets
Network Security
Thanks to the coin’s decentralized nature, anyone can run a Stellar Core Node and validate transactions. To further increase security, you can choose specific validators whom you trust. Another added benefit is atomic transactions – simple, declarative operations that allow the creation of auditable code and fewer security issues.
Future of the XLM Cryptocurrency
According to the official roadmap, we can expect great things from Stellar. One of the goals for 2018 is to launch a decentralized exchange, which would enable users to transact and swap coins between each other, with no fees. Another added benefit would be the possibility to trade Stellar for other cryptos, all without a central authority to oversee the process and thus we’ll have an open market.
Additionally, there’s the potential for a Lightning Network integration into Stellar’s blockchain.
We’ll have to wait and see how all these innovations are going to promote Stellar’s adoption rates.
News and Useful Links
To keep you on track with the most up to date and reliable information concerning the Stellar cryptocurrency, I’ve made available a list of reputable sources, for your convenience.