Wide Range Coin: Stellar Cryptocurrency (XLM)
One of the key properties of Stellar Lumens (XLM cryptocurrency) is that it can support thousands of transactions per second. The total confirmation time is very fast - up to 5 seconds. XLM cryptocurrency can be used to transfer or sell any currencies, assets or tokens, which makes the system multifunctional and very convenient.
Stellar's protocol architecture allows for complete data decentralization. It uses SCP technology instead of Proof of Work. The cryptocurrency Stellar Lumens is open source, which further increases the credibility of the project.
The initial number of XLM coins created is 100 billion. Today, the total number of coins is 50 billion. Most of the coins are held by the nonprofit organization Stellar.org.
What is Stellar Lumens?
So what is Stellar? Stellar Lumens is a fully decentralized consensus platform that supports absolutely any type of currency (digital and fiat). The platform system is equipped with an internal decentralized exchange that can be used by any user who wishes.
Stellar Lumens network consists of peer-to-peer nodes, which are located around the world. At the same time, the "anchors" do not depend on each other, thereby ensuring full decentralization. Between them every few seconds there is a synchronization, which provides a consensus SCP network.
Stellar was originally conceived as a system that would make it possible to transfer finances between people and different companies as easily and very quickly as possible using smart contract technology. That is, XLM cryptocurrency is a great alternative to the current banking system, more convenient and cheaper.
Another plus of XLM blockchain is the ability to create new tokens that can be used to launch ICO companies. And writing code with Stellar is much easier than with Ethereum, which uses a little-known programming language. This, in turn, creates problems for many users. That's why XLM developers took into account this important point and made it possible to create tokens with well-known C++.
How does Stellar work?
Stellar is a decentralized consensus platform where transactions with various assets are possible. Stellar cryptocurrency itself serves only as the main unit of account for transactions. Thus, XLM cryptocurrency is an intermediate means of exchanging one asset for another.
To give an example, a user has lightcoins on an exchange. He needs to transfer them to a certain person in the form of bitcoins or transfer them to his fiat account in a credit institution. To perform these operations, you just need to register on the Stellar platform, enter the initial data, choose the most appropriate way that the system will offer and then complete the transaction. In this case, lumens will only be required to pay the system fee. Its size is 0.0001 XLM.
The operation of such a scheme is based on the decentralized exchange Stellar, which operates on the internal algorithm SCP, which acts as a consensus protocol. The algorithm is based on a ledger - an array of distributed data registry. It stores information about all performed transactions.
The functioning of the registry is based on the work of multiple independent nodes, which duplicate the data ledger. In case of failure of one or more nodes, the system will continue its work, as data is stored on other nodes. Thus, the integrity and stability of the entire platform is ensured.
Pros and cons of Stellar and XLM currencies
With its connection to Ripple, Stellar uses banking tools but is decentralized. Being created to make cross-border payments with fiat currencies, the Stellar blockchain platform has its pros and cons.
The positive qualities of Stellar and XLM cryptocurrency
- Cross-border payments. Using "anchor" technology, the Stellar system is able to conduct fiat transactions without double asset conversion. The exchange goes directly through the internal DeFI exchange, without additional commissions. Using a decentralized exchange allows for much faster transactions than the centralized approach like in Binance and Bitfinex.
- Up to five seconds per exchange. The entire process - from block confirmation to payment validation by the network takes two to five seconds. This is achieved by sending payments for verification directly to the node, rather than to nodes, as is done in the Bitcoin or Ethereum system.
- Energy-efficient exchange. Using its own DeFI SCP payment protocol and Proof-of-Stake algorithm allows more efficient validation than in the case of mining currencies on ASIC machines and video cards.
- Accessibility, even through bans. XLM payments are notable because if crypto is banned in the recipient's country, they can receive the payment in fiat or any other Stellar-supported asset.
- Wide bandwidth and open source. Stellar has a bandwidth of 1,000 T/s. The source code is open to the public, for later analysis by the community.
Disadvantages of XLM cryptocurrency and Stellar blockchain platform
- Average protection against attacks. Each "double-spending" attack that duplicates a transaction "freezes" the entire network until it is identified. This network behavior is typical of any suspicious activity.
- Validation is not profitable. Nodes involved in validating a transaction receive only a commission. There is little motivation for participants to become a validator.
- Not suitable for complex dApps. Stellar smart contracts are not full Turing and are limited in their autonomy from using external tools. This is both a minus and a plus - the network cannot be overloaded with complex computation and Stellar is suitable for creating simple dApp applications.