The stellar blockchain turned many heads after announcing a partnership with IBM in October 2017. The cooperation involves the establishment of numerous currency corridors between South Pacific island governments. The blockchain network used by Stellar is just one of many in the crypto-sphere.
However, given its popularity, how does it differ from its competitors? It was introduced in July 2014, aiming to bridge the gap between cryptocurrencies and conventional finance. That, though, is not the only advantage of this unique blockchain network. This article broadly explains- what is stellar- and dives deep into the functionalities of this blockchain network.
What does Stellar blockchain do?
Stellar is a global exchange network that is open-source and decentralized and enables cheap transfers between digital and fiat currency. Additionally, it facilitates cross-border currency exchanges between any two currencies.
It uses blockchain technology, just like other cryptocurrencies, to maintain network synchronization. Compared to other blockchain-based financial access and inclusion platforms, Stellar is quicker, less expensive, and more effective. Although Stellar is a decentralized peer-to-peer framework, the Stellar coin, Lumens (XLM), empowers it.
The well-known Jed McCaleb and Joyce Kim founded Stellar, a blockchain that split away from Ripple because of certain underlying discrepancies. The stellar network is now highly regarded in the crypto-sphere due to its speed, dependability, and affordability.
Is Stellar better than Ethereum?
The applications of blockchain technology are countless. Blockchain’s use is not limited to developing and managing digital currencies. Blockchains can also track food, secure the internet of things, store cloud data, and manage medical information.
However, most blockchain technologies are incapable of performing such tasks. Ethereum’s extensive programmability resolves this issue. Implies–that it is possible to create applications and features that use the Ethereum blockchain to exchange Ethereum currency.
It is complicated but also quick, open-ended, and a powerful platform for building blockchain applications. Ethereum makes it easier to design and use smart contracts to safeguard user-created applications and prevent copyright theft.
On the other hand, stellar focuses on trading various digital assets. However, stellar coins (lumens) do not hold value but serve as a means of exchange.
Ethereum is the most popular blockchain in use. However, it has made space for hacking attacks. Stellar delivers more security as a result of its reduced flexibility. Further, stellar blockchain offers additional security features like batching/atomicity, multi-signature, and the ability to pick and choose nodes to authenticate transactions.
Stellar processes transactions on average in five seconds as opposed to more than three minutes for Ethereum. Additionally, stellar’s transaction fees are a small fraction of Ethereum’s.
Being compared with Ethereum in itself is a tremendous achievement. However, Ethereum and Stellar continue to be exemplary in their respective endeavors. Both blockchains can coexist and draw various token issuers, thanks to their substantial differences. It is complicated to decide which one is better than the other.
Is Stellar the same as bitcoin?
No, Stellar and Bitcoin are not the same. Both are decentralized digital currencies but have different underlying technology and distinct goals. Bitcoin is a peer-to-peer electronic cash system that aims to be a decentralized currency for global transactions.
On the other hand, Stellar is a platform that aims to make it easy to create, send, and trade digital representations of all assets: dollars, pesos, bitcoin, and pretty much anything. The stellar finance built on the blockchain system gives people of all income levels access to low-cost financial services.
Additionally, Stellar uses a consensus algorithm called the stellar consensus protocol (SCP), which is different from Bitcoin’s proof-of-work consensus algorithm.
Is Stellar a good investment?
Stellar is a cryptocurrency and open-source payment system designed to make international money transfers faster, cheaper, and more efficient. The value of any investment can be highly volatile and is subject to several factors, including market conditions and the performance of the particular asset.
Investing in cryptocurrency poses a high level of risk due to the market’s volatility. Stellar has had a strong performance in the past, reaching an all-time high in January 2018, but has also experienced significant declines in value.
The Stellar Lumens network continues to be well-liked among investors drawn to unaffiliated, decentralized projects. For those of you who like long-term crypto investments, Stellar Lumens is a fantastic option because its strong fundamentals have the potential to increase values.
What blockchain does Stellar use?
Stellar uses a decentralized blockchain built on a consensus algorithm called the Stellar Consensus Protocol (SCP) based on a Federated Byzantine Agreement (FBA) model. SCP allows for decentralized control, low latency, flexible trust, and asymptotic security. The nodes in the network, called quorum slices, are chosen based on their stakes and reputation, which helps to ensure the integrity of the network.
How does the Stellar blockchain work?
The fundamental workings of Stellar are comparable to those of most decentralized payment systems. It manages a decentralized server network with a distributed ledger that is updated across all nodes every 2 to 5 seconds. The consensus protocol that Stellar uses, sets it apart.
The consensus protocol Stellar uses does not require transaction approval from every miner in the network. Instead, it uses the Federated Byzantine Agreement (FBA) algorithm that allows for quicker transaction processing.
For instance, if someone transmits a dollar to someone else using a Stellar-based app, the nodes will check that the correct balances were deducted and credited. Every node enables the other nodes to observe the transaction and accept it.
No one has authority over a Stellar network. It automatically maintains synchronization by default. At present, Stellar network hosts hundreds of independent computers throughout the globe.
A wallet is necessary for sending and receiving XLM. Users of a stellar wallet can sign transactions and access their funds using a combination of their private and public keys.
The stellar blockchain explorer allows users and investors to view transactions, ledgers, and accounts on the Stellar blockchain. Stellar has nodes in it. These nodes support the blockchain’s efficient operation and the publication of the ledger.
Is Stellar a layer 1 blockchain?
No, stellar is not a layer 1 blockchain. In terms of its technical architecture, stellar functions as a layer 2 blockchain, as it builds on top of existing blockchain technology (such as the underlying blockchain of the digital assets it supports) to offer additional functionality.
The Stellar network utilizes a consensus algorithm called the stellar consensus protocol that allows for a decentralized network of nodes to reach consensus on the state of the blockchain without the need for mining or proof of work.
The Stellar network also features a built-in decentralized exchange (DEX) that allows the trading of various assets. It enables uncomplicated conversion between different currencies and assets, making it a valuable platform for cross-border transactions.
Is Stellar a good blockchain?
All emerging blockchain systems are banking on three key advantages over their forerunners: faster transactions, scalability, and cheaper transactions. Users can effortlessly store and transfer value with Stellar for low prices without the worry of chargebacks. Additionally, it facilitates and speeds up international payments.
On the other hand, Stellar was created with the ordinary user in mind and for underdeveloped nations. It offers easy, rapid, and affordable transactions that provide users access to the global economy. It sets stellar blockchain apart from all its competitors and makes it a really functional and worthwhile network.
More than a thousand users utilize Stellar regularly as a multi-currency payment platform. There is no denying that Stellar has grown in strength since its inception in 2014. Stellar undoubtedly has a lot of potential and deserves attention for its future development.
The caliber of the alliances they have formed is remarkable, and some well-known companies include Deloitte, IBM, Stripe, and others. McCaleb announced at a conference in 2017 that 30 banks signed up to use stellar blockchain for cross-border transfers. Stellar is experiencing consistent growth in the field of blockchain technology thanks to an incredible workforce, great advisers, and collaborations.