Stellar Lumens: Connecting Banks, Payment Systems, And People With Affordable Financial Services Via The Blockchain

Update: 11/10/2017:

Stellar was recently picked up by IBM for payments in emerging markets. This happened last month, but articles are still coming out as traders and cryptophites analyze the impact this will have on Stellar Lumens long-term. Currently, Stellar Lumens will be the transactional cryptocurrency for this aspect of IBM’s blockchain, but there is word that, in a year, IBM may no-longer use Stellar Lumens. That said, none can argue that this partnership will have a HUGE impact on Stellar’s outlook and visibility.

Here’s a quote from Stellar founder Jed McCaleb on the deal with IBM:

“This new innovation and collaboration represents a significant milestone for Stellar as well as the financial technology industry as a whole. For the first time, public blockchain technology is being used in production to facilitate cross-border payments in multiple integrated currency corridors. Currently, cross-border payments take up to several days to clear. This new implementation is poised to affect a profound change in the South Pacific region, and once fully scaled by IBM and its banking partners, could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations.”

In the article below, I’ve aggregated tons of info on this deal between Stellar and IBM. Read on!

Big Blue – Meet Stellar Lumens: Blockchain Payments For Emerging Markets

–end of update–

Update: 11/09/2017:

Still digging into Stellar Lumens… lots of great content out there! Easily done, when the company makes sense, has a plan, and executes. –>

A Deep Dive Into Stellar Lumens

  • There is actually a strong case for companies to choose Stellar over Ethereum for ICOs:
    • For one, the Stellar network is significantly faster and cheaper to use than Ethereum’s (e.g. 5 second vs 3.5 minute confirmation times). Faster and cheaper transactions make ICOs more accessible and more accessibility means more money raised.
    • The Stellar network also has a built-in feature that lets developers whitelist ICO contributors. This reduces development time for ICOs that want to ensure complete legal compliance.
    • Finally, the Stellar network’s transaction model is simpler than Ethereum’s and simplicity reduces the chances of security pitfalls. This is significant for ICOs that do not require the expressiveness provided by Turing-complete smart contracts.
  • Stellar, Waves, and OmiseGo all aim to serve very similar use cases:
    • All three platforms have native support for a decentralized exchange.
    • All three platforms support multiple assets.
    • Although Waves is not currently focused on micropayments, remittances, and mobile payments, Stellar and OmiseGo are both gunning for these three use cases.
    • Stellar comes out just slightly ahead of Waves as a multi-asset trading platform.
      • Although Stellar is losing in terms of ICOs, Stellar has many more anchors than Waves has gateways.
      • Most of Stellar’s anchors are operated by external companies that include large financial institutions.
      • Waves, on the otherhand, currently operates all of its gateways.
      • Stellar is also currently much faster than Waves.
        • Stellar supports a theoretical of maximum of 1000 transactions/second whereas Waves only supports 1.7 transactions/second.
        • This will change as the WavesNG protocol comes online, but that’s not for another few months and even then, Waves’s maximum transaction throughput is still shy of Stellar’s 1000 transactions/second.
    • Stellar will give OmiseGo a run for its money.
      • Almost everything that OmiseGo aims to do, Stellar is planning to do or is already doing it.
      • Not to mention Stellar already has a robust, secure, and fast blockchain already running in the wild whereas OmiseGo is still a farcry away from even launching a public testnet.
      • Having a functioning public blockchain also gives Stellar a headstart in business integrations.
      • As mentioned above, a multitude of payment companies, especially in Asia and Africa, have integrated with Stellar and are already sending payments through the platform.
      • We also can’t forget the massive IBM and banking integration that was recently announced.

Stellar Lumens: The Sleeping Giant

  • [Stellar’s] greatest value is that it can get around liquidity problems even when there are no established markets.
    • This is a game changer for underbanked communities and developing countries.
    • Speed and low cost will provide greater access to capital while mitigating threats of corruption, which will put them on a level playing field with developed countries.
  • Stellar is even complementary to Bitcoin, which means that as Bitcoin becomes more and more accepted in the global community as a legitimate means of payment, XLM will be the low-cost method of providing liquidity in the transfer between Bitcoin and fiat currencies.
  • Banks are likely to adopt the Stellar blockchain network first to transfer funds given that its core philosophy is more central to banks’ core functions today.
  • [Stellar] is simpler and easier to use and understand compared to other technologies that have a broader scope of applications.
  • Stellar’s specificity is its strength.
  • Stellar will benefit from the growth of Ripple (XRP) as it is often perceived to be a younger, decentralised version of Ripple – the third largest cryptocurrency by market cap. This serves as a psychological boost in the profile for Stellar and ultimately means you could buy a version of XRP at a much lower price.

