Stellar is an open source, distributed payment infrastructure that enables instant transfer of money around the world. Lumens are built into the network and act as a unit of digital currency. Just like Bitcoin and other cryptocurrencies, Lumens cannot be held physically and are transferred digitally. The technology behind Stellar connects people, payment systems, and banks. The system is designed to facilitate multi-currency and asset transactions in a fast, reliable way using Lumens.
History of Stellar
Jeb McCaleb founded Stellar Lumens in 2014. Initially, its protocol was based on a Ripple Protocol from which critical consensus code changes were carried out. The Stellar Development Foundation created an updated version of the protocol with a new consensus algorithm. The code for the new algorithm was released in 2015, and the network went live in November of the same year.
Stellar Lumens launched with 100 billion STR Coins. The Stellar network was renamed Lumens in 2015 as part of a major overhaul. The renaming was carried out to avoid having a token named differently than the network supporting it.
Stellar Lumens stands out from other cryptocurrencies because it boasts fast transaction speeds. Its transaction costs are also quite low. Transactions on the Lumens Blockchain cost as low as 0.00001 Lumen per transaction. It also takes just between 2-5 seconds for a transaction to be processed.
The XLM coin that powers the network does not require traditional cryptocurrency mining. Instead, it uses Stellar consensus protocol, which validates transactions without requiring any mining power through Proof-of-Work.
How Stellar Lumens Works
Stellar Lumens operates just like a typical ledger. The ledger is designed to record and list all the balances and transactions belonging to every account on the network. A copy of the ledger is hosted on each server that runs the Stellar software. The servers form a decentralized network that allows the ledger to be distributed as widely as possible.
The servers synchronize and validate the ledger to ensure that all transactions are valid and get applied to the global ledger in a process called consensus. For example, if you wish to send $10 on the network, all the trusted servers will have to agree on the validity of the $10 payment by first confirming you indeed own the credit on the network. The validation process usually takes between 2 and 5 seconds.
Stellar Lumens also comes with an in-built distributed exchange. The exchange makes it possible for people to send any currency across the network. For example, if you want to send Euros but you have Dollars, Stellar will be able to make the exchange by finding an offer on the internal USD/EUR exchange.
Stellar Lumens Coins
It is not possible to mine Lumen coins. During inception, 100 billion STR coins were created. To own Lumens, which is the network’s native digital currency, one needs to buy them from various markets and exchanges.
The Stellar Organization retained 5% of the total Lumen coins generated at inception to support operations of the organizations. The company also offers a portion of the reserved Lumens at auction from time to time. The first auction took place in March 2015. The Stellar Development foundation regulates distribution. To account for economic growth and lost Stellar, the network generates 1% of the total Lumens annually.
Stellar Lumens Price Volatility
Stellar Lumens has risen through the ranks and is currently ranked among the top 10 largest cryptocurrencies in the world. The growing popularity of Lumens has to do with the announcement of a partnership with IBM. The two are working on a payment service, which, once complete, will allow the transfer of funds across borders.