en
Back to the list

Stellar cryptocurrency – it’s Lumen: a complicated story or a promising asset?

Investments
Aleksandre B

According to Wiki, Stellar is a former name of the cryptocurrency of the same-titled company founded in 2014. Later, the name of the coin was changed to Lumen, and Stellar.org remained as the name of a non-profit foundation dedicated to supporting and developing the project.

Despite the fact that the renaming occurred in 2015, the confusion with the designation of cryptocurrency continues to this day: on some crypto exchanges, the coin is called Stellar, and on others — Stellar Lumen.

Stellar: crypto Lumen

The code (ticker) of the cryptocurrency — XLM but on some exchanges, you can see the designation STR. The Stellar network operates on the basis of blockchain technology. The project software is freely distributed and available on GitHub.

Lumen is a cryptocurrency which emission is possible without mining. In 2014, 100 billion coins were issued, and every year another particular mechanism hardwired into the system adds one billion Lumens into circulation.

Cryptocurrency is sold on exchanges and distributed for free

All coins issued are distributed according to the following program:

  • a half will be distributed to individual users free of charge in small amounts (50-300 XLM);
  • a quarter of the total amount will be issued to companies, funds, business people, institutions, and governments that will support the project and promote it, increasing the popularity and number of users;
  • a fifth of all lumens will be distributed to Bitcoin and Ripple cryptocurrency holders;
  • five percent of the coins will remain in the Stellar.org fund to support and develop the ecosystem of the project.

There is a question: why do the founders of the company give the cryptocurrency away for free? Doesn’t it reduce its price? The answer is: lumens have a particular function — it is an internal asset of the Stellar network.

Stellar is a modern payment system

Lumens are used for circulation in the system of financial transactions Stellar. The distributed network of this company is designed to make payments and transfers between users all over the world: fast, inexpensive, with any fiat and digital currencies.

A commission is charged for each operation in the Stellar system: 0.00001 XLM. It is a tiny amount, and its goal is not in making a profit, but in preventing spam and DDoS attacks in the project network. The amount of collected commision interacts with the mechanism of inflation and is distributed to users.

How Stellar works

The blockchain network is supported by separate peer-to-peer servers, installed by users of the system. Each service contains records of all transactions and all accounts of the system.

The process of money transfer is carried out between network elements and is confirmed by nodes according to a particular protocol of consensus: an attacker can’t compromise the integrity of the data since an attack against one participant will not work — other nodes will restore the original information.

The system supports transfers in any currencies, with or without exchange from one to another: the user's application reaches the Stellar network, where the system algorithm selects the appropriate response (an exchange principle) and performs the operation.

Another function of Lumen is the transactions with rare currencies. If the user’s application contains an amount of currency with no reciprocal counter application, then the algorithm will create a kind of a bridge — a chain of operations, which include lumens. Due to the exchange of the original currency for lumens and the subsequent exchange of lumens for the required currency, the network produces the necessary operation.

Stellar crypto review for business

The program code of the project is available for creating a variety of financial services: from micropayments, exchangers, mobile payment operators to banking products. In order to start working with Stellar to launch a business project, it is necessary to become acquainted with the technical documentation and develop your application.

For the creators of services the system provides the principle of KYC (Know Your Customer) — state regulators of many countries insist on usage of this application. Besides, there is the possibility to introduce anonymous payments using the developments of other companies, such as the Lightning Network.

Wikipedia says that the creators of Stellar cryptocurrency specify that their project is not a financial service, as it works as an intermediary between users. Still, those entrepreneurs who create their solutions based on Stellar will have to follow the rules of financial regulators.

The history of the project

The appearance of a new company at a time when disagreements between developers or founders are becoming irresolvable is a usual phenomenon in the world of blockchain and cryptocurrency. Stellar is no exception to this rule.

Jed McCaleb, one of the team members of another blockchain project — Ripple, left it and founded Stellar as he was dissatisfied with the closeness, centralization and commercial policies of the company.

In the new project, Jed cooperated with another founder Joyce Kim and implemented those principles that Ripple lacked. First of all, refusing of developers dominance in decision-making and distribution of the cryptocurrency, the openness of the system for users and business, the non-profit structure of the fund manager.

In 2014, when the Stellar project appeared on the market, its network operated using Ripple protocols, but in 2015 engineers of the company switched the system to their personally developed programs.

Several large companies announced their partnership with Stellar: IBM is going to create a transaction system based on the blockchain system of the project. One more successful financial start-up, the Stripe payment system, also invested in Stellar buying Lumen tokens. Other well-known investors are BlackRock, Google.org, FastForward.

Such companies as Deloitte, Tempo, Parkway operate using the protocols and the project network.

Stellar cryptocurrency value on the market

Since the launch of the project, the Stellar-Lumen currency exchange rate has not changed much and was about $ 0.002 with a few exceptions. In May 2017, Stellar cryptocurrency price  increased to $ 0.03 but soon fell to $ 0.013.

When the market wroth caused the price rise of most cryptocurrencies, Stellar coins also took part in the rally and reached the level of $ 0.75. The current course Lumen continues to follow the market, and after the recession, it began to grow.

Stellar crypto news and predictions

The TOP-10 leadership in the capitalization of two cryptocurrencies of the companies that deal with payment and transfer systems (Stellar and Ripple) is a strong argument in favor of the fact that the business model of financial transaction systems has passed the test of time and proved its consistency and relevance in the market. The prospects for Stellar cryptocurrency are quite good.

Despite the fact that lumens cannot be mined, a considerable amount of them are distributed for free. The price of coins is rather low, so users and investors are investing their money in the Stellar project. It means they have confidence in its future.

Specialists assume that Lumen should be viewed not as an asset, an investment object or a way of investing in the calculation of the growth rate. Although it should not go unnoticed that the price of XLM coins is still growing.

The value of this digital currency is in the innovative and convenient service that the project provides. If the system of payments and transfers Stellar develops, it will attract both business people and ordinary users — the Lumen coins will be in demand, and their price will increase.


Back to the list