The stellar lumen is a sensible blockchain project that functions as a bridge between the opposing world of traditional centralized financial institutions.
Stellar lumens advertises itself as an open sourced, distributed payments infrastructure and an international network accessible to everyone. The stellar lumen team wants to make monetary transactions quicker, cheaper and more reliable than they are under the current system.
More, so their primary objective is to link people from all over the world by allowing for more efficient cross-border payments.
What are lumens?
Lumens are the digital currency that exists on the stellar network. The lumens operate in two different way:
1) Anti-spam role
2) Facilitate multi-currency transactions
Anti-spam role
Anti-spam protects attacks where accidents can occur on the stellar system, a small fee of 0,00001 lumens focuses on every transaction that happens on the network. The fee is minimal therefore it does not affect the cost of any deal. In other words, the fee is large enough to hinder bad actors from spamming the network.
Multi-currency transactions
Lumen is the native asset that functions as the mediator to facilitate multi-currency transactions. It focuses on transactions like sending money in USD and then receive it in EUR. Lumen is the digital bridge that permits such transaction to occur at a minimum cost.
How does it work?
Stellar functions are similar to most decentralized payment technologies like bitcoin. However, the primary distinguishing feature is a consensus protocol. The stellar protocol will work like a more flexible and inclusive PayPal. To start using Stellar, one need to deposit funds to an anchor on the network. Much like a bank, the anchor then holds the money and issues credit to your virtual wallet in its steal. In other words, stellar functions as a bridge for any given currency and stellar network. Therefore, the swap allows individual to convert their money into the stellar, public ledger formally.
More so, the integration denotes that individuals can transfer funds instantly on the network without having to wait for a bank transfer. It can also transfer fund across borders. For instance, if you want to send money to your sister staying in France, you can use your deposited USD balance to send her funds through the stellar network. The stellar system will automatically convert the USD to EUR using minimum exchange rate. After that, your sister will receive the money in her account with the exchanged amount into EUR.
How do transactions work?
Stellar lumens can process up to 1000 transaction per second. The fee is mainly used to protect the network from experiencing attacks. People can make cross-border transactions to anyone around the globe by using lumens.
Staller does not use proof of work like bitcoin instead it uses the stellar consensus protocol. The consensus protocol permit transactions to be made securely and quickly anywhere with anyone in the world. Also, stellar’s SCP permit lumens to function without any mining being necessary for operations. Some argue that without mining stellar lumens is less secure and less decentralized than bitcoin.
Where to store stellar lumens?
The most wallets used to store ledger exist with thin stellar’s network or ledger specific for use with its international marketplace. Stronghold, for examples, is a distributed exchange platform created into the stellar system and a stellar team is a client that permit people to access the distributed exchange for sending or trading money. The stellar team has also designed the stellar desktop client that focuses on the human currency.
Multi-currency transaction
Stellar permit people to freely send money across borders without a hustle of currency exchange or banking procedures. Therefore to accomplish the transactions, the network consider doing the following
• Stellar uses lumens, its coin, as a medium of the exchange. It converts the currency A into lumens on the international marketplace and then it takes the lumens and convert them into currency B for the person receiving the money.
• If there is no existence of trading pairs in exchange for the two currencies, then the stellar searches for an offer on the network that will lead to a chain conversion into the desired currency.
• Steller converts the money with a previous offer on its order book and automatically facilitates the exchange.
NB This multi-currency exchanging platform is pretty amazing, and it gives people a flexible method to easily changeover currencies on an international scale.
How can stellar lumens be used?
Stellar lumens can be viewed as bitcoin’s faster cousin that does not need mining. Lumens can be traded anywhere around the globe. Therefore it is ideal for cross-border payment, i.e., overseas transactions.
International, fast and cheap transactions from desktop, tablet or mobile can be particularly useful if you are in a location with limited access to banks. With lumens, people won’t need to deal with expensive transaction fees with companies like MoneyGram. This implies that when a person receives or send money from someone overseas, they won’t have to pay more fees.
Also, stellar has a built-in exchange on which people can trade coins like Etherum, Bitcoin or stellar’s Repocoin. Stellar’s exchange is beneficial if a person would want to exchange stellar cryptocurrency to EUR.
The future of stellar lumens
Stellar’s increasing partnerships and its quick developing ecosystem denote that, there is no doubt that stellar can be an excellent player around the world.
The services it provides are straightforward and offer practical, real-world application. Therefore, professionalism and combination that currently surrounds stellar give the cryptocurrency a chance to grow vehemently soon.
Conclusion
Stellar may not be a decentralized project, but it is significantly promising in accelerating the blockchain technology adoption.
This coin seems to have received the minimum amount of criticism. However, as an investor one should always do thorough research before investing.