What is Stellar Crypto? Step By Step Guide
Stellar is an open-source, decentralized blockchain platform seeking to revolutionize cross-border transactions. Founded in 2014 by Jeb McCaleb and Joyce Kim, the distributed ledger network connects banks, payment systems, and people, thus enabling fast and low-cost cross-asset transfers.
Stellar operates the same way as Ripple as a payment technology geared towards connecting financial institutions. Its primary goal is to reduce the cost and time required to send and receive cross-border transfers.
The native token powering the stellar blockchain platform is dubbed Lumens, often denoted as XLM. Stellar Lumens cryptocurrency is used to provide liquidity in the stellar blockchain. Stellar.org is the non-profit organization that operates the stellar network.
Its primary goal is to enable the transfer of money in areas where remittances and bank loans are not possible, given the lack of banking services. In 2018 Stellar.org signed a strategic partnership with TransferTO to facilitate cross-border payments to more than 70 countries.
Stellar.org does not charge individuals or institutions for using the stellar network. The firm received funding from organizations such as Black Rock, Google.org, and Fast Forward to offer financial services to people not covered by banks. The firm covers its operational costs through donations from tas deductions.
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How Stellar Works
Stellar operates the same way as other decentralized payment systems as it relies on consensus protocol to process transactions. Stellar Consensus Protocol (SCP) is the consensus protocol whereby transaction authentication is confined to select nodes, rather than being left to the whole blockchain.
A transaction is considered approved once authenticated by all nodes acting as representatives of given groups. The shortened approval cycle is one of the reasons why the Stellar network boasts of fast transaction speeds compared to other decentralized networks.
Likewise, Stellar is widely used in developing economies, whereby it is impossible to access banking services. The decentralized exchange allows people to send and receive payments in particular currencies such as EUR, USD, or GBP. The network performs conversions at the best available rates.
What Affects Stellar Price
Stellar crypto is billed as the 17 largest cryptocurrencies by market cap. Its price and market cap fluctuates amid changes in traders sentiments in the market.
How effective the Stellar network is at facilitating fast cross-border transactions goes a long way in influencing its sentiments in the market, thereby price. Fast and low-cost cross border transactions are crucial to stellar network fending competition from the likes of Ripple, thereby a higher valuation for the XLM price.
Regulatory pressures have also had a hand in influencing XLM price in the market. Friendly regulation in some countries such as South Korea continues to accelerate mainstream adoption, conversely influencing crypto trader’s sentiments positively.
Media hype has also had a hand in influencing Stellar Lumen price. Greater media coverage of how effective the network is at enabling cross-border transfers has gone a long way in pumping up the XLM price. The hype has also gone a long way in attracting more people to the cryptocurrency, conversely driving prices higher.