What is cryptocurrency Stellar (XLM) and how does it work? Definition from Digimagg

What is Stellar (XLM)?

Occasionally, you might encounter the term "Stellar Lumens," but it's a misnomer. Stellar refers to the network, while Lumens are its native cryptocurrency unit.

The Stellar Network operates on a decentralized peer-to-peer framework, with Lumens (XLM) serving as its token.

Stellar's concept revolves around enabling users to transfer various assets, from traditional currencies to tokens representing diverse assets such as dollars, euros, bitcoin, stocks, or gold, seamlessly within its service. Lumens facilitate these transactions with reduced friction between users.

How does Stellar work?

Stellar operates as a decentralized network of servers on the blockchain, where each server runs autonomously. This setup ensures that each node is interconnected but remains unmonitored by any central authority. Transactions are enabled through synchronization and consensus among nodes, facilitating widespread and equitable distribution of the ledger. Any individual can become a verification node (server) using the Stellar Consensus Protocol (SCP) and the Stellar Core.

SCP, Stellar's algorithm for transaction verification, enables rapid and efficient scaling of the network, surpassing the capabilities of many proof-of-work blockchains like Bitcoin. Additionally, the network is theoretically more decentralized thanks to the utilization of "anchors."

Anchors serve as trusted entities responsible for managing users' deposits and issuing credits onto the blockchain. They act as a vital link between different digital assets and the Stellar blockchain.

Who established Stellar?

Jed McCaleb, the creator of Lumens and co-founder of Stellar, established the Stellar Development Foundation, leading the team of developers behind the project. McCaleb is also renowned in the crypto industry as the founder of the first major Bitcoin exchange, Mt Gox.

Previously serving as the Chief Technology Officer (CTO) of Ripple, a company prominent in the development of the XRP Ledger, McCaleb departed from the project in 2013 to create Stellar.

Other key figures in the XLM ecosystem include David Mazieres, the creator of the Stellar consensus protocol, Denelle Dixon, the Executive Director and CEO of SDF, and Joyce Kim, the co-founder of Stellar and former Executive Director of SDF.

What sets Stellar apart from other platforms?

Stellar stands out due to its comprehensive offering, boasting attributes like:

• Absolute decentralization
• User-friendly interface
• Compatibility with various currencies and asset categories
• Swift, virtually cost-free transactions

What attributes contribute to the value of Stellar?

Although Stellar initially launched with a plan for 1% inflation annually, its economic dynamics have evolved over time.

By late 2019, the 1% annual subsidy was discontinued as Stellar users voted to cease the programmatic supply expansions. Concurrently, the Stellar Development Foundation opted to diminish its share of the XLM supply, regulating the XLM economy.

Beyond its finite supply, Stellar garners value from its existing use cases and its capacity to facilitate inexpensive and efficient cross-border transfers of digital assets.

What is the circulating supply of Stellar (XLM) coins?

Upon its inception, Stellar distributed 100 billion Lumens (XLM), with the total supply growing by 1% annually until reaching 105 billion in circulation. However, post-2019, this figure decreased to slightly over 50 billion.

Additionally, each transaction in XLM results in the burning of 100 Stroops (0.00001 XLM), serving to deter malicious actors from flooding the blockchain with empty transactions.

Other technical data

Stellar hit its peak value of $0.889 in January 2018. Despite facing challenges, particularly amid the broader market downturn following the cryptocurrency bubble burst, XLM is experiencing a resurgence in price, gradually building momentum alongside the increasing popularity of the crypto sector.

What measures are in place to ensure the security of the Stellar Network?

Stellar's network achieves full decentralization by enabling anyone to become a validator node, enhancing its security. Furthermore, it addresses the common issue faced by many zero-transaction blockchains—void transaction spamming—by introducing a nominal fee for each transaction.

How does one utilize Stellar?

XLM's potency stems from the expansive Stellar network, which has forged partnerships globally. Notably, it has integrated with Samsung Mobile and collaborates with renowned entities such as IBM, Stripe, Wirex, SureRemit, Smartlands, among others.

How can one select a Stellar wallet?

Stellar, being a prominent cryptocurrency, is compatible with various wallets, offering users a range of options to suit their preferences.

Kriptomat presents a secure storage solution for XLM tokens, facilitating both storage and trading seamlessly. By storing XLM with Kriptomat, users benefit from top-tier security measures and intuitive features.

Trading XLM, purchasing or exchanging it for other cryptocurrencies, can be swiftly executed through our secure platform, ensuring a seamless storage solution.

Stellar mining

Given its fixed total supply and the maximum XLM already in circulation, Stellar does not involve any mining or staking processes.

In summary, Stellar serves as a cryptocurrency striving to function as a cross-border payment system for digitized assets or currencies. Often viewed as a decentralized alternative to XRP, it primarily targets consumers rather than institutions.