There is a wide variety of Stellar wallets available. Multicurrency wallets are handy if you use several coins at once. But if you hold only Lumens, you can choose a specialized variant for this coin, the reliability of such mono-wallets is usually higher.

In this article, we will consider in detail the online service Stellar Web Wallet, note a few more options for XLM coin storage and give recommendations for choosing the best wallet.

Stellar Online Wallet

We are pleased to introduce you to one of the most convenient online storages for XLM. The wallet is accessible directly from your browser, so there is no need to install additional software.

The secret key for the wallet is held exclusively by the user and it is important to pay extra attention to protecting the key storage location from viruses and Trojans that can steal the key file and the application password.

Registration and wallet menu

Follow the link https://stellar-wallet.org/ and click “Creating a new Stellar wallet”. 

In the next step you will get a warning and advice on how to use the wallet, press “continue” to generate the keys:

At this stage also carefully read the recommendations and save the generated keys. The first key is the address of your wallet, the second is a secret key to access this wallet:

Here you click on the “copy keys” button, check the box below and then click on the “close” button.  

Your wallet is successfully created, now on the main page, click on “Access to the wallet with a private key” and follow the instructions to log in.

Go in and see that the wallet is not activated yet. You need to deposit at least 1XLM to start using the wallet.

You can top-up your wallet by sending the required amount and specifying the public key of your wallet, which you saved when creating a wallet. It is also available in the main menu of the wallet. You can click the button in the control panel to copy the public key to the clipboard. Also by clicking on the button “Receive” you can get a QR-code of your public key. After the activation of the wallet you will be able to transfer coins.

As you can see there is no difficulty in creating a wallet. The wallet is chosen for its accessibility and ease of management.

Other XLM wallets

Stellar Web Wallet is, by far, not the only wallet for storing Lumen tokens on the Stellar platform. Here is a brief list of the main features of competing projects:

• Ledger with the Ledger Nano hardware key, allows you to forget about any security issues when using Stellar Wallet and other similar applications. You won’t lose access to your funds even if the device falls into the wrong hands, and the encryption algorithms allow you to securely store your private key – it doesn’t leave the device, but at the same time provides absolutely transparent support for transaction signing in many popular cryptocurrency payment systems.
• Stronghold is a web service that maintains high security standards and provides access to your Stellar account and address from anywhere in the world where there is internet. The service offers minimal fees to customers and a detailed API to developers.
• StellarTerm is a desktop client. It supports currency exchange and gateway trust setup with equally high security requirements.  StellarTerm provides client access to distributed trading and differs only in design and minor details of the gateway trust algorithm.
• Astral is a web service that supports two-factor authentication and simultaneous work with several Stellar addresses.
• Stellarport is another desktop client for Stellar. Functionally it isn’t inferior to two previous ones (except ICO section), but it supports authentication with Ledger hardware wallets. The intuitive interface of the trading platform can please those who haven’t managed to figure out a similar solution in the Stellar Web Wallet.
• LOBSTR is a cross-platform application, with support for Android and iOS smartphones. Simple and clear enough interface, but functionally limited only to storage and transfer of XLM tokens. Great for those who plan to invest in the main token system, but don’t expect to participate in exchange transactions and use the potential of the gateway system.
• Stargazer is a mobile cross-platform application. Unlike LOBSTR, it works with gateways and provides access to the turnover of various assets. It supports multi-signature procedure for transactions, which opens new perspectives in the use of Stellar tokens.
• SAZA is a desktop client running on Windows and macOS. Full access to gateway functionality and decentralized exchange. Allows you to place your own offers for buying/selling assets and supports simultaneous work with a large number of Stellar addresses.
• Centaurus is a mobile application that knows how to work with gateway assets and, of course, transmit and receive payments in the Stellar system. An interesting feature of the program is the support of cross-currency payments between participants, which doesn’t require a preliminary manual conversion of one asset into another.
• Papaya is a cross-platform Stellar wallet that works even on such exotic operating systems as FirefoxOS or the outdated Windows Mobile. It supports point-to-point trading and access to Federation Server functionality, which means gateways and exchanges that cooperate with Stellar.
• Interstellar is a web client and mobile application for Android that supports hardware wallets to access user accounts. Allows you to participate in the decentralized exchange and establish gateways trust. Also works with all Federation Server networks, in addition, customers are initially available to top-up with cryptocurrencies, thanks to the presence of its own gateway.

How to choose a Stellar wallet

As you can see, with the development of wallets that support Stellar, there is no problem, but there is a problem of choosing the best solution of all existing. It is impossible to recommend any one application as the best and most functional, especially since the competition between them forces developers to make constant improvements and refinements that introduce new features for fast and secure transfer of money in the payment system Stellar.

And yet, if there is no desire to participate in a decentralized exchange or the ICO procedures of in-network projects – it is quite possible to choose a web service or application that provides only storage and transfer of XLM tokens. On the other hand – the gateway system allows finding unusual trading strategies with a variety of assets, and if trading on the exchange is the initial purpose of investment, then the capabilities of the decentralized payment system and trading platform Stellar may be enough to form an investment portfolio and profit from trading on the difference between fiat and cryptocurrency instruments rate.

The Stellar consensus model was developed to meet the needs of the real world

A few years ago, Stanford University professor David Mazires developed a blockchain system that is a faster, more flexible and secure counterpart to Bitcoin. The Stellar Consensus Protocol (SCP) fits well into the existing model of business agreements.

In the Stellar blockchain, as in the real world, each participant chooses who to entrust the information to. Participants in a transaction don’t need to use the entire network to validate it. Instead, each transaction participant and trusted users form what is known as a quorum slice.

Nevertheless, participants can belong to an unlimited number of different “quorum slices”, the intersections of which are called “quorum intersections”. Such quorums allow for stable and safe system-wide agreement.

Transferring money should be as easy as sending email

Stellar users can link their wallet address to their account ID. It turns out that instead of using a long, hard-to-remember wallet address, you can use an email address or some short word to send cryptocurrency A similar service exists in the Ethereum network and is called ENS, but unlike Ethereum, this Stellar service is completely free.

