What is Stellar?

What is Stellar?

Stellar is an open-source, decentralized payment protocol that allows for fast, cross-border transactions between any pair of currencies. Like other cryptocurrencies, it operates using blockchain technology. Its native asset, a digital currency, is called lumen (XLM). XLM powers the Stellar network and all of its operations, similarly to how ether (ETH) powers the Ethereum network.

How does Stellar’s blockchain work?

Transactions that take place on the Stellar network are added to a shared, distributed, public ledger, a database accessible by anyone worldwide. In order to reach consensus on transactions so quickly and accurately, Stellar uses its own unique consensus method.

How does Stellar’s consensus method work?

Stellar’s consensus method allows for fast and cheap transactions, with everyone on the network reaching agreement about transaction validity within a few seconds. Every participant (called a node) who helps add Stellar transactions to the global ledger chooses its own mini-network of other trusted participants that it agrees with. As long as these mini-networks (called quorum slices) overlap, the overall Stellar network can reach agreement about which transactions are valid and can be added to the ledger very quickly. You can read about how Stellar’s consensus mechanism works in greater detail in this article.

Where is the value of Stellar derived from?

Stellar is useful and valuable because it is a global exchange network, capable of hosting thousands of exchanges between currencies and tokens per second. Exchanging between cryptocurrencies and/or fiat currencies can be a lengthy and expensive process; Stellar makes exchanging swift and cheap. XLM, the asset that will be supported within the Blockchain Wallet, is used to pay transaction fees and maintain accounts on the Stellar network.

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