Stellar Cryprocurrency - How It All Begun?

background

Steller is an immediate and final settlement system (final in the non-refundable sense) of financial transactions between banks and business entities and clients, and between individuals and themselves (RTGS)); And a payment system that enables the conversion and trading of valuable assets including fiat currencies, digital currencies and commodities.

The project was founded in 2014 Ripley split, by c , d from Club (founders of eDonkey, Ripple and (MT Gox and Joyce Kim . From Club Ripple left due to disagreement with Larsen (co-founder Ripple) and subsequent dissatisfaction with the direction in which concentration Ripple progresses. Therefore, the Steller from Club established, he said, is a distributed version (upgraded) of Ripley. side of the club, behind this project are staffFrom consultants and developers with a rich background in blockchain, including David Mazières, Stanford Professor of Computer Science, and the Stellar Development Foundation (SDF), a non-profit organization dedicated to operating and developing the platform. The vision of the project is to promote an easy-to-use, secure, global payment system and low fees, which will make it possible to access financial services on a global level, with emphasis on populations with poor financial services. Since its launch, Stellar signed a number of cooperation, the most prominent among them is the co- operation with IBM and KlickEx Group, led to a surge of 100% in exchange rates in the same week.

The protocol

Steller is an open source protocol, based on decentralized registry technology (DLT). All transactions on the network are stored on a ledger that is fully saved on each server, and every 2-5 seconds, the logs are synchronized between the servers on the network. Each individual or organization can serve as a server, and as the number of servers increases, the functionality of the network increases.

Source: https://www.stellar.org/how-it-works/stellar-basics/#how-it-works

How a transaction is executed

I will explain how the protocol works through the payment network receipt, paypal: By using PayPal's network, a user is required to deposit a sum of money from his bank account in his PayPal account, and in return, his PayPal account is credited (money that can only be used On PayPal's network). Now that user can send the credit he received to any other user on PayPal, and the user who received the credit can withdraw it to his bank account. Similarly, in order to make a transaction on Stellar's network, money must be deposited with an anchor on the network (a kind of money storage entity), and in exchange for the deposited money, the same anchor will issue credit to the virtual wallet (in the account of the Stellar network user) Now, the same user can send the money deposited in his virtual wallet to any Steller network user, and the user who received the payment can withdraw the money to his anchor online bank account, in exchange for the credit he received to his account, meaning the anchors serve two functions: (1) A depositor uses a sum of money and receives credit for his or her virtual wallet. (2) A user can withdraw money from anchor in exchange for credit from their account.

The protocol allows transactions between different types of currencies, which means that A. from the United States can send $ 5 to B in France, which can receive the requested amount in terms of euros. The protocol is based on an algorithm that calculates the cheapest exchange rate using one of the three ways The following: (1) Direct conversion if there is another order book provision (in the next paragraph I will elaborate) (2) Using XLM as an intermediate asset: $ XLM conversion and XLM conversion to Euro. (3) Conversion chain : For example, from Dollar to Bit, and looking at Euro, the protocol is based on an algorithm that calculates the cheapest and cheapest conversion rate.

Distributed exchange

Apart from making transactions between different types of currencies, currency conversion operations can also be performed. On Stellar's network, there is an orderbook for each pair of currencies, where conversions can only be made between the same pair of currencies. For example: If A wants to convert a dollar to Bitcoin, it will enter into a specific dollar / Bitcoin conversion orderbook, and execute an order to convert its dollar to Bitcoin. A user wishing to convert can be based on the previous instructions in the orderbook and in this way the conversion rate will be determined by supply and demand.

Steller's coin

Lumens, or XLM is Steller's digital currency. The function that the coin serves is store of value. The currency has two main uses: first, preventing spam attacks. For each transaction, a minimum fee of XLM 0.00001 is charged, the main purpose of which is to prevent network flooding attacks (also known as DoS attack). For this reason, network usage is contingent on holding 20 XLM. As mentioned, this is a non-profit organization, and therefore the commissions are fully returned to investors as follows: The fees charged are stored in the "inflation pool". Each user on the network can define another user as the inflation destination (the user who receives the money from the inflation pool), and the same inflation destination will receive the number of votes as the number of XLM currencies the user has voted for. For example, I have 200 coins, and I set B as my inflation destination, so B gets 200 votes. At the end of each week, the currencies are distributed to users who have received an amount of votes greater than 0.05% (of the total currencies available),Expandable ). Second, the XLM serves as an intermediary between currencies / assets, with the primary purpose of allowing liquidity and tradability between pairs of currencies whose trading volume is low. For example, conversion of Japanese Nigerian money may not be particularly widespread on the network, so conversion can be done more effectively and cheaply by converting to XLM.