It won’t be long before you and I witness email providers integrate the Stellar payment system into their platforms, which in turn will allow cryptocurrency wallet addresses to be combined with users’ email names. Thus, in the near future, users will be able to send digital tokens in a simple and affordable way to anyone in the world who has email.

Transaction security

В свое время основатель блокчейна Litecoin Чарли Ли заявил следующее:

In his time, Litecoin blockchain founder Charlie Lee said the following:

“The fact that Gavin Wood, the creator of the Solidity programming language himself, is unable to create a secure cryptocurrency on Solidity confirms once again that the Ethereum blockchain is a ‘paradise’ for hackers.”

Most blockchain companies are not known to require complex smart contracts, which are at high risk of hacking. All transaction security measures must be respected when it comes to large corporations.

Stellar’s blockchain provides security by restricting access to untrusted users without the Turing-complete system. The developers of the network have given the payment system a broad functionality while reducing the threat of hacking.

Liquidity of network tokens

It is known that in order to ensure token liquidity, it is necessary to place it on several cryptocurrency exchanges, which in turn is very costly from a financial point of view. The Stellar platform has its own decentralized exchange, which is integrated into the platform.

This suggests that tokens created on the Stellar blockchain can be traded on that exchange the day they are created. Thus, this solution allows building a fairer ecosystem in general.

Documentation and technical support

One of the main developers stated that “the work with Stellar’s documentation was above and beyond praise. So it’s worth noting that the documentation, as well as the support from the community, is presented at a very high level. Everything is clear and simple.

The large number of Stellar blockchain developers and other community members makes it possible to resolve any issue that arises in no time, thanks to lively discussions and a desire to help. This explains the desire of banks and financial institutions to build a payment system based on the Stellar network.

A properly set goal

Stellar’s blockchain is an amazing combination of things like low fees, high performance, and constant improvement in technology, with transaction fees collected to keep the network running. According to blockchain testing, the Stellar network can safely process about 1,000 transactions per second. The average time to process a money transfer is 3 to 5 seconds.

Work is currently underway to improve and scale the network, which will eventually allow for more transactions per second, as well as a reduction in processing time.  It is important to note that ad technologies require high performance and scalability of the blockchain, which is why new product development teams choose the Stellar platform.

Also, the integration with Blockdaemon allowed the developers of Stellar to expand their toolkit, which further ensures the easy deployment and management of the blockchain-enabled platform.

Strong team

Platform’s team is composed of the best experts in cryptocurrency, fintech and security. For example, co-founder Jed McCaleb pioneered p2p file exchanges, created the first Bitcoin exchange, and co-founded Ripple. The list of other team members includes blockchain pioneers such as Greg Brockman, Sam Altman, Dan Kaminsky, Patrick Collison, Kate Rabois, and many others.

Stellar mission

The Stellar network is primarily aimed at moving into the global financial sector of the economy. The platform offers the latest innovations from the world of blockchain and fintech. While other blockchain startups take years to solve today’s problems, the Stellar platform already offers a ready-made, high-performance solution.

There are many such blockchain products on the market, but only a few offer broad functionality. One of such promising technologies will be the focus of this review, in which we’ll look in detail at what Stellar Lumens cryptocurrency is and what the prospects are for its development.

An improved version of Ripple

Stellar (XLM) is not another Bitcoin competitor, but an entire ecosystem with its own token, exchange and wallet. Launched in 2014 as an offshoot of the Ripple blockchain, the network is an improved and more reliable version of its predecessor. The main goal of the project is to ensure the availability of financial transactions, reduce bank costs and increase business profitability.

Ripple developers are often accused of getting too carried away with making money on the exchange rate and abandoning the project. On popular forums, there are more and more accusations in the direction of the company’s management, which has full control over the platform due to the closed program code. There are rumors that the founders manipulated the XRP exchange rate for their own benefit, undermining investor confidence in the project.

In 2015, Joyce Kim and former Ripple employee Jed McCaleb conceived of eliminating the problems described above by creating a new technology with its own protocol and open source code. In this way, Ripple has a strong competitor with a quality product and a clean history.

Unlike Ripple, where the company’s capital is controlled by its owners, Stellar is decentralized. The developers founded a non-profit investment fund, so it’s safe to say that the funds go to the development of the project and not to the needs of certain individuals, as happens in case of Ripple.

In addition, the creators of XLM are trying to pay more attention to the product itself, as evidenced by numerous agreements with large companies. When the team announced a partnership with IBM, hardware and software manufacturing and supply leader, the Stellar cryptocurrency added about 500% in value in less than a month and then skyrocketed from $0.21 to $0.91 in just one week.

Ripple’s “killer” surpassed Ethereum’s blockchain

If you compare Ripple and Stellar in terms of fundamental and technical analysis, you can see that their charts from 2014 to the present are virtually the same, although independent of each other. The competitors develop their products in the same field, which is probably due to the similar movement of exchange rates. As statistics show, the value of cryptocurrencies is very much influenced by news about their management and promotion of the company. Here XLM has a significant advantage.

In addition, the number of uses for Stellar is much larger. And although Ripple cooperates with financial giants like Western Union and Santander, it is still unknown whether the new products that this company is testing will be approved and integrated. As for Stellar, the platform can even be used for ICO. In this way, the company poaches the audience of Ethereum, which uses the more complex Solidity programming language when writing smart contracts.

Stellar’s blockchain, in turn, is based on the popular C++, which simplifies the process. It is the broad applicability of the new technology that has enabled it to take a leading position in the crypto industry. According to Coinmarketcap rating, today Stellar cryptocurrency occupies the 28th place by market capitalization.

In addition to IBM, the developers have partnered with MoneyGram, SatoshiPay, Exch.one, Klick-Ex, Mobius, HashCash and so on. Also, with the growing interest in CBDC, financial institutions in many countries prefer to develop their own digital currencies based on Stellar.

Functional characteristics of the cryptocurrency

Apart from open source and scalability, Stellar has a wide range of features. In particular, it has a high transaction confirmation rate and allows thousands of transactions per second. In addition, the platform has a built-in decentralized exchange and a specific algorithm, so that users get the currency they are interested in.

Mining is not provided in the network and the issuance is strictly limited. After the launch of the fork, all issued coins went into circulation at once – 100 billion XLM. Subsequently, the management decided and burned half of the coins, so now the volume of all coins in the system is 50 billion.