–end of update–

Update: 11/07/2017: 

I was recently introduced to several videos which provided me with new insight into Stellar’s foundations and philosophy:

Quotes & Notes from the above videos:

  • “Bitcoin converts a real world resource (electricity) into a digital asset” -Jed McCaleb, Stellar.Org
  • “Bitcoin was designed to be a new currency, it wasn’t designed to be a unifying, universal payment network.” -Jed McCaleb, Stellar.Org
  • Stellar solves Bitcoin’s problems:
    • Digitally representing existing currencies and assets.
    • Making payments interoperable across institutions and currencies.
    • Making sure your system still scales.
  • “Stellar is an open protocol for payments.” -Jed McCaleb, Stellar.Org
  • “We’re creating an internet for payments.” -Jed McCaleb, Stellar.Org
  • @jedmccaleb: Twitter handle

–end of update–

On September 27th, 2017, Stellar Lumens had a market cap at USD $238,468,092 for the equivalent of 57,124 BTC or 782,522 ETH, with a circulating supply of 16,587,353,817 XLM at a price of $0.014377 per coin. Today, Stellar Lumens hits the lists at cryptocurrency #24 by market cap.

Stellar Lumens is next on my list of cryptocurrencies to review. Read on for an aggregated list of important facts on Stellar… this coin has been along for awhile, so there’s a TON of content to digest! I’ve tried to narrow the field to what data prospective investors will find most interesting.

“The FUTURE of Banking is Here”: Now you can build AFFORDABLE Financial Services.