Currency supply and inflation

When the project was launched, in 2014, 100 billion XLM coins were created. The number of currencies has increased steadily by 1%, using a built-in inflation mechanism, and as of this writing, there are approximately $ 103.5 billion. At launch, the company pledged to hold no more than 5% of all existing currencies for project operation and the remaining 95% to be distributed as follows:

• 50% will be allocated to the Direct Sign-up Program - the purpose of this project is to expand the use of the protocol, and to increase awareness of the existence of the network. To increase network visibility, the organization distributes the (free) coins allocated to this project through various methods. Remember that the functionality of the network is a function of the amount of users it uses, and therefore, the network exposure issue is acute for the project.
• 25% will be allocated to the Partnership Program - the money allocated to this project will serve as a reward (or incentive) for corporations or organizations that adopt the protocol. As part of this project, the company aims to collaborate to expand the use of the network to other populations, where financial services are not accessible. Under this program, the Company launched its co- operation with IBM, and KlickEx Group.
• 20% will be allocated to the Bitcoin Program - distributed free to Bitcoin and XRP holders (19% to Bitcoin holders and 1% to XRP holders). The purpose of this project is to expose Bitcoin traders to the project, and to encourage the adoption of the currency by them and by trading and exchange arenas.

These plans are expected to come to an end within 10 years from the time of launch, that is, by 2025. At this time, all currencies except the 5% left by the company are expected to be tradable. As of this writing: Approximately 103.5 billion coins exist, of which 81.3 are held by the SDF, and 17.85 billion are allocated to the various trades and projects. (Givers taken from project site ).

Advantages:

1. Ideal for ICOs - Steller's platform offers value to ICOs on several levels: First, for liquidity. The issuing companies will be able to distribute the Tokens in distributed exchange, thus gaining exposure, making the currency tradable (transferability), independent of a third party (exchange). Second, dealing with regulation. The bulk of the Tokens appear likely to be classified as non-financial and therefore subject to financial regulation. Network-based, purchase the Tokens either via ETH or BTC (and not just through XRP).
2. Scalability and Transaction Costs - Transaction validation on Steller's network takes approximately 5 seconds, and the fee for a transaction is approximately 1 cent per 100K transactions.

Disadvantages:

1. Currency supply - Although the company has pledged to distribute about 95% of the currencies, in the current situation, the SDF still holds 83% of all currencies, and as of this stage, there is uncertainty as to how the currencies will be distributed.
2. The value that the currency offers - The value offered by Steller's currency, the XLM, relative to the value offered by the platform, is minor. According to the company's website, the main use of the currency is to prevent flooding attacks (collecting fees paid through it) and liquidity between currencies with low trading volume. That is, in order to trade and convert currencies, in the vast majority of cases, no XLM is needed (except for the minor fees, which are returned to investors anyway).

Differences between Ripple and Stellar

Despite the (great) similarity between the Ripple and Stellar, there are several significant differences:

1. Project Vision - While Sharifel focuses on banking services, Stellar focuses on providing a payment system for individuals trading, with an emphasis on remote populations that lack financial services.
2. Consensus - Stellar has developed a new consensus algorithm, which is essentially an upgrade of the Federated Byzantine Agreement (FBA) model. Without elaborating on the technical details, the main difference is Stellar verification distributed transaction done, and Ripley is done centrally by the UNLs on behalf of the company. For more on the technical aspect (of Steller) - Video explanation , white paper .
3. Coin supply - First, the currency allocation. In Stellar's project, about 5% of all coins are allocated to SDF for operation and development of the platform, compared to about 62% of existing coins allocated to Ripple's founders. However, as of this stage, the SDF holds about 82% of the existing currencies, and Ripple has announced its intention to sell an integral part of its currencies. Second, currency production. At Ripple no new coins are planned to be manufactured and all fees charged are destroyed. That is, the amount of existing coins is decreasing (at a very slow rate). In Stellar, on the other hand, there is a structured inflation rate of 1%, meaning that the amount of currencies is constantly increasing, and in addition, the money collected for commissions is returned to investors.
4. Freezing deals - Ripley there is a feature that allows users to freeze accounts of, inter alia to allow the freezing of certain funds demanded by the authorities or in cases of suspicious transactions. Used in this feature to freeze the account of Jed from Club at Bitstamp After a legal dispute between him and the founders of the company, one can argue whether this is a disadvantage, but it is undoubtedly a controversial feature. Stellar has a similar feature that allows freezing of transactions, but it is not as sweeping as the Ripple. But the company or organization that issues toucans over the network will freeze any transaction of that specific token on the network.

How to Buy XLM

1. In Israel, as of this writing, there is no easy trading \ XLM, so the recommended way is by buying Bitcoin and then buying through Bitcoin at one of the following trading venues: binance , Kraken , bittrex or Poloniex . .
2. Another option is conversion via the changelly , which allows, among other things, direct conversion of XML in exchange for fiat money (dollars / euros).

Wallets

The safest option is storage on a cold wallet (Ledger). For users who wish to trade daily, the Web Wallets may offer a convenient package, but the security level in these wallets is limited and lower than that offered on desktop and blogger wallets.

1. Cold Wallet : Ledger , a high-security hardware wallet that supports a wide variety of currencies. For a tutorial video .
2. Purses Yun : Stellar Desktop Client and StarGazer. The guide .
3. Mobile Wallets : On the official website of the project, 4 mobile wallets are offered , including the Centaurus, a wallet available for Android and iPhone (for a guide ); And StarGazer (for a guide ).
4. Web Wallets : StellarTerm Wallet offers a very comfortable feature that allows you to see all the updated anchors online (for the guide ) and Stronghold, a relatively easy to operate and convenient to use with Bitcoin and Ethrium.