Coin distribution:

• 5% of the volume was allocated by the Stellar Foundation for technology development.
• Lucky holders of BTC and Ripple share 20% of assets (taking into consideration the amount of these currencies on their balances). Bitcoin holders get 19% and Ripple investors only 1%.
• The other 25% of coins are distributed through non-profit organizations in order to involve as many users as possible in the system.
• Another 50% of tokens are distributed to participants who have registered on the official website of the project.

Stellar Lumens cryptocurrency: is it worth investing?

Definitely, yes. According to experts, crypto winter is not a permanent phenomenon and soon the bullish trend will appear again on the horizon, and the price of the coin, thanks to the conclusion of new partnership agreements, can increase at least twice. But do not hope for huge profits in the short term, because the cryptocurrency is more suitable for long-term investments.

Despite its broad functionality and profitable partnerships, experts’ opinions on Stellar Lumens differ. Some analysts believe that the value of tokens will reach at least $0.5 in the third quarter of 2022. Others argue that the rate will not exceed $0.3 until the end of the year, and the mark of one dollar will be crossed only in a couple or three years. But the cryptocurrency Stellar is still one of the most promising investments this year.

DogeCoin

It’s hard to find a person in the crypto world who doesn’t know about Doge currency. So first, a little bit about Dogecoin – it is a decentralized platform that is easily scalable. As a result, the coin is ideal for use by companies of all sizes. Unlike many cryptocurrencies, Doge is supported by the community. A large number of users have contributed to the currency, which has a limit of 132,670,000,000 coins. As the popularity of the Doge coin grows, so does the demand for this digital asset.

It was originally intended to be a transactional currency rather than a long-term investment. Doge has become a solid investment option and is in high demand among investors. High-volume trading is also a key driver of its price growth. Although some crypto analysts consider this rally is fluctuating, the currency’s growth can be attributed to several factors such as the lack of a miners community and weak security. As a result, it is vulnerable to attacks.

DXLM and Stellar

Now let’s talk about Doge Lumens. Doge Lumens is a currency based on the Stellar network and it has appeared relatively recently. Its users can exchange assets such as cryptocurrencies with other users. It is an effective way to save cryptocurrencies.

Consequently, it is a great investment for both beginners and professionals. The community has a strong team of followers among a variety of people. The platform is also supported by a strong international network of companies. Its users can exchange and share their funds with others on the platform. This means it’s a great tool for businesses to make payments. Although the currency is not fully decentralized, it could become the most popular cryptocurrency in the world. In the long run, thanks to the support of the cryptocurrency community, Doge Lumens could become more popular than its recognizable competitor.

The power of Stellar Blockchain makes it an ideal cryptocurrency for use in everyday life. With this decentralized network, users can exchange currency in order to buy or sell anything. The transaction fee is only 0.00001 XLM. It is convenient and free to use this currency. The power of Stellar Blockchain makes it a viable currency.

The power of Stellar Blockchain is a boon to any digital currency, not just Doge Lumens. It’s a great way to transfer money between people and makes transactions more secure. Unlike traditional currencies, the network is highly decentralized. This means that every blockchain payment is fully traceable and easily accessible.

DXLM inherits all the advantages of the Stellar platform, which radically distinguishes this coin from DogeCoin and makes it much better. Doge Lumen’s owners do not need to think about security as Stellar developers have already taken care of it and created one of the safest and most scalable algorithms, Stellar Consensus Protocol.

By the way, the cryptocurrency Stellar or, as it is also called, Lumens, with the ticker XLM, was created to add movement to the network. All transactions in the network must use Lumens, which is necessary to maintain stability.

As of August 2022, it has a market capitalization of $2.8 billion. The platform is run by Jed McCaleb and the Stellar Development Foundation. Initial funding was provided by Stripe and other organizations.

Conclusion

One last thing to mention. Given the popularity of Stellar, we can safely talk about the promising future of Doge Lumens. While this coin stays less-known,  its price makes only $0.0001, and it’s time to think about purchasing, because everyone remembers what happened with DogeCoin when this coin was noticed.

Do your own analysis, evaluate your possibilities and make the right decision. Have profitable investments!

Ripple is most often compared to Stellar, like David to Goliath. Ripple Labs is disliked because it is run by former financiers and bankers. Stellar is run by people from a non-profit organization called the Stellar Development Foundation.

• What is Ripple?
• What is Stellar?
• What is better to invest in
• What are the similarities between two projects
• Differences between Ripple and Stellar

What is Ripple?

Ripple Labs was founded back in 2011 by Jeb McCaleb. It is a financial company that makes its money by selling software to banking institutions around the world. It is trying to create a network through which payments move quickly, securely, and inexpensively. Equally important is the creation of a system for international transfers.

XRP cryptocurrency is a separate part of Ripple Labs. XRP is its native asset, which runs on the company’s network. When it comes to Ripple, we think they are interchangeable, but they are not.

Jeb created XRP to be able to deliver the product more efficiently, though it’s worth noting that XRP is not required to use the Ripple platform.

The protocol is based on the Ripple Protocol Consensus (RPC) algorithm. It contains a unique list of all active nodes in the network, which form a decentralized register. The nodes are constantly connected to each other and compare transaction data.

There is no point in going deeper into the technicalities, so we will go directly to Ripple Labs’ products. Its first solution is xCurrent, which allows financial institutions to transfer money across borders by relying on the Ripple network, which is blockchain, while XRP is left out.

Banks have made no secret of their interest in Jeb McCaleb’s software because it saves money and time.

The second solution, called xRapid, which helps financial institutions improve their liquidity as they transition to developing markets, but, unlike the previous one, it utilizes XRP.

The third and final product is called xVia, but it is still under development, and we don’t know everything yet. As for the timing of its release, the developers promise to release the final version in the near future. The way it works is similar to xCurrent, but with a few differences. This solution can be used not only by banks but also by businesses, and here too XRP is not needed.

Ripple representatives said that they have partnered with more than 100 banking institutions and uses xCurrent as its primary platform.

As for xRapid, this product is used by 4 or 5 companies in many countries.

What is Stellar?

