What is Stellar (XLM)
Stellar (XTM) was founded in 2014 by Jed McCaleb, who is also known for co-founding the now-defunct cryptocurrency exchange Mt. Gox, and Joyce Kim. The project was initially based on the Ripple protocol but has since evolved into its own distinct blockchain network.
McCaleb and Kim founded the Stellar Development Foundation (SDF), a nonprofit organization that oversees the development of the Stellar network. The SDF is funded by the sale of Stellar Lumens (XLM), the native cryptocurrency of the Stellar network, as well as donations and grants.
In addition to McCaleb and Kim, the SDF has a team of developers and other professionals working on the Stellar project. The organization is based in San Francisco, California, and has partnerships with a number of companies and organizations around the world.
How does Stellar Work?
The Stellar network is a decentralized platform that facilitates the exchange of cryptocurrencies and fiat currencies. It utilizes a distributed ledger technology similar to blockchain, which allows for the creation and transfer of digital assets.
The Stellar Consensus Protocol (SCP) is the unique consensus algorithm used by the Stellar network to reach agreement on the state of the ledger. It is based on a federated Byzantine agreement, which allows for faster transaction times and greater scalability compared to proof-of-work consensus algorithms used by other blockchain networks.
Anchors are entities on the Stellar network that hold deposits and issue credits onto the Stellar network. These credits represent a specific currency, such as US dollars or Euros, and can be traded with other assets on the Stellar network. Anchors act as a bridge between the Stellar network and the traditional financial system, allowing users to exchange between different currencies.
For example, if a user wants to exchange Euros for US dollars, they can do so through an anchor that holds deposits in both currencies. The user can send the Euros to the anchor, and in return, the anchor will issue credits on the Stellar network representing the equivalent value in US dollars. The user can then trade these credits with another user or exchange them for a different asset on the Stellar network.
Cryptocurrencies, like Stellar, have garnered a lot of attention in recent years due to their potential to disrupt traditional financial systems and offer a decentralized means of exchange. One of the main benefits of cryptocurrencies is that they are not controlled by any government or financial institution, which makes them resistant to censorship and regulation. Additionally, the use of blockchain technology, which is a decentralized ledger that records all transactions, adds an extra layer of security and transparency to cryptocurrency transactions. However, there are also some significant risks to consider before investing in cryptocurrency. For one, the value of cryptocurrencies is highly volatile and can fluctuate wildly in a short period of time. In addition, the lack of regulation means that there is a higher risk of fraud and scams in the cryptocurrency market. It is important for potential investors to thoroughly research and understand the risks and potential rewards of investing in cryptocurrency before making any decisions.
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