Stellar, created by Mt-Gox and Ripple co-founder McCaleb, is a new payment system similar to Ripple that was recently launched. The Executive Director of the Stellar Development Foundation, Joyce Kim, stated that Stellar will serve as a bridge between fiat currencies and digital currencies, which is key to the mainstream adoption of digital currencies. This new platform acts as a decentralized gateway for transferring funds between digital and fiat currencies. Like Ripple and Bitcoin, Stellar also has its own digital currency, Lumens (Stellar).

The network created by Stellar, like the Ripple payment network, enables the transfer of any currency, including USD, Euro, CNY, JPY, or Bitcoin, in an easy, quick manner. It relies on Bitcoin blockchain technology, connecting 180 global currencies within 2-5 seconds, linking banks, payment systems, and individuals, reducing transaction fees and time delays associated with cross-border payments.

Stellar’s Consensus Protocol (SCP)

The Stellar white paper (authored by Professor David Mazières) provides detailed information about how the Stellar Consensus Protocol (SCP) works. The white paper is listed on Google Scholar and had been cited 39 times at the time of writing this blog post. The paper is 32 pages long and highly technical, containing detailed mathematical proofs regarding the correctness of the Federated Byzantine Agreement (FBA) consensus model.

Core Technical Features

• Decentralized Network: A decentralized network consists of nodes that operate independently. Information is distributed across a network of servers rather than being driven by a single source.
• Ledger: Similar to traditional ledgers, the Stellar network records all balances and transactions for each individual account on the network. A complete global Stellar ledger is hosted on every server running Stellar software, allowing any entity to run a Stellar node.
• Consensus: Stellar servers communicate and synchronize with each other to ensure transactions are valid and can be successfully applied to the global ledger. The entire process of reaching consensus on the Stellar network occurs approximately every 2-5 seconds.
• Anchors, Trust, and Credit: Anchors are trusted entities that hold deposits and issue credit into the Stellar network based on those deposits. They act as bridges between different currencies and the Stellar network. All currency trades on the Stellar network (except for the built-in digital currency Lumens) occur in the form of credit issued by anchors.
• Distributed Exchange: The Stellar ledger can store offers to buy or sell currencies. Offers are public commitments to exchange one type of credit for another at a specified price. The ledger becomes a global market for these offers, enabling people to trade currencies like foreign exchange, seamlessly converting currencies during transactions.
• Multicurrency Transactions: Stellar allows you to send any currency you hold to anyone else in a different currency type through its built-in distributed exchange. People can receive any currency through the anchors they have added.

Stellars Business Model

The Stellar Development Foundation (SDF) or Stellar.org is the company that maintains the open-source Stellar network. It is a non-profit organization that covers operational costs through donations and 5% of the issued Lumens. The Stellar network is an open-source, decentralized system, and the Stellar Development Foundation does not charge individuals or institutions using the network.

Corporate donors to Stellar include Blackstone (a $29 billion global investment management firm with 13,000 employees), Google.org, Stripe, and FastForward.

Differences Between Stellar and Ripple

Stellar aims to create a distributed payment system that absorbs the best aspects of Bitcoin and Ripple while surpassing Ripple.

Lumens (XLM) are the base digital currency used in the Stellar payment network, designed with a total supply of 100 billion, similar to Ripples total supply. However, the supply of XLM is not gradually reduced; instead, it increases by 1% annually.

In the Stellar payment network, users use Lumens as the base currency to transfer any currency, including USD, CNY, Euro, JPY, or Bitcoin, among others.

Unlike Ripple, 50% of the XLM supply is directly distributed to users worldwide through distribution programs, 25% of XLM is allocated to underserved populations and non-profits through inclusion programs, and 20% is distributed through a Bitcoin program. The remaining 5% is used to cover operating expenses for the Stellar Development Foundation. In other words, 95% of XLM is given away.

The Stellar Development Foundation operates Stellar, a non-profit organization focused on environmental sustainability, charity, and financial inclusion.

Stellar Partnerships

1. Stellar is fully supported by Stripe, a payment technology company valued at billions and classified as a fourth-party payment provider.

2. IBM announced at the Sibos 2017 conference that it had partnered with blockchain startup Stellar to use Stellar’s custom cryptocurrency to enable real-time cross-border fiat currency payments and settlements.

3. Deloitte, one of the worlds largest professional services firms, has integrated the Stellar network to create a revolutionary cross-border payment application. This project was unveiled at the May 2016 Consensus Conference in New York, and Deloitte Digital Bank now offers real-time cross-border payments.

4. On May 11, 2017, Deep Valley Technology and Stellar Network held a strategic cooperation signing ceremony at the headquarters of Golden Valley in Shanghai. Both parties will jointly establish a Sino-US joint venture, Gingpay, to build an online payment platform for global users using the Stellar Network and provide technical support to institutions and individuals joining the Stellar Network.

*This content has been compiled by the official Non-Small Number team. If you wish to reproduce it, please cite the source.