Stellar Foundation was founded in 2014 by the same Jeb McCaleb, the man who was involved in the creation of Ripple Labs. Even earlier, namely in 2010, Jeb founded a digital asset exchange, but left the position of director the following year. In fact, Stellar appeared after the Ripple fork, but a lot has changed now.

Stellar co-founder Joyce Kim reported that she discovered a problem in the Ripple protocol, which led the Stellar Foundation to create a completely new code for the network, called Stellar Core. Thus, the claim that Stellar is a fork or clone of Ripple is no longer true.

Stellar platform fits the description of an open-source project with a protocol for exchanging digital funds. While Ripple establishes cooperation with financial institutions, Stellar works directly with consumers.

Lumens or XLM is a native asset of the Stellar network. Users can exchange the currency almost instantly and the commission is minimal.

This currency is built on the Stellar Consensus Protocol (SCP) algorithm, which was born out of an evolution of the Federated Byzantine Agreement (FDA). XLM is based on quorums, not blocks. They establish the nodes that are necessary to obtain an agreement. Quorums reach consensus in a secure way by exchanging signatures.

What it is better to invest in

If you look at both companies from the perspective of a typical investor, of course it is better to invest your time and money in Ripple. These guys make money from their own product, which they successfully sell to various financial institutions. But it’s not all that simple.

Large financiers are not trustworthy, and for this reason many choose Stellar as an investment target.

Although there is a lot of hype around Ripple right now, it seems to me that their competitors from Stellar have much more potential for growth.

In our opinion, Stellar Lumens are more open, decentralized, lower capitalization and generally attractive in the long term (than XRP).

What are the similarities between the two projects

The first and most obvious similarity is that both companies were founded by the same person, Jeb McCaleb. Both Stellar and Ripple act as bridges to simplify access to multi-currency payments between ordinary users and banking institutions.

Both projects offer nearly free transactions that are validated in a short period of time.

These cryptocurrencies cannot be mined, which means they have a fixed number of coins. This is where the similarities end, and we move on to the differences.

What are the differences between Ripple and Stellar

Ripple Labs claims to be able to process 1,500 transactions per second, while Stellar is 500 less, but according to tests, they can reach a theoretical figure of 3,000 transactions per second. Confirmation takes from 3 to 5 seconds, which is one of the best rates.

Ripple has frozen a certain amount of XRP coins and puts them into circulation in installments each year. Stellar does not support this tactic, but is also inflationary, and puts 1% of new coins into circulation each year. And all of the money from the commission goes back into use.

Stellar network also collects a base fee for each transaction and transfer. Once a week, these funds go into an inflation pool and the algorithm sends these XLMs to those who hold Stellar.

Ripple presents things differently. Funds resulting from the write-off of the commission are destroyed, which means that the number of all coins decreases over time.

Ripple Labs is often criticized for holding 61% of all coins, allowing them to manipulate the rate.

The Stellar Foundation has only 5 percent of XLM in its hands, and they are needed to pay off operating costs. At the same time, there is a page on the developer’s website where you can track the release of all of the currency’s coins.

Stellar also offers more freedom, allowing you to choose who you trust, whereas users of Ripple services have to settle for a limited list of nodes.

Unlike Stellar, the average user cannot become part of the Ripple network; all nodes are operated by banks and market makers. Because of this, the latter suffers from the lack of decentralization, that is why many players on the cryptocurrency market are wary.

The main difference is the fact that the XLM component in the Stellar network is more important than the XRP in Ripple.

What Stellar is all about

Stellar Lumens is a special type of cryptocurrency designed for the purpose of online transactions. It is integrated into the eponymous network and works on a similar principle to Bitcoin and other related projects.

Stellar was created in 2014 in order to blend all cryptocurrency together. With the aid of this project it is possible to support any budding crypto in order to make the most profitable exchange transactions on the network.

Features of the Stellar Lumens:

1. Functioning in real time via special gross calculations.
2. A specific development of currency technology that allows transfers between people, organizations and countries.
3. Decentralization and the distinctive feature – versatility.

Before mining XLM, it is important to become acquainted with the advantages of this project. Among the main advantages, the creation of an unlimited number of payments, and a loyal commission for transfers can be distinguished.The online platform has compatibility with other services that are operating in the financial market. Within the system it is possible to work with several types of cryptocurrency, which is rather convenient for users.

It must be noted that transactions are performed in real time. In order to ensure a sufficient level of security, a special cryptographic cipher has been created.

How to mine Stellar cryptocurrency

Mining of the Stellar Lumens XLM is currently quite in demand. Note that this is not a standard process that requires special equipment or hardware. The system doesn’t stipulate obtaining digital coins in this way.

Approximately 100 billion coins (now 50 billion) were put into circulation when the platform was launched. Only 1% of the amount already in circulation is added to this amount of crypto every year. It should be noted that not all of the issued tokens are in circulation, but only a half.

Since its release, crypto has barely increased in value for 3 years. Only at the end of 2017 there was a sharp rise in the value of Stellar. But the upper limit lowered quickly because of the hacker attack, which caused the price to return to its initial value. In 2021 there was an explosive growth again, which later also was replaced by a deep correction. XLM is now at $0.19 (according to coinmarketcap)

Recently, many network users began to wonder how to mine XLM. This is resulting from the fact that this crypto has good prospects and many analysts predict a bright future for this coin.

Passive pool for mining

Mining of XLM is not provided. Despite this, every user of the network can get a certain amount of Lumens for free. The distribution is made by Bitcoin owners in the amount of 1% of the balance.

The following guidelines can be used to get passive payments:

• At a planned yearly inflation rate of 1% of XLM token emission, voting is started.
• Lumen owners can provide their address to receive the generated coins and can canvass everyone they know so they can get as many votes as possible.
• Those addresses that get more than 0.05% of the votes will receive a certain share of tokens.
• Voting is held every week, so everyone has a chance.

The organizers of the Stellar mining pool have come up with a scheme for those who vote in favor of their project. Received coins are distributed automatically among the users who took part in the vote.

Mining Stellar currency

Before you start mining, consider the disadvantages of Stellar cryptocurrency. Among the disadvantages is the need to pay fees that users are charged when making transactions within the platform. Fees are negligible compared to those charged to customers of financial institutions, so users have nothing against them.

