What is Stellar?

Beginner Avr 29, 2020

What is Stellar
Key Takeaways:
– The aim of Stellar’s blockchain is to facilitate transactions of any currency
– Stellar’s native cryptocurrency is called Lumen, with the smallest unit known as a stroop (0.0000001 XLM)
– Your Stellar account needs to keep a minimum of 1 XLM on it at all times
– Its unique consensus mechanism allows transactions to be verified within seconds at minimal costs

Stellar’s Goal

Stellar is a completely public, open-source blockchain network that strives to facilitate international transfers of any types of money – be it US dollars, Euros, Yen or even Bitcoin. 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. The transactions of these assets are powered by its native cryptocurrency. Let’s take a deeper dive. 

Shedding Light on the Blockchain’s Native Currency

Stellar’s cryptocurrency is often referred to as Stellar, which is not its actual name. The Stellar blockchain’s native currency is known as Lumens (XLM). The smallest unit of a Lumen (0.0000001 XLM) is also known as a stroop. As of now, you can manage Lumens directly through Ledger Live

Much like Ethereum, Lumens are used not only for XLM transactions, but equally for Stellar blockchain’s tokens. On the other hand, a Stellar account must hold a minimum of Lumens, similar to XRP. This concerns only a minimum of 1 XLM at the time of writing, which can potentially be increased if using certain features.

Much like a preset amount needing to remain on your account, the transaction fees also have a base fee. This is currently set at 0.00001 XLM, or 100 stroop. So how does the Stellar network manage to propose such low fees?

Consensus Mechanism

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.

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