Stellar Lumens (XLM) may call itself a real top 10 cryptocurrency. The price of the crypto coin exploded after it became known that they had entered into a partnership with none other than IBM. The crypto coin is seen as the Ripple without drawbacks. More and more crypto enthusiasts are beginning to discover the potential of Stellar Lumens, which is why the currency is on the rise in the crypto world. In this article you can read how Stellar tries to overtake Ripple.

What is Stellar Lumens (XLM)?

Stellar started in 2014 because the founders of Ripple, Chris Larsen and Jed McCaleb could not agree with each other in terms of their vision of the future. The latter therefore decided to split off Ripple by means of a fork and brought 100 billion Stellars (the then name of Lumens) into the world. With the crypto coin, McCaleb wants to pursue the same ease of payment and the same transaction speed as its biggest competitor. The main difference between the two is that Stellar Lumens has a non-profit organization (Stellar.org) that wants to keep the currency as decentralized as possible. They do this, among other things, by distributing the cryptocurrency XLM optimally over its (future) users.

The advantages

Before we delve deeper into how Stellar Lumens and its token XLM work exactly, you can already see an overview of the most important features of the crypto coin.

Stellar Lumens:

• Can handle 2000 transactions per second
• Has a transaction time of 3-5 seconds
• Has virtually no transaction costs
• Can be used to trade or send any currency or cryptocurrency
• Uses Stellar Concensus Protocol (SCP) instead of Proof-of-Work (PoW)
• Can be used for smart contracts and multisig
• Is decentralized

In addition, it is important to know that there are approximately 103 billion XLM, of which almost 18 billion are in circulation at the time of writing. The remaining XLM are put into circulation in such a way that 1% inflation per year occurs.
They are impressive features and most crypto coins (especially Bitcoin and Ethereum ) will look jealous of it. How did the team behind Stellar Lumens manage to develop this crypto to what it is now?

Team and advisers

Let's start with the team behind Stellar Lumens itself. The entire team consists of very experienced people, but in fact it is mainly one man: Jed MacCaleb. His career in the world of crypto is pretty impressive. He is the founder of the first Bitcoin trading platform Mt. Gox that he later sold to Karpèles (after which it only went bankrupt). He then started Ripple and is currently successful with Stellar Lumens. So he has three of the most influential crypto companies on his resume!

Furthermore, the crypto company has very talented advisers. The CEO of Stripe , a payment platform worth more than 10 billion dollars, the founder of WordPress and the president of Y combinator are a small selection from this impressive list.

How does Stellar work?

Despite the fact that the code of Stellar has been completely rewritten since the fork, it still looks a lot like Ripple (see this article)for a clear explanation about Ripple). Stellar is a system that ensures that all financial entities can communicate with each other in the same language. You can compare it with the current e-mail system. If you now send an email to the other side of the world, it will arrive in a few seconds without you having to pay anything. If you transfer money, on the other hand, it will take a few days and it will cost you a few euros. The only reason that this difference exists between e-mail and money transactions is that all e-mail providers (such as Gmail, Hotmail, etc.) use the same underlying system. However, the banks use a variety of different systems that are difficult to communicate with each other.

Anchors

One of the most important features of the Stellar network is the presence of "anchors". Anchors are in fact units that serve as a bridge between different currencies within the network. It is easiest to explain with an example from the current financial world.
If you want to use Paypal to transfer money to a foreign account, you first deposit money from your Dutch account on your Paypal account. You can then send this money to everyone who trusts Paypal, or who has a Paypal account. The person who has received money from you via his Paypal account can then convert it back to money on his own domestic bank account.

"Anchors" can be seen as the "paypal" within Stellar. Instead of having to transfer your money from your "foreign" account to your own account, the anchors do all this automatically. Because they communicate with each other within the same network, it works a lot more powerfully than in the current financial world. Thanks to Stellar, users can easily send and exchange all kinds of different anchor credits.