XLMPool is a counterpart of the classic pools used for pooled mining. In this case, there is no need for computing power, which is an unquestionable advantage. It is enough to enter the address of the pool in your personal wallet once, and the coins generated by the network will come to your account every week.

Since this system is the only one, its income is 1% per year. This is quite a lot for getting a passive profit.

Conclusion

XLM is a rather unique cryptocurrency with great potential. The platform will expand in the future. In this case, the platform itself, on which the crypto is developed, deserves more attention.

Use passive mining to get a small, but stable flow of tokens. Stock up on coins in order to exchange them in the near future in order to increase your own capital.

What would you say if I told you that you could understand everything you need to know about Stellar Lumens in 10 minutes?

If you have some free time, let’s figure it out.

After reading this article, you will learn:

• What is the difference between Stellar and Lumens? How they really work.
• What the Stellar network is and whether it’s worth investing in XLM like Bitcoin and altcoins.
• Will Stellar be successful in the future, or is it just one of the many altcoins that will soon disappear.

What is Stellar?

The terms Stellar and Lumens have always been used synonymously by crypto users. But the truth is that they mean different things.

The name Stellar refers only to the network, the protocol, the system, and the community as a whole. Lumens (XLM), on the other hand, is Stellar’s own digital currency that powers the network.

The cryptocurrency is used to send, receive and trade with other assets. The confusion may have started because the cryptocurrency was originally known as Stellar (STR), but it was later renamed Lumens or XLM.

Stellar and Lumens were born in 2014, when Jed McCaleb, founder of Mt.Gox and co-founder of Ripple, launched the Stellar network system with former attorney Joyce Kim. The nonprofit Stellar DevelopmentFoundation was created in collaboration with Stripe CEO Patrick Collison to formally launch the project in July.

After raising $3 million in seed funding from Stripe, Stellar was finally released as a decentralized payment network and protocol with its native currency, XLM. In August 2014, Mercado Bitcoin, Brazil’s first Bitcoin exchange, announced that it would use the Stellar network.

Great, now you’re starting to understand the concept.

Oops… that’s not all.

The next thing you need to know is how it all works.

How does the Stellar network work?

The network is an open-source payment technology, technically similar to another popular altcoin, Ripple (XRP), but less centralized, allowing for faster and easier transactions.

Stellar is essentially a decentralized network of servers on a blockchain that operate independently. This means that it is distributed among all the interconnected nodes of the Stellar network without control from a centralized source. The network synchronizes and reaches consensus, allowing the registry to be distributed evenly. The key element is that anyone can simply set up a verification node (server) with Stellar Core, where the verification process is performed using the Stellar ConsensusProtocol (SCP).

Think of SCP as the Stellar algorithm for transaction verification. This allows the network to scale faster and more efficiently than most PoW blockchains such as Bitcoin. The highlight of the Stellar network is that transactions take place in a more decentralized way, using “anchors”.

These anchors are organizations that people trust to be responsible for their deposits; they issue credits on the blockchain for those deposits. These anchors function as bridges between different currencies and the Stellar blockchain. Thus, all monetary transactions performed on the Stellar network (not including XLMs) are in the form of credit issued by anchors.

Ultimately, this reduces the cost and time required for cross-border transfers. (more about Functionality of the Stellar’s platform)

What are XLM Lumens used for?

Lumens (XLM) is Stellar’s native cryptocurrency. It serves several functions on the network, mainly it is used to pay users transaction fees and acts as an intermediary allowing users to trade between multiple currencies quickly, easily and at the lowest possible cost. For Lumens to work as it should, users must maintain a minimum XLM balance in their accounts.

It’s worth noting that XLM has a decentralized protocol built right into it. Any payment in different currencies can be routed through its order book, eventually the desired currency will arrive.

Since the primary use of XLM is to settle cross-border transactions for both individuals and financial institutions, Stellar has also partnered with IBM, which has helped Lumens gain significant traction as a blockchain-based cross-border money transfer.

Let’s take an example.

Sarah (the sender) wants to send her mother (the recipient), who is in China, $50 as a money transfer. Let’s assume she chooses traditional wire transfers. In that case, she would be charged an average transaction fee of 7.1%, resulting in a final transfer of $46.25, not including currency exchange fees.

But if she chooses Stellar, it will turn her dollars into Lumens, and then the order book will turn Lumens into yuan. Sarah’s mom can get an almost exact amount of dollars in just five seconds.

So this concept is similar to Ripple? Yes, it is similar. However, there are differences that you may not be aware of.

The difference between Stellar and Ripple

The basic operation of Stellar is similar to most decentralized payment technologies. However, it is fundamentally different from Ripple, although both XRP and XLM are open source and rely on distributed ledger technology.

What sets them apart is that they target different groups of customers. Unlike Ripple, which works with well-known banking institutions and consortiums, Stellar focuses more on individuals and emerging markets and has many options for using its technology. Some of these include cash transfers and distribution of bank loans to non-banks. Various partnerships with banking institutions and payment processing platforms around the world allow people to use Stellar’s network for local and international transactions at virtually no cost.

In fact, the Stellar brand itself “helps” rather than “profits” from the people.

In terms of organization size, Ripple tends to be a larger organization with more capital. After all, Stellar targets a smaller pool of users compared to Ripple.

If you’re deciding whether to invest in XLM or XRP, you’ll want to know that Ripple has a protracted lawsuit with the SEC, which could affect prices. So does the removal of XRP from major crypto exchanges like Coinbase, Crypto.com and others, which also has an impact. Naturally, this will lead to a decrease in its potential trading volumes.

XLM price and future forecasts

The price of XLM is determined by the rate at which the Stellar network spreads. The network offers a wide range of functionality that may or may not be reflected in the price of digital currency, but the more Stellar is used, the higher the price of Lumen will be. Stellar’s blockchain is one of the best and is obviously driven by its partnerships with well-known tech titans such as IBM, Flutterwave and French Tempo Money.

At its all-time high, XLM hit $0.93. Since then, its price has fluctuated, and as of the current time (March 2022) is around $0.18. However, the stable performance of the coin and the growing adoption of the Stellar platform have led to optimistic price forecasts for 2022 and beyond.

