Difference between revisions of "Stellar (XLM)"

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Revision as of 15:54, 7 July 2018

Stellar (XLM)
Founded 2014
Headquarters San Francisco, CA
Key People Jeb McCaleb (Co-Founder, CTO)
Employees 15-20
Products Stellar Platform, XLM
Twitter @StellarOrg
LinkedIn Profile
Facebook stellarfoundation
Website https://www.stellar.org/
Blog https://www.stellar.org/blog/

Stellar (XLM) is a global financial platform based on distributed ledger technology. It is a protocol created to help develop a decentralized global financial system, similar to Ripple. Its digital currency, or digital tokens, are called "Lumens."[1][2]


Stellar was created in 2014 by the Stellar Development Foundation.[3] Among its founders was Jeb McCaleb, one of the creators of the now-defunct bitcoin exchange Mt. Gox, as well as a co-founder of Ripple.[4] According to its white paper, Stellar was created to address the need for a "financial infrastructure that supports the kind of organic growth and innovation we’ve seen from the Internet, yet still ensures the integrity of financial transactions."[5]

Stellar is working directly with IBM on a blockchain-powered project called Hyperledger Fabric, which aims to use distributed ledger technology to create a streamlined, cross-border payment system.[6]


Unlike bitcoin, which uses a proof-of-work system to verify transactions made on its blockchain, Stellar uses a system that does not rely on a closed network of nodes. Instead, it uses a model called FBA (federated Byzantine agreement), which uses a meta-system to verify transactions and maintain the integrity of the network's trustworthiness. This is accomplished by having each user within the system establish his or her own set of preferred users, watching them to ensure they verify the transaction first before the user verifies it.[7]

Cross-border trade

The Stellar Development Foundation's stated goals are primarily to take advantage of distributed ledger technology to help foster economic growth worldwide. It seeks to do so by lowering the cost of small transactions, or micropayments, as well as decreasing the costs for individual users making payments to users in other countries. It also seeks to improve the capabilities of mobile technology to perform fast, low-cost money transfers, and stimulate the growth of small business worldwide, all in compliance with international law.[8] To that end, Stellar has partnered with numerous companies and services including the U.K.-based consulting firm Deloitte and, as of May 2018, American Express.[9][10]

The Stellar Development Foundation plans to use the Stellar protocol and lumens to provide a basis for interoperability between various financial systems, including banks. Its service provides multi-currency transactions, which are designed to be as efficient as possible regardless of varying values between fiat and cryptocurrencies.

Basically, it is built into the programming of the Stellar protocol that if the payee wants to be paid in a different currency than what the payer is sending, Stellar converts that currency to the desired currency at the same time that it sends the payer's value to the payee. Normally this would be done over the course of days or weeks while financial institutions talk to each other to verify the transaction.

For example: if an American user wanted to pay someone in Stuttgart from their Chase Bank account using Stellar, Chase Bank would have to clear things up with whatever bank or credit institution the German user wanted to use to receive the payment, in order to verify the transaction and convert it to euros. This process usually takes several days. Stellar is designed to do all that automatically in a couple of minutes.[11][12] Thus, this transaction occurs between the U.S. user and the German user with the ease and speed of sending an email.

Stellar is designed so that these transactions are also quite cheap, costing a fraction of a cent each.[13][14]

Private companies and financial institutions in several countries, especially underbanked regions in Africa, India, the Philippines, and some Southeast Asian countries, have begun using the Stellar network. India's ICICI Bank, for example, is partnering with Stellar in order to allow users to send faster, more secure transactions with lower fees than was previously possible.[15][16]

Mobile transactions

Numerous companies around the world are integrating with Stellar in order to enable users to perform transactions, including cross-border transactions, using mobile phones. Coins.ph, a leading mobile financial services provider in Southeast Asia, as well as the multinational African fintech company Flutterwave, have both integrated with Stellar in order to give their users the ability to make fast, cheap, legally-compliant payments across national borders using mobile phones.[17][18][19]

John Lothian News

Stellar was highlighted in a recap of Consensus 2018 by contributing editor Chuck Mackie. You can read the article here.