What Is Stellar (XLM)?

XLM is the native coin of Stellar. It’s an open-source peer-to-peer network that was initially launched in order to connect financial systems around the world and establish a framework for payment providers. The Stellar network allows users to develop and transact various crypto assets this way linking individuals, banks, and payment providers. If you’re interested in the current Stellar price, make sure to check out the XLM price chart above.

The Stellar crypto project also functions as a decentralized exchange and marketplace. It has an integrated crypto, forex, and securities exchange that allows users to easily swap various crypto assets.

Besides, it has an integrated Order Book that keeps track of entities that own Stellar assets. Users of the platform can choose and designate their preferred assets for settlements and manage their buy or sell orders. Overall, Stellar is a decentralized network that allows users to store and move their money.

The main features of Stellar include:

• Fast transaction speeds;
• Low-cost transaction fees;
• Decentralization;
• Simplicity;
• Security.

Both the process of currency exchange and the ease of user access contribute to the system's simplicity. All transactions are carried out seamlessly thanks to XLM. Additionally, all that users need to join Stellar Network is software that supports XLM and a steady internet connection.

Talking about security, XLM tokens act as a defense mechanism against DoS attacks by making microtransactions prohibitively expensive for hackers which leaves them with no opportunity for profit.

Besides, Stellar employs its own Stellar consensus mechanism to secure the network. This protocol ensures that anyone can participate in the process of reaching a consensus, and that no one entity can ultimately hold the majority of the decision-making authority.

In terms of speed, the Stellar consensus mechanism confirms transactions in about 3-5 seconds, which is very fast. Additionally, Stellar can accommodate thousands of transactions per second, making smart contracts and multi-signature transactions available.

Overall, the four main characteristics of the Stellar consensus mechanism are decentralized administration, quick response times, adaptable trust, and asymptotic security.

Moving on, XLM coins offer low transaction fees and fast speeds, which makes cross-currency transactions much faster and cheaper. The focus of Stellar is on helping regular people move their money rather than institutions. It mostly aims to provide users with fast, simple, and low-cost transactions.

The users of the Stellar Network can utilize XLM tokens to send money in various currencies. When a person sends money, the recipient can receive it in another currency than it was sent in. For example, you can send ETH to a friend but he will receive BTC. These are called cross-currency transactions.

Talking about different types of currencies, the Stellar network also provides users with multi-currency transactions. How does it differ from the aforementioned cross-currency transactions? Well, essentially, it means that Stellar doesn’t limit users to only, let’s say, ETH-BTC transactions. It allows them to make cross-currency transactions in various currency pairs.

The technology that enables multi- and cross-currency transactions is called Anchors. In essence, it serves as a link between various currencies and the network. This enables easier interaction inside the network and speeds up the entire transaction process.

Who Founded Stellar?

Jed McCaleb and Joyce Kim are the founders of Stellar. They launched Stellar in 2014. Joyce Kim is a former attorney while Jed McCaleb is the founder and former CTO of Ripple.

In fact, the Stellar crypto project was originally built on the Ripple protocol. However, after Ripple's original consensus algorithm was found to have widespread issues, Stellar changed the protocol and created a new consensus method. This way, a hard fork of Ripple was created. In general, both platforms share similar characteristics. Though Stellar is thought to be more decentralized.

However, McCaleb didn’t see eye to eye with the Ripple team and its future plans for the company, so he left in 2013 and focused on developing the Stellar network. McCaleb wants to make sure that Stellar can provide a means for people to convert their fiat currencies into cryptocurrencies. This way he aims to remove the inconveniences that are encountered when sending money abroad.

Besides that, Jed McCaleb and Joyce Kim founded a non-profit organization called the Stellar Development Foundation that seeks to unleash the global economy's full potential. They aim to do that by increasing financial flexibility, market transparency, and human empowerment.

Initially, when the network was launched, the name of the Stellar coins was Stellar as well. However, it was decided that this could be a bit confusing. Thus, in 2015, the token was renamed Lumen. Though the ticker symbol for Lumens is still XLM, which is a bit confusing as well, since, usually, ticker symbols resemble the name of the token. Either way, Stellar tokens are referred to as XLM or Lumens.

What Is the Purpose of XLM Coins?

XLM coins are the backbone of the Stellar network. Essentially, they act as an intermediate for operations completed on the network. Users have to convert their funds into XLM tokens, which can then be converted into their desired currencies.

Apart from that, XLM tokens are used as a payment method for Stellar’s fees. 0.00001 XLM is the price of one transaction. This price is large enough to deter spammers from using the network but small enough that it has no impact on transaction costs.

Additionally, as previously stated, XLM coins serve as a security precaution that counteracts DoS attacks, which aim to produce a high number of transactions or take up a lot of space on the ledger.

Besides, XLM also functions as an anti-spam measure. Each user's account must have at least 1 XLM token, which deters abandoned accounts and makes sure that every account has some sort of practical value.

Just don't forget to check the Stellar price chart to see the current (or previous) XLM price.

Tokenomics of XLM

XLM tokens cannot be mined or rewarded like it is with the majority of other tokens. Initially, when Stellar was launched, 100 billion XLM tokens were issued. During the first 5 years after the launch, the XLM supply kept increasing by 1% every year as it was intended by the inflation mechanism.

However, in 2019, the community decided to stop using this inflationary strategy, which resulted in the burn of 55,5 billion XLM tokens. After that, the max supply of XLM was set at roughly 50 billion tokens. Stellar states that no more Lumens will be produced. After the burn, the foundation revealed that they preferred to work with fewer tokens and that they were aware that greater token circulation does not guarantee greater XLM adoption.

Out of the 50 billion XLM coins, nearly 20 billion are released to the open crypto market. The remaining 30 billion are kept by the Stellar Development Foundation for the development and promotion of Stellar.

If you're thinking about buying XLM coins, keep in mind that the Stellar price is highly erratic. Although this is common in the cryptocurrency industry because the prices of different crypto assets, including the XLM price, are affected by a variety of factors that cause fluctuations in the whole crypto market.