Analysts believe the price will likely be in the $0.20 to $0.30 range. While Coinswitch sees XLM soaring to $1 by 2025. However, if it goes backwards, the coin will probably drop to about $0.05 and stay there for a while before moving up.

According to Coinmarketcap, XLM was trading at $0.34050 during bitcoin’s bullish run. It currently ranks 30th in market capitalization.

How much can XLM grow? Could it reach $100?

Of course, XLM is not the brightest star. Nevertheless, it tends to do well in crypto, despite all the ups and downs, which is pretty typical for all cryptos. Naturally, this has led investors and crypto-enthusiasts to wonder how far the coin can go.

If you look at XLM’s long-term price forecasts, they vary widely. Some even suggest a rise to $5 to $10, which is a rise of more than 500% even relative to the historical high. However, more moderate estimates range from $1 to $3. In the end, if you’re going to diversify your portfolio, XLM still generates substantial ROI.

Although $100 seems like an unreasonable target price, XLM is still a fantastic long-term investment. Nevertheless, its price is unlikely to soar above $100. After all, Stellar is here to help, not profit. Also, since Lumens supply is increasing at a fixed rate of 1% per year, it helps fight inflation and protects its holdings.

We can conclude that XLM is an altcoin that is not going nowhere. In fact, it has gained mass distribution and is now listed on almost every exchange.

How will Stellar come to success in the future?

XLM’s strength lies in the Stellar network and its current partnerships. The platform already has an impressive list of partners and has even been integrated into Samsung Mobile.

Let’s face it, partnerships are an integral part of any crypto project because they drive adoption and are a testament to the real utility of the XLM coin. Here are a few of the companies Stellar is partnering with:

• IBM
• Smartlands
• Stripe
• HTC Exodus
• Franklin Templeton
• Flutterwave
• Wirex
• Baracoin
• Novatti Group
• Saldo
• Tempo
• Bitbond
• SureRemit 

This is just one of the reasons why XLM is in the top 50 of all altcoins. It is very well established, has tremendous support, and its technology helps solve one of the major problems of today’s world – providing financial services to the public without banks. Even reputable companies like Deloitte are now providing services on the Stellar network.

Back in 2017, 30 banks confirmed that they had agreed to use Lumen blockchain for cross-border transfers. Payment service Stripe has also expressed interest in hosting Stellar on its platform.

Is there any possibility of a collapse?

XLM is a great long-term investment because it’s not going anywhere anytime soon. But it is unlikely that this cryptocurrency will dethrone Bitcoin or Ethereum.

But!

Even Elon Musk believes in cryptocurrency, which means that the hopes that Stellar Lumens will live on are very real. Although Lumens is becoming a go-to payments token, there hasn’t been much information recently about its development. However, that certainly doesn’t mean anything if you believe in it. It’s only a matter of time before this cryptocurrency proves itself.

Conclusion

XLM doesn’t seem like the worst investment in 2022, although the platform still has plenty of room for growth and development. The coin has established some strong partnerships, it has a strong community behind it, and that makes a strong case for a significant price increase.

However, no one can know anything for sure about the future, especially against the backdrop of the turmoil that this year has brought.

Universal payment solution by IBM 

Leading tech giant IBM uses Stellar to make its payment structure more transparent. Although IBM is partnering with a variety of banks, private, federal and state, including Central Banks (CB), especially in the Asia-Pacific region, they want to know what Stellar can offer them.

According to Jesse Lund, head of Blockchain Solutions, the company is close to helping the Central Bank move fiat money to the Stellar blockchain.

Analysts speculated that the Stellar-IBM partnership could eventually replace the SWIFT/IBAN payment system. Such an outcome would greatly benefit XLM cryptocurrency.

Veridium

Veridium is partnering with both IBM and Stellar to label the carbon credit market worldwide. The new start aims to include their VERDE token in oil and gas trading platforms in an attempt to automate the process of compensation of carbon footprints.

This means that when an individual or institution makes a purchase, they can purchase the corresponding amount of carbon credit to compensate for their own actions. This can serve as a basis for achieving carbon neutrality of large corporations and institutions. In addition, it can also help with environmental reporting.

Stellar X

In an effort to become an authority in the decentralized exchange industry, Stellar X has put all of its powers to create a great user experience. The main feature may give it an advantage over other DEX platforms as he was able to use the Stellar Anchor Network.

Open Garden

Open Garden allows users to turn their phone into a Wi-Fi hotspot and get paid in Lumens for the used data.

It may not be suitable for the US and Europe. However, it fits in perfectly with the Stellar Market Base as the app’s purpose is to mainly cover places where internet connectivity is not available to most people.

TillBilly

The platform plans to create a seamless point of sale on the Stellar Network that will be much cheaper than credit and debit cards and Apple pay. To make life easier, the platform will offer an electronic alternative to fiat money.

Slice

Real estate is a very popular type of investment. And since buying real estate in another country with their own rules is quite a risky business, Slice chooses projects that are available for the United States. Although the real estate market is a highly competitive area, Slice feels quite confident.

Sure Remit

Africa is said to be the largest market and every year Africans send home billions of dollars from abroad. Sure Remit is designed specifically for such money transfers. It also works with Stellar affiliates in Kenya, Rwanda and other African countries. What’s more, it can be used to pay utility bills online as well as make online purchases.

SmartLands

SmartLands is used to work with agricultural land. The direction of movement is correct, since paper money is gradually being used less and less to purchase land. If in the future cryptocurrencies can get enough power to invest in agricultural relations, then it will all pay off with big dividends.

•     Emission mechanisms and principles
•     Consensus building mechanisms
•     Architectural benefits and risks
•     Licensing and legal aspects 

Stellar is a decentralized platform for P2P currency transactions such as payments and exchange. Stellar’s goal is to bring banks, payment processors and people together for fast, cheap and secure transfers of funds. One of the main directions of Stellar is the exchange of Stellar-based assets using a built-in decentralized exchange.

The platform was created in 2014 by Jed McCaleb and Joyce Kim and initially operated on the Ripple protocol. Later on, a new original protocol was developed, the source code of which is publicly available. Work on the new protocol was launched in November 2015.

