What is Stellar?

Read 2 min
Key Takeaways:
— High fees and slow processing times mean regular people stand to lose out when making sending fiat across borders – but the Stellar blockchain is making this process frictionless.

— The aim of Stellar’s blockchain is to facilitate transactions of any currency.

— Any asset can be made into a token (even Fiat), and sent to another wallet using the Stellar blockchain, making it a perfect vehicle for remittances without borders.

— Ledger supports Stellar’s native token XLM – and now we’ll also support Stellar USDC token, bringing offline security together with the utility of Ledger Live.

As another blockchain joins the crypto galaxy, Ledger is here to explain!

The blockchain has the potential to establish a seamless economic framework, and one area where its utility comes to the fore is its ability to facilitate the transfer of value across borders – in blockchain, there are no borders. So unlike with fiat money, sending value from one state to another cna be frictionless. Stellar blockchain is one network making this the focus of its efforts.

In this article, we’ll take a deep dive into Stellar, its native currency Lumens and how the network is taking the cost, friction and waiting out of overseas fiat transfers. Let’s get into it.

Sending Money Isn’t Easy

No matter how far technology has come, one thing that remains tricky and time-consuming is sending money across borders.

Cross-border remittance normally see between 7 and 15% is charged as fees, creating a disadvantage for huge swathes of people who need to do this regularly, such as individuals working abroad who need to send money home to their families.

And cost is not the only issue. Have you ever tried to send a cross-border payment via your bank? You’ll know it’s no easy process, often taking days to be completed. So our current system has a couple of major failings, especially when it comes to cross-border payments. This is where Stellar comes in. 

Stellar Blockchain: Making Remittances Frictionless

If the above story sounds familiar to you, you’ll be pleased to know there’s an alternative. Stellar is a completely public, open-source, layer 1 blockchain network leading the way in developing infrastructure for moving fiat across borders. 

Founded in 2014 by Jed McCaleb, Stellar has enjoyed most of its development from the Stellar Development Foundation (SDF). SDF’s vision is to bring equitable access to the global financial system and unlock the world’s economic potential using the blockchain. 

With the goal of making blockchain a vehicle for global remittances, the Stellar team is working on creating one single network that can be used by all of the world’s financial systems. On top of this, it does this in a pretty fast, cheap and energy-efficient way.

So How Does Stellar’s Payment System Work?

Stellar blockchain allows users to build their own tradable tokens. These programmable tokens of value represent other assets, including crypto assets, art, or even fiat currency – talk of the earlier adopters of the concept of tokenization.

Here’s how Stellar’s payment system works;

  • Imagine you are trying to send U.S. dollars as payment to a friend who will receive Euro.
  • First, you need to hold your dollar tokens and initiate a token send transaction, specifying the recipient’s currency as Euro. 
  • Second, the network will look into its entire exchange system to convert the USD to Euro – like a traditional order book.
  • On the other end, the recipient will receive their money in the form of Euro almost instantly. Stellar blockchain uses an atomic system to complete transactions, meaning everything in your payment is done by a single transaction.

Stellar works with fiat institutions to create on- and off-ramps: so for example, you could send fiat in your local currency from your local institution, utilize the blockchain to send that value to another institution as tokens and have them redeemed by the recipient in local fiat currency at the other end. 

Why is Stellar so Efficient?

The key to the fast and low-cost transactions is the Stellar blockchain’s consensus method. It takes all network participants called nodes only a few seconds to validate a transaction.

This efficiency is for the greater part thanks to the clever mechanism put into place for verifying transactions in the network. Rather than having all nodes reach consensus on every single transaction, each node instead manages a mini-networks on which it checks every transaction. These mini-networks are also known as quorum slices. These networks actually overlap, which means that in the end there are still multiple nodes verifying each single transaction.

Shedding light on Lumen XLM

While Stellar was designed to support digital representations of multiple assets and currencies, the blockchain has its built-in token dubbed the Lumens (XLM). 

As the bloodline of the Stellar ecosystem, XLM offers solutions for the ordinary Joe looking to evade expensive and time-consuming options when sending cash around the globe. The native currency facilitates value to flow within the network.

Can you Build on Stellar?

Yes, you can! Stellar is open source and allows businesses to build on it, and many are already doing that. Its state-of-the-art features and open financial infrastructure are versatile enough, allowing us to build intuitive products focused on end-user experience.

MoneyGram is one of the most high-profile businesses using the Stellar network to issue assets and settle payments digitally. In October of 2021, MoneyGram forged a partnership with Stellar, allowing for the settlement of payments in multiple fiat currencies using the USDC stablecoin. Other top companies leveraging Stellar technology include SatoshiPay and Saldo. Notably, the blockchain network has grown to over 5 million accounts and has processed over 1.5 billion operations since its debut in the payments industry. 

Of course, as a blockchain network, Stellar carries many other use cases. Some of them include investment, e-signatures, mobile savings accounts, etc.

USDC on Stellar Blockchain Joins the Ledger Ecosystem

Stellar has been ahead of the pack with its approach to tokenization, spotting a real-world use case where this technology could be brought to bear to make a real difference to people’s everyday life.

And fiat is not the only currency that can benefit from Stellar’s infrastructure; it also hosts stablecoins, such as USDC, bringing seamless cross-border transactions, and fiat off-ramping, to fiat pegged crypto assets.

Ledger has now integrated Stellar USDC within its ecosystem, meaning you can secure, send, receive and even buy the token (thanks Moonpay) within Ledger Live, while securing your private keys offline at all times.

Offline security for your private keys, paired with the seamlessness of Ledger Live – there is no better experience for crypto users.

Stellar – Linking Blockchain with Real Life

Stellar’s devs designed its blockchain as the much-needed link that can modernize the traditional financial system and make it fairer and more accessible for those who use it the most.

At its core, blockchain was supposed to conquer the problems of the legacy financial system and make money fairer for everyone – and Stellar blockchain is one of the purest examples of this ethos in action today. We’re excited to see just how big a difference that can make – and to keep your private keys safe and sound as you get involved for yourself.

How Ledger Keeps your Crypto Safe

Check out this video from our Chief Experience Officer Ian Rogers for the basics of crypto security.



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