Stellar Lumens (XLM) Global technology powerhouse, IBM, announced in October that it would go into partnership with Stellar to facilitate the real-time transfer of funds across the South Pacific region. This banking network would include the currencies of such countries as New Zealand, Fiji, Australia, and Tonga. The transfers would happen in real time and at only a fraction of the heavy costs that accompanied such transactions. In the announcement, IBM expressed confidence that this transfer protocol would process over 60% of all transfers in the region’s retail market by early next year. This announcement stamped the growing corporate confidence in Lumens, Stellar’s cryptocurrency as a transfer medium.
The integration of Stellar by financial institutions into their operations especially in the developing world has seen it rise in market valuation. Its current market capitalization currently stands at $792 million
What is Stellar?
Stellar is developed by the Stellar Development Foundation (SDF), a not-for-profit organization. SDF seeks to extend financial inclusion to the unbanked people in such areas as Asia and Africa. It seeks to achieve this through a strategic partnership with global financial institutions as well as money transfer institutions. Its cryptocurrency is known as Lumens and trades under the moniker, XLM.
It developed as a fork from Ripple, with its development being done by Joyce Kim in 2015. Joyce Kim was one of the developers of Ripple and this has resulted in the two currencies being likened by many. However, the consensus code was completely rewritten and Stellar is now based on a completely new consensus algorithm.
The success or failure of any cryptocurrency depends heavily on the network platform it uses. Stellar uses the Stellar Consensus Mechanism. This mechanism or protocol focuses more on the security of transactions and protects the users against malicious hackers which are a big concern in the digital currency market. Servers run a software implementation of the protocol and form a worldwide value exchange network with other servers over the internet. These servers have ledgers where transactions and account information is recorded. For a transaction to take place, these servers have to come to a consensus, thus the basis of the Stellar Consensus Mechanism.
This protocol is advantageous because it ensures a decentralized model of control where no one server dominates another. It also allows a lot of flexibility in the configuration of quorums by the different nodes in the system allowing it to accommodate a situation in which bad nodes lie, otherwise known as Byzantine error.
Stellar’s protocol also allows any interested party to join and become a validator. This is unlike some currencies such as Ripple which is more centralized and determines who can validate transactions on their network.
Should you invest in Stellar?
Stellar offers a unique opportunity for an investor to not only make money but be part of a transforming movement. Stellar Foundation’s ultimate goal is to bring financial inclusivity to the ignored masses especially in the developing world and in places like Africa. It has already partnered with some institutions in countries like Nigeria and Philippines that seek to bring affordable financial services to the bottom of the pyramid. It is also a great opportunity for anyone who missed out on Ripple’s early stages as the two platforms have some striking similarities. With a price of $0.044, Stellar Lumens are a good investment.