Stellar is an open-source network used for currencies and payments. It gives individuals the ability to create, send and trade digital forms of money, for example, dollars, pesos, bitcoin, and many more. It is built in a way that all monetary networks can work together under the same roof.
Who runs Stellar?
Stellar is owned by the public with no single owner. Millions of transactions are made daily by this decentralized open network. Similar to Bitcoin and Ethereum; Stellar relies on blockchain to keep the network secure and in sync. It is a more efficient, cheaper more energy-efficient blockchain system.
What is it for?
The Stellar network launched in 2014 has handled about 450 operations. An average of about 4 million individuals have used Stellar. Companies and small start-ups alike have used it as a means of transferring money and accessing new markets. Stellar has always been cryptocurrency-adjacent, but the program is here to complement rather than disrupt the existing financial system. Whereas the Bitcoin network, for example, is specifically for trading bitcoins. Stellar is a decentralized system that can trade any type of currency in a transparent and efficient manner.
The native digital currency used on the Stellar network is a Lumen. Stellar doesn’t require the use of any specific currency. Rather its purpose is to make use of traditional forms of money that people have been using spending and saving for quite some time and make it useful and accessible.
One of the things done with Stellar is creating a digital representation of the U.S. dollar. On Stellar, this would be a “dollar token”. When someone returns the dollar token you promise to redeem it in exchange for the regular dollar. You are essentially setting up a 1:1 relationship between the digital token and the dollar. Every token is equivalent worth of the dollar, therefore people holding the token can treat it like traditional money.
Who builds on Stellar?
Stellar is a fast and efficient network for trading, saving, and spending digital money for end-users. It’s an open financial infrastructure for developers. Everybody has access; no permission or application is necessary. Currency tokens such as euros, bitcoins, dollars, Mexican pesos, Brazilian reais, Nigerian Naira, and Argentinian pesos are all accessible and ready to use on the network. The issuers are to deal with the deposit and compliance and the builders focus on end-user experience. The same applies to the token layer. Any financial institution can come out with a new digital token to fill the needs of a certain market. In this way, the power of Stellar grows with each new company and developer.
How does It work?
By the use of a ledger Stellar is a system that can track ownership. However, in its case, there is no actual accountant instead there is a network of independent computers that examine the work of others. As we mentioned before it is a system with no central authority therefore no one can stop the functionality of the system.
An algorithm called the Stellar Consensus Protocol (SCP) keeps the system in sync. In order to come to an agreement on a decentralized system, the most famous method is the proof of work method. SCP shows its success by being a fast and highly energy-efficient network.
Where is Stellar going?
Simply put, it enables a future in which ordinary people may transmit money anywhere for a reasonable price and in a timely manner. The Stellar Development Foundation believes that the true power of the modern digital economy is only when currency can travel freely around the world. Stellar is here for this purpose.
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