Everything You Need to Know About Stellar XLMsteemCreated with Sketch.

in #cryptocurrency5 years ago (edited)

When we focus on the top cryptos in the market, we often throw the term out there that crypto is going to the moon. One of those crypto’s though literally has a rocket to the moon as a logo. Of course, I am talking about Stellar and their XLM Lunar coin. XLM is currently sitting at number 8 on coinmarketcap, and with the rest of the market, we are starting to see renewed excitement in the space for this and other projects. So in this video, we are going to look at everything we think you need to know about Stellar XLM if you make sure you subscribe to our channel on Friday we will be looking at the top 7 reasons that Stellar will succeed.

Stellar XLM is the work of a non-profit organization called the Stellar Development Fund, the SDF was formed in 2014 when Jed McCaleb one of Ripples founders teamed up with Joyce Kim to create a cryptocurrency project with a more altruistic goal.

Stellar's mission was to create a financial platform. A system where even the lowest income individuals of the world would be able to access low-fee, secure and easy to use financial services.

Many people wrongly believe that Stellar is a fork of Ripple, but that just isn’t correct, Jed McCaleb made it clear on Twitter that Stellar is a completely different code. Very much like Ripple’s XRP though it is designed to make international transfers but is not focused on corporate partnerships and as a non-profit, it is driven by its ideological mission rather than profit margins.

Stellar isn’t without competitors; for Smart Contracts you have Ethereum, and for the borderless transfers of money there is Ripple who as we showed in the 8 reasons Ripple will succeed video has over 200 financial clients using their technology giving them a massive headstart on Stellar.

That's not to say that Stellar doesn’t have some impressive partnerships of its own. IBM is, of course, the biggest. IBM recently landed a massive $740 million contract to provide services such as automation and blockchain technology to federal departments including defense and home affairs for the Australian Government. There's no guarantee that stellar will be a part of that initiative, but with it being reported that IBM is developing a Stellar based stable coin it is good news for the Stellar Development Fund.

Other partnerships include Deloitte, a multinational professional services network and the Deloitte Digital Bank, and Stripe, the international online payment gateway.

Stellar is a potentially great project, but there are some negatives that you need to weigh up if you are planning to invest in Lumens. XLM actually acts as a bridge currency and provides protection from spamming the network. The problem is that there are over 100 Billion lumen coins in total supply and the stellar development fund has centralized control over the vast majority of those coins though it should be noted that the SDF claims those coins are locked up by Smart Contracts.

The other problem is that Stellar uses a Constant Inflation model. Bitcoin, by comparison, has a fixed supply and through its halving of block, rewards are deflationary in nature. This means that it has scarcity to it which in theory should drive up the value of the coin.

Stellar on the other hand issues 1% new Lumen coins every year. This fixed inflation mechanism of the coin supply has some investors worried that it would negatively affect the value of Lumen coins. Inflation is a bad thing but only when the increase in supply is higher than the demand for the currency. Stellar believes that by fixing the inflation to just 1% per year, they will avoid that becoming an issue while ensuring that the platform is sustainable. Controlled inflation can have the advantage that it helps with price stabilization which makes XLM more attractive for wider adoption.

Other criticisms have been raised over the Stellar Development Funds centralized control over the coin supply itself. This is always a concern when other cryptocurrencies have experienced orchestrated token dumps and insider sell-offs in the past. Looking at the way Lumens are distributed; however, only 5% of the tokens will be held for use by the Fund.

One of Stellars more impressive features is it's built-in decentralized exchange or DEX.

Centralized exchanges are open to hacks because they retain the private keys for the on-exchange wallets. Stellar's Dex, unlike centralized exchanges, allows users to retain their private key. This makes it almost impossible to hack. Order books are stored on the ledger and are a built-in feature of Stellar's protocol which also means that settlements are handled on-ledger too. This makes for a more reliable and faster DEX.

It also means that the overall transaction fees are a fraction of the cost for centralized servers. For example, if the cost for 100,000 transactions of £100 on a Centralised exchange would amount to $25,000 for Stellar the cost per 100,000 transactions is just 40 cents.

Stellar also has its own Stellar Consensus Protocol based on Federated Byzantine Agreement. To explain the process its best to explain it compared to Ripples approach to consensus. Bitcoin uses Proof of Work which is different from both Ripple and Stellar, so we won’t use that here. If you want to learn more about how validation works for Bitcoin, you can watch my video asking Does China control Bitcoin?

Ripple manages validation of XRP transactions using an approved list of validator nodes. In order for a validator to become a trusted node, Ripple has to approve it to join the network. So while the network is decentralized, it is often argued that because Ripple decides who gets into that network the control of the network is centralized. Ripple has stated on their FAQ that they eventually intend to remove themselves from this process entirely.

Stellar's approach is that any validator can join the network, but it is up to individual validators to choose which other validators it wants to trust. This selection is called a ‘quorum slice’. Quorum slices overlap to create the Quorum or network-wide consensus on a transaction. This approach allows for open membership which improves decentralization. The other feature of the consensus protocol is its focus on preventing forks in the ledger.

Despite the cons it’s Consensus Protocol, Decentralised Exchange and its altruistic vision to bank the unbanked makes it a very interesting cryptocurrency project and to see the 7 reasons in the news so far why Stelar will succeed you need to like and subscribe to this channel because I will be releasing a 7 reasons that Stellar XLM will succeed video tomorrow night.

What are your thoughts on Stellar?

Is their 1% annual inflation or high coin supply a concern for you or do you believe in the project and agree with their goals? If so let us know in the comments below. We really like to hear your thoughts on the stories we run so, please get involved.

So there you have it loads of great info about Stellar XLM and for everything I have mentioned there are links to source material.

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Disclaimer: Cryptopig content is written by a team of blockchain passionate people. We are not registered as investment advisors. Don’t take the information in this post as investment advice and make sure you do your own research before investing. Cryptocurrencies are a very risky investment, never invest more money than you can afford to lose.

LINKS

Founder

https://www.linkedin.com/in/jed-mccaleb-4052a4/

https://www.bitdegree.org/tutorials/stellar-lumens/#If_Stellar_isn8217t_a_Ripple_fork_what_is_it

Mission

https://www.stellar.org/about/mandate/

Partnerships

https://cryptobriefing.com/5-stellar-partnerships-that-explain-xlm-escape-velocity/

https://www.bloomberg.com/news/articles/2018-07-05/ibm-lands-740-million-deal-to-supply-data-security-to-australia

Inflation

https://medium.com/diviproject/inflation-and-divis-economic-model-why-inflation-can-be-good-64b7ee2b3626

https://blockonomi.com/bitcoin-deflation/

How Stellar’s DEX works:

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