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Stellar: the voice of the unbanked, EXPLAINED

Stellar is an open source blockchain that aims to facilitate crypto-asset transfers of value, which includes payments. Mainly, the project is focusing on building a worldwide financial network open to anyone by connecting individuals, institutions, and payments systems through its platform. Eventually, this will lead to a new system with cheaper, quicker and more reliable transactions.

stellar explained

How Stellar works?

The information is distributed all over the interconnected servers (nodes) in the Stellar Network. Instead of proof of work, Stellar uses its Stellar Consensus Protocol (SCP). The protocol provides a way to reach consensus without relying on a closed system in order to record a transaction. Stellar claims that SCP has a set of provable safety properties. The SCP is considered as the first implementation of the Federated Byzantine Agreement (FBA). Idealized in 2015 by David Mazière, the FBA describes a way for nodes in a network to reach an agreement. Its main key features are decentralized control, flexible trust, low latency, and asymptotic security.

Stellar Consensus Protocol

 

Stellar Decentralized Exchange (SDEX)

The Stellar Decentralized Exchange is an exchange that enables users to trade and transfer currencies across borders. Through SDEX, multiple currencies can be actively traded by either the bank themselves or a market maker directly on the exchange.

Stellar Team

Previously created one of the first bitcoin exchange, Jed McCaleb is the face and CTO of Stellar. Moreover, he founded and served as the CTO of Ripple which he left in 2013 due to differences in ideology against the rest of the team.

Compared to other projects and startups, Stellar has one of the most influential advisory boards in the tech world. The board includes Patrick Collison (Stripe CEO), Matt Mullenweg (WordPress Founder), Naval Ravikant (AngelList Founder), and Sam Altman (Y Combinator President).

Stellar roadmap

Stellar does not provide a concrete roadmap for the next years. However, by the launch of each year the team posts “their sort of roadmap” for the next year. For instance, in 2019, the main focus will be on Horizon, Stellar Core, Product, Ecosystem, and Organization.

Actually, the team is planning to add transactions that break in consensus to Horizon. In addition, in the second and third quarter of this year, the project is aiming to have more validators connected to the network. The team is planning to develop data access to Stellar core’s database, in addition to combining protection for corrupt archives and support full validator finding and bulk configuration.

Furthermore, 2019 roadmap highlights that the company is rebuilding its website. It is presumed to be ready by May 1st.

Stellar VS Ripple:

Key similarities:

  • Both co-founded by Jed McCaleb
  • No mining allowed – private nodes
  • Both use distributed ledger technology (DLT)
  • Near instant and free transactions
  • Perfect for international transfers
  • Developers control the circulating supply

Major Differences

Goal:

Stellar: Help the un-banked in poorer regions

Ripple: Supply banks and financial institutions

Consensus model:

Stellar: Stellar Consensus Protocol

Ripple: Proof-of-Correctness

Supply:

Stellar: Inflationary (1% per year)

Ripple: Deflationary (Transaction fees burned)

Control

Stellar: Considered less centralized

Ripple: Considered more centralized

 

Quick analysis

Advantages

Stellar is scalable
Compares to other blockchains, Stellar combines between a low transaction cost, a high number of transactions per second, and average settlement time. Actually, the average cost of a Stellar transaction is 1/100,000 of a penny. Moreover, recently Stellar achieved more than 10,000 transactions per second, with an average settlement time of 5 seconds.

Targeted partnerships
In order to achieve its main goal of building a cross-border payments application, Stellar made partnered with tech big names such as IBM and Deloitte, in addition to local companies including KlickEx in the South Pacific region, ICICI Bank in India, and Flutterwave in Africa.

Stellar enables smart contracting
Stellar has the ability to incorporate elements such as blockchain smart contracts, alongside features like multi signatures. Eventually, this potentially enhances the functionality of the payment protocol in general.

 

Disadvantages

Competition:
As mentioned above, in the difference section between Stellar and Ripple, the latter is focusing more on banks and financial institutions. This brings a very huge competition.

Minimum Limit for Having Access:
In order to have a working wallet, the user must have at least 20 XLM coins in his wallet.

 

Resources:

Website: https://www.stellar.org

Stellar Consensus Protocol Whitepaper: https://www.stellar.org/papers/stellar-consensus-protocol.pdf

2019 Roadmap: https://www.stellar.org/roadmap/

 

DISCLAIMER:

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE VIEWED AS AN ENDORSEMENT BY DECENTRAL MAGAZINE. WE TAKE NO RESPONSIBILITY AND GIVE NO GUARANTEES, WARRANTIES OR REPRESENTATIONS, IMPLIED OR OTHERWISE, FOR THE CONTENT OR ACCURACY. READERS SHOULD DO THEIR OWN RESEARCH BEFORE INVESTING FUNDS IN ANY COMPANY.

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