The main reason why Jed McCaleb had left Ripple and created Stellar was the accusation of the Ripple management that they are interested solely in increasing its own profits, that the payment system is centralized, and its management exploits it, among other things, by “swinging” the rate of the built-in currency of the XRP system. Thus, the platform was originally a “clone of Ripple”, eliminating its drawbacks related to the lack of transparency in financial flows, organizational structure, etc. Subsequently, the projects chose different development paths.

Stellar’s visibility has been boosted by the launch of several major projects in collaboration with IBM, a giant of IT.

Emission mechanisms and principles

The platform’s native token is Lumen. The ticker is XLM or STR. The more common ticker XLM will be used further in the text.

The coin is referred to by two tickers, since it was originally called Stellar, and not all exchanges have changed the designation. The name change occurred when the Stellar protocol was launched in 2015 in order to separate the name of the native cryptocurrency from the name of the platform and the non-profit organization that operates the platform.

100 billion Lumen tokens were issued when the platform was launched in 2014.

Tokens are generated weekly by the protocol to create an artificial inflation of 1% per year. Tokens are distributed to the address that receives more than 0.05% of the votes of the entire network. You can read more about voting on the official website . However, the situation in which one address on the network receives a sufficient number of votes is almost impossible. As a result a number of resources have appeared, which launch pools to collect votes and then distribute XLM among those who voted for the pool. Thus, the basic strategy for distributing inflationary tokens could be different, without requiring the use of third-party services to work. 

The Stellar Foundation has developed a token ditribution program in order to diversify the distribution. Distribution of tokens:

• 50% – Direct Registration Program, which aims to distribute tokens to the largest number of people around the world. Programs are carried out in stages, while the methods of distribution may differ.
• 25% – distribution within the partner programs: for grants and various kinds of organizations that contribute to the development of the Stellar ecosystem.
• 20% – distribution among owners of BTC (19%) and XRP (1%).
• 5% to the Stellar Fund for operating expenses. 

It is worth noting that much fewer tokens were distributed than originally planned. This is due to the fact that the owners of bitcoin wallets had to leave an application for participation. Unclaimed XLMs were sent to the Stellar Foundation and the Build Challenge. Stellar Build Challenge is a special reward program for development and integration within the Stellar ecosystem.   

XLM is the native currency of the platform. To protect against transactional spam, a small fee of 0.00001 XLM applies to each transaction. XLM is also used as a “bridge” for multicurrency transactions (in case two assets are exchanged between which there is not sufficient liquidity but at the same time there is liquidity in a pair of each of them with XLM).

Starting with version 12 of the protocol, Stellar abolished the inflationary mechanism.

Consensus building mechanisms

 The Stellar Consensus Protocol (SCP) works on the basis of the Byzantine Generals’ task. In distributed systems, the task of Byzantine generals is the task of reaching consensus in a network of unreliable calculators. It sounds something like this:  the task of interaction between several remote nodes that received a message from one control center. Some of the nodes, including the center, can be compromised, but despite this, it is necessary to make the right decision. 

SCP uses the Federated Byzantine Agreement ( FBA) model , which introduces the concepts of quorum and quorum slices to describe how it works. In a distributed system, a quorum is a set of nodes sufficient to reach consensus. The Federated Byzantine Agreement (FBA) introduces the concept of quorum slices (qourum slice) – a set of nodes, the opinion of which is enough to make a decision by one specific node.  

The main difference of the Federated Byzantine Agreement (FBA) is that each individual node chooses quorum slices for itself, the solution of which it trusts. A node can select multiple trusted quorum slices and wait for them to approve the transaction. These nodes, in turn, also expect transaction approval from their quorum slices. In this way, a sufficient number of network votes are collected and a system-wide consensus is formed.

The intersection of quorum slices as an important parameter of the system’s performance and ability to lead to the final state. The protocol is only operational if any two quorum slices have an intersection. An illustration of the intersection is depicted below. In the first case, the groups of nodes have no intersection and, accordingly, the groups of nodes can come to different solutions. In the second case, the quorum intersection condition is met and the system will reach a system-wide consensus.

Each node is responsible for maintaining quorum slice intersections. The primary method is to responsibly select large quorum slices by a node whose members are authoritative enough to risk their reputation. Removing malicious nodes from a quorum slice does not lead to a loss of its integrity. Thus, the main parameter of the finiteness of reaching consensus is the establishment of trust links between the selected node quorum slices.

The process of reaching consensus takes the form of multi-stage voting: nodes propose transactions, vote for them and confirm the vote with a special ballot when the quorum threshold is reached. The confirmed results are then recorded and spread over the network. If the network does not come to one decision within the allotted time, voting goes to a higher round and the nodes vote again, while they can cancel their votes using a special function (abort) and vote for a different value.

A technical description of SCP is available on the official Stellar website at the link . It is worth noting once again that in order to reach consensus, there must be an intersection between quorum slices. In the current implementation, this is mainly achieved due to the fact that the nodes launched by the Stellar foundation are considered “trusted” and users add them to their quorum slices. This creates a risk in case of failures in the operation of these nodes, leading to a shutdown of the network. 

It is worth noting that the algorithm does not include any reward mechanisms for validators, which can negatively affect an increase in their number and expansion of geography and, accordingly, at the level of project decentralization.

Architectural benefits and risks

The architecture of the Stellar protocol is based on the concept of registry (a ledger). The registry reflects the current state of the system: a list of all accounts, balances, orders of the built-in decentralized exchange, etc. The first register in history is called the genesis register (by analogy with the genesis block,). Each ledger is cryptographically linked to a unique previous state of the ledger, forming a chain. Updating the state of the registry occurs through the execution of rounds of the consensus algorithm.

One of the main features of Stellar is the ability for users to use any assets, create their own assets and exchange assets among themselves. All transactions with assets in Stellar, with the exception of XLM, are carried out on the basis of a system of credits. To implement these capabilities, Stellar has created special entities – anchors.

Anchors are trusted organizations that release assets in the Stellar network. The role of anchors can be performed, for example, by banks or payment systems. The participant chooses the anchor they trust in themselves, while trust in other system participants is not required. Each anchor has its own account.