Stellar Consensus Protocol (SCP)

One of the reasons that Stellar is fast, scalable and virtually free is that it does not use Proof-of-Work, but the Stellar Consensus Protocol (SCP). This ensures that the network is highly secure against external attacks. The entire ledger on which the crypto platform is running is decentralized, which means that all transactions are checked by the community behind the crypto currency and not by one central point. All servers on the network communicate with each other every 2 to 5 seconds whether a transaction is legitimate and whether it can be added to the global blockchain. This makes it possible to carry out transactions within 5 seconds and Stellar Lumens, unlike Bitcoin, can be used to pay for your coffee just as quickly. You can read a detailed and technical explanation of how this works exactly .

The function of the token - XLM

The token behind Stellar is called Lumens and is indicated with the ticker XLM. The token has two important functions:

1. It serves as anti-spam

• Transactions via the Stellar network are not completely free, but they cost you a little bit of XLM. This is not because the non-profit organization secretly tries to earn money from you, but to prevent attacks from outside. An example of such an attack is a DoS attack.
  With a DoS attack, malicious people want to flood the network with transactions, creating a large row of transactions, so you can not pay for your coffee within 5 seconds. The network can be completely flattened by such an attack. By charging a small amount of costs for a transaction, a DoS attack is much too expensive to execute, making it no longer really relevant for malicious people to commit to it.

• In addition, it is mandatory to keep at least 0.5 Stellar Lumens in your wallet. This ensures that all accounts on the platform are actually from a person and users do not create hundreds of accounts via bots. This keeps the network a seamless flow of transactions.

2. It serves as a bridge between different currencies

• If you want to transfer money to someone and the person wants to receive it in dollars, the Stellar Lumens will automatically take care of this. The XLM automatically exchanges the different currencies at the current exchange rate.

Lumen distributed fairly.

Another advantage to Stellar Lumens compared to other crypto coins is that the distribution of the tokens has been done in a very fair way and that this will remain so in the future. Approximately 85 billion tokens have yet to be distributed and the Stellar Development Foundation (SDF) aims to do this as fairly as possible:

• 50% Of the tokens are given to as many different users as possible in small quantities.
• 25% Is given away to companies and organizations that stellar.org can not reach through their "Direct-Signup program".
• 20% Is given away to all Bitcoin and Ripple owners.
• 5% Is held by the team for further developments.

Incentives for the community

It is often said that in the world of crypto the community behind the currency can be seen as one of the most important factors for success. At Stellar they understand this like no other and that's why they have set up two different incentive programs to give their community that extra push to contribute to the development of the platform:

• The Stellar Build Challenge
• The Partnership Grant Challenge

Stellar Build Challenge

This continuously running program was created to motivate users within the network to develop innovative solutions for Stellar Lumens. Rewards can amount to up to 2 million XLM. Programmers can innovate in areas such as wallets, token distribution, apps, et cetera.

Partnership Grant Challenge

This program is intended to encourage large organizations to use the Stellar-Lumens network. Rewards of up to $ 2 million can be spent on this.

Conclusion

What struck us immediately about Stellar Lumens is that the team and the consultants behind it are very strong. It must go crazy if a company with such a solid team does not succeed. In addition, it can be a real challenger for Ripple who is not loved by his central character within the crypto community.

Stellar Lumens can be a good alternative and the only thing that still separates the two is that Ripple has a much larger number of companies and banks behind them. However, the partnerships with IBM and Deloitte show that Stellar is also well on the way to entering into partnerships with influential companies. The biggest disadvantage of Stellar Lumens is that it mainly relies on Jed McCaleb and it is not with 100% certainty that he can be completely trusted. His first Bitcoin company Mt. Gox did not end well and his second company Ripple he tried to put a heel into it by completely abandoning the course. It should be said that these messages come mainly from the corner of the biggest competitor Ripple.

Thank you for reading :D
Happy investing..

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