  • Stellar is software—think of it as the middleware that sits between financial products and institutions. “As such, we are not a licensed financial institution. If your organization plans to accept deposits and issue credits on the Stellar network, it is likely you will need to be a licensed money services provider (MSP) or mobile money operator (MMO).”
  • Using the Stellar network, you can build mobile wallets, banking tools, smart devices that pay for themselves, and just about anything else you can dream up involving payments! Even though Stellar is a complex distributed system, working with it doesn’t need to be complicated.
  • The idea behind Stellar is to create a “giant translation layer” for money, allowing easy and cheap transfers between any pair of currencies, whether fiat (such as the dollar), digital (such as bitcoin) or notional (such as cellphone talk time) that any financial provider can plug into. But instead of using existing systems such as wire transfers or banks to move money around—which rely on legacy software, and have slow verification procedures and built-in costs—Stellar uses its own low-cost, open-source protocol. The stellar currency acts as a safeguard—if the system believes it is under attack or being used for fraud, it boosts the number of stellar required to complete the transactions.
  • Stellar Remittances: Send money across borders quickly, for a fraction of a cent. Facilitate low-cost payments between different currencies.
  • Stellar Micropayments: Increase efficiency and decrease the cost of smaller transfers. Offer incremental payment options to your customers.
  • Stellar Mobile Branches: Get an agency banking advantage with mobile branches. Expand your retail operation, without the overhead costs.
  • Stellar is Mobile Money: Make mobile money platforms interoperable. Let your customers send MM to recipients with different providers.
  • Stellar services the Underbanked, as well as the Unbanked.
  • Transactions on the decentralized Stellar network resolve in 2-5 seconds.
  • “FINANCE WITH A MISSION”: With a team of top technology and finance professionals, is a nonprofit that connects people to low-cost financial services to fight poverty and develop individual potential.
  • Stellar: “Platforms, not products, are the way to bring financial services to the poor.”
  • Stellar Lumens is great for micropayments: A $0.01 fee handles ~600,000 transactions.
  • “We don’t charge people or institutions for use of the Stellar network.”
  • 5% of the initial lumens are set aside for operational costs.
  • accepts tax-deductible donations from the public.
  • “We received an initial infusion of funding from the payments startup Stripe. Our corporate donors include BlackRock,, FastForward.”
  • All transactions on the Stellar network are public.
  • “Our recommended design is to use at least two Stellar accounts: a base account and an issuing account. Issuing accounts can serve as the intermediary pool between the base account and customer’s accounts. A base account’s credentials should be kept on a computer that is not connected to the Internet and cannot be compromised. Ensure that all of your assets are marked AUTHORIZATION REVOCABLE so you can freeze them in an erroneous situation.”
  • Most applications interact with the Stellar network through Horizon, a RESTful HTTP API server. Horizon gives you a straightforward way to submit transactions, check accounts, and subscribe to events. Because it’s just HTTP, you can communicate with Horizon using your web browser, simple command line tools like cURL, or the Stellar SDK for your favorite programming language.
  • The Stellar Core software does the hard work of validating and agreeing with other instances of Core on the status of every transaction through the Stellar Consensus Protocol (SCP).
  • The Stellar network itself is a collection of connected Stellar Cores run by various individuals and entities around the world. Some instances have a Horizon server you can communicate with, while others exist only to add reliability to the overall network.
  • Stellar Cores—the network of nodes—eventually agree on sets of transactions. Each transaction on the network costs a small fee: 100 stroops (0.00001 XLM). This fee helps prevent bad actors from spamming the network.
  • In order to act as a Stellar anchor, your infrastructure will need to:
    • Make payments.
    • Monitor a Stellar account and update customer accounts when payments are received.
    • Look up and respond to requests for federated addresses.
    • Comply with Anti-Money Laundering (AML) regulations.
  • maintains a bridge server, which makes it easier to use the federation and compliance servers to send and receive payments. When using the bridge server, the only code you need to write is a private service to receive payment notifications and respond to regulatory checks from the bridge and compliance servers.
  • The Stellar federation server is designed to connect to any existing SQL database you might have with a list of account names. It essentially translates a federation request into a SQL query. The server supports MySQL, PostgreSQL, and SQLite3.
  • The Stellar distributed network has a built-in, fixed, nominal inflation mechanism. New lumens are added to the network at the rate of 1% each year. Each week, the protocol distributes these lumens to any account that gets over .05% of the “votes” from other accounts in the network.
  • The distribution of new lumens is limited to once a week.
  • Inflation is run in response to an inflation operation that anyone can submit to the network.
  • Each time inflation is run, the lumens used to pay transaction fees since the last voting round are also included in the total lumens distributed.
  • The Stellar Consensus Protocol (SCP) provides a way to reach consensus without relying on a closed system to accurately record financial transactions. SCP has a set of provable safety properties that optimize for safety over liveness—in the event of partition or misbehaving nodes, it halts progress of the network until consensus can be reached.
  • SCP simultaneously enjoys four key properties:
    • Decentralized control
    • Low latency
    • Flexible trust
    • Asymptotic security
  • SCP has applications beyond financial markets for ensuring organizations perform important functions honestly.
  • SCP holds the potential to strengthen the indelible certificate history at the core of certificate transparency.
  • SCP can only guarantee safety when nodes choose adequate quorum slices.
  • Though SCP’s safety is optimal, its performance and communication latency are not.
  • SCP can suffer perpetual preemption.
  • The Stellar Consensus Protocol (SCP) is a construction for FBA (Federated Byzantine Agreement) that achieves optimal safety against ill-behaved participants. [FBA forms quorums from participants’ individual trust decisions, allowing an organic growth model similar to that of the Internet.]
  • Stellar uses industry-standard public-key cryptography tools and techniques, which means the code is well tested and well understood.
  • Each transaction on the Stellar network is signed by whomever sent it using the Ed25519 algorithm, which cryptographically proves that the sender was authorized to make the transaction.
  • While all transactions are public, banks using Stellar to exchange funds on behalf of individual account holders can keep information about the individuals sending and receiving it private by storing encrypted or unique identifiers in the transaction’s memo field. This allows banks to meet regulatory compliance requirements and keep transaction history verifiable while still keeping privileged information secure.
  • At the genesis of the Stellar Network, 100 billion lumens (XLM) were created as specified in the protocol. As part of its custodial mandate, SDF is entrusted to oversee that the vast majority, 95 billion, of the lumens are distributed to the world.
  • Stellar Lumens is not mineable.
  • Lumens are the native asset of the Stellar network.
  • Depending on hardware and network configurations, a conservative estimate of Stellar’s processing rate is 1000 operations per second.
  • If were to disappear, the network would continue to confirm transactions, and anchors could still integrate with the network at any time. All Stellar Core validators are run by community members external to
  • The Twitter handle for Stellar Lumens is: @StellarOrg
  • The primary markets for Stellar Lumens are:
    • Poloniex (currency pairing STR/BTC or STR/USDT)
    • Bittrex (currency pairing XLM/BTC or XLM/ETH)
    • Kraken (currency pairing XLM/BTC)
  • Market cap history:
    • Stellar Lumens ended August 5th, 2014 at $772,597.
    • August 8th, 2014: Stellar Lumens market cap passed $1,000,000.
    • November 28th, 2014: Stellar Lumens market cap passed $10,000,000.
    • April 3rd, 2017: Stellar Lumens market cap finally passed $25,000,000.
    • May 5th, 2017: Stellar Lumens market cap passed $50,000,000.
    • May 6th, 2017: Stellar Lumens market cap passed $100,000,000.
    • May 7th, 2017: Stellar Lumens market cap NEARLY reached $200mil –> ending the day at $199,521,000.
    • May 8th, 2017: Stellar Lumens market cap explodes to $403,409,000.
    • May 21st, 2017: Stellar Lumens market cap passed $500,000,000.
    • May 22nd, 2017: Stellar Lumens reached market cap high to-date: $602,024,000.
  • Resources:

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