Anchors perform the following functions:

•     Accept network member deposits and issue appropriate credits to the member’s Stellar registry address. Credit corresponds to some currency, for example, USD.
•     Allow you to withdraw funds through an issued credit.

Algorithm of user interaction with gateways:

1. The user makes a cash deposit to the anchor account.
2. The gateway issues a credit for the funds that ended up in the deposit account.
3. A user can send a credit to any user who has an account in the system.
4. The recipient of the credit can convert it into real currency by transferring the credits to the anchor account.

Thus, Stellar implements the ability to link digital assets with real assets. At the same time, additional restrictions are not imposed on the transfer of credits among users, for example, when the credit is linked to fiat currency, the user will be able to make cross-border payments quickly and with a minimum commission.

In order to protect the network from congestion by creating a huge number of addresses (malicious spam), there is a requirement according to which at least 0.5 XLM must always be on each balance sheet. It also helps to clean up the registry from abandoned addresses.

Licensing and legal aspects

In 2014, the Stellar Development Foundation was created. It is a non-profit foundation whose creators can benefit neither from its work, nor the sale of stocks. The Foundation is registered in the state of Delaware, USA. The fund’s initial funding of $ 3,000,000 was received from Stripe and subsequently redeemed with 2 billion lumen tokens (XLM). Also, 5% of the initial issue of tokens is traded on exchanges and used for operating expenses such as employee salaries, office expenses, educational and affiliate programs, etc.

Additional items of income for the foundation are annual contributions from its members and charitable contributions from third-party companies or individuals. The creation of the fund was primarily motivated by the desire to avoid criticism of the project, similar to criticism of Ripple, where executives were blamed for exploiting the system to make income for themselves.

In May 2017, the creation of a commercial organization Lightyear.io was revealed. It was supposed to focus on expanding the system of services based on Stellar, attracting partners, etc. Later the company was renamed to “Interstellar”.

All project software is licensed under the Apache license version 2.0. This license allows commercial use, modification and / or distribution.

Stellar is a middleware for integration between financial products and institutions. Stellar is not a licensed financial institution / operator. If an organization plans to accept deposits and make credits in the Stellar network, then it may need to obtain a specialized license, such as a Financial Services Provider (MSP) license. Integrators are responsible for meeting all KYC / AML authentication requirements themselves. However, Stellar has released tools to help organizations verify KYC / AML compliance. 

• Team
• Advisors
• Partners
• Investors
• Competitors

Team

On the official website you can see the main composition of the team, including:

• Jed McCaleb – Developer, co-founder of Stellar Development Foundation. He has extensive experience in IT and business. Creator of the eDonkey2000 file-sharing network, one of the co-founders of Ripple, creator of the Mt.Gox exchange.
• David Mazières is a Senior Fellow, co-founder of the Stellar Development Foundation Professor of Computer Science at Stanford University, where he leads the Secure Computing Research Group and the Blockchain Research Center. David is the author of a technical White Paper describing the SCP consensus algorithm.
• Nicolas Barry –  M.S. in Computer Science and Mathematics, and has extensive experience in IT, including work at Microsoft and Salesforce.
• Keith Rabois – Board member. Investment partner at Khosla Ventures. Previously held executive positions at Paypal, Square, was a board member at Yelp, and VP of Business Development at LinkedIn.
• Denelle Dixon – CEO and Executive Director Before joining Stellar, Dixon served as COO of Mozilla, one of the most successful mission-driven employee-source organizations.
• Lin-Hua Wu – Member of the Executive Board. leads internal and external communications, brand marketing, and analyst relations at Dropbox. Previously, she ran corporate communications at Square Inc. and was a partner at the Brunswick Group.

The official site lists 11 team members and four board members. There are 118 people listed on the Stellar Development Foundation linkedin page right now. There is also a section on the official site with a large number of open positions. 

Advisors

The official website lists 6 advisors, including:

• Matt Mullenweg – Founder of WordPress.com. Experienced entrepreneur, developer and angel investor.
• Greg Stein – Director of the Apache Software Foundation. An advocate of open-source software, member of the Python Software Foundation, and helped launch Google’s open-source hosting platform.
• Patrick Collison – Co-Founder and CEO of Stripe.

Partners

Among the partners of the project are such companies as:

• Bankhaus von der Heydt – one of the oldest banks in the EU and developing a stable cryptocurrency pegged to the Euro.
• IBM uses Stellar for their international remittance system.
• Tempo Money Transfer uses Stellar as one of its transfer tools.
• Moneygram – a cross border P2P payments and money transfer company.
• AnchorUSD – develops a stable cryptocurrency backed one-for-one to the US dollar.

More about partner projects, which use Stellar protocol can be seen on the official website. 

Investors

Stellar’s official website states that the initial $3 million investment in the project came from Stripe, which was later redeemed in XLM tokens. Also listed as corporate investors are BlackRock, Google.org and FastForward.

Competitors

The main competitors of Stellar can be called cryptoprojects aimed at creating a fast and convenient payment protocol.

One of the competitors of Stellar Lumens is the Ripple platform (the comparison of the two platforms and the competition between them is described in this article). Originally, Stellar was based on the same source code and was considered a fork of Ripple at the beginning of its existence, however, over time, it gained full independence. Ripple is often criticized by experts who believe the platform is centralized and controlled by the commercial structure of Ripple Labs. In addition, for a long time Ripple’s code was closed, unlike Stellar. Now Ripple mostly cooperates with institutional clients.

A large number of cryptoprojects are working on the creation of a convenient payment protocol, among them such projects as Nano, Dash and many others. An important feature of Stellar is the ability to link the issued token to another asset, which allows a more familiar way to integrate the solution into current payment systems. However, it should be taken into account that binding relies not only on the technical capabilities of the protocol, but also on the fact of trust in the gateway.

In terms of the ability to create smart contracts and decentralized applications, Stellar can be compared to projects such as Ethereum, Eos and others. However, in Stellar, this direction is not the main and underdeveloped. Also, for example, on the Waves platform it is available to issue their own tokens, create applications and smart contracts, as well as there is a decentralized exchange.

At the moment, the main features of Stellar that contribute to its spreading as a payment protocol are its relatively high throughput, fast confirmation of transactions and low fees.