Stellar (XLM) is a decentralized, peer-to-peer network established in 2014 by the Stellar Development Foundation. As a cross-border transfer and payment system that connects financial entities, Stellar aims to unite the world's financial infrastructure, connecting banks, payment systems, and individuals with near-instant and secure transfers at a minimal cost. If the Internet connected the world's computers to enable the free global flow of information, Stellar aims to do the same for money. To accomplish this vision while maintaining neutrality, Stellar is not set up as a bank or a business. Instead, it's a decentralized, open network that is supported by a nonprofit foundation called the Stellar Development Foundation (or SDF, for short). The network's native digital currency, XLM or Lumens, acts as an intermediary currency for operations and is also used to pay transaction fees.

Stellar operates on distributed ledger technology, which is open-source, community-owned, and distributed by the community. Its token, the XLM (or Lumens), fuels activity on the Stellar network — a system designed to help payments (and currencies) cross borders faster and cheaper than with traditional financial-system networks. The Stellar payment protocol achieves this by converting financial resources into XLM and then into the requested currency within a few seconds. For example, a bank in Japan might use Stellar to send money to a bank in Mexico. Stellar would automatically convert yen to XLM, send the payment via blockchain, and reconvert XLM to pesos at the current exchange rate. Stellar was intended to work alongside existing assets and cryptocurrencies, allowing users to create digital representations of any asset as a Stellar token. These can then be used to transact on the blockchain and can be redeemed at any time for the base asset. The network aims to maintain a level of security, with XLM holders required to have at least one token to remain active on the network. This feature aims to execute network transactions efficiently and with minimal time costs. As a decentralized financial network, no single entity can process transactions or stop someone from onboarding or offboarding into Stellar, and the network can still run successfully even if some servers are turned off or fail.

Stellar's potential use cases are vast, particularly in the realm of cross-border transactions. The platform aims to overcome the challenges of high fees and slow procedures associated with traditional financial systems, support multi-currency transactions, and enhance processes with foreign operations. The network also uses a development called Anchors, which simplifies the exchange within the network and accelerates the entire process.

Stellar was founded by Jed McCaleb and lawyer Joyce Kim after McCaleb left Ripple in 2013 due to disagreements about the company's future direction. McCaleb's goal was to ensure that Stellar could provide people a way of moving their fiat (governement backed money), into crypto and eliminate the friction that people normally experience when sending financial resources around the world. Jed McCaleb currently serves as Stellar's CTO. This not-for-profit organization aims to "unlock the world's economic potential by making financial transactions more fluid, markets more open, and people more empowered." Stellar was initially based on the Ripple Labs protocol, but the blockchain was created as a result of a hard fork, and the code was subsequently rewritten.

Unlike many popular cryptocurrencies, XLM cannot be mined or staked to receive rewards and increase the asset's supply. While Stellar works like technologies like Bitcoin, its key distinguishing feature is its consensus protocol. The present-day Stellar is a result of a 2014 fork that created the Stellar Consensus Protocol (SCP), following which Stellar became an open-source system. Under this protocol, the transaction authentication process is confined to a select set of trustworthy nodes rather than being left open to the whole network of nodes. Instead of being mined by "proof of work," Stellar is secured by a unique blockchain mechanism called the Stellar Consensus Protocol (SCP).

You can buy, sell, send, and receive XLM by creating an account on Coinbase — or a number of other financial technology companies. Coinbase Wallet is another option for storing, sending, and receiving XLM.

The primary role of XLM in the cryptocurrency ecosystem is to facilitate cost-efficient, cross-border, cross-asset transactions of non-monetary value. Stellar seeks to facilitate connections between banks, payment systems, and individuals. The Stellar network is designed to be used with Lumens to pay transaction and account initialization fees. Stellar also supports a distributed exchange mode, allowing users to send payments in specific currencies even though they may hold credits in another, with the network automatically performing the forex conversion. This makes Stellar a functional tool in the context of remittances and bank loans, particularly in developing economies.

The Stellar Consensus Protocol (SCP) is a mechanism used by the Stellar network to reach consensus. Unlike traditional consensus mechanisms like Proof of Work (which relies on a node’s computational power) and Proof of Stake (which depends on a node’s staking power), SCP is based on the Federated Byzantine Agreement (FBA). In the FBA system, each participating Stellar Core node, also known as a validator, decides which set of other nodes they want to trust. This user-defined trust allows for open network membership and decentralized control, meaning anyone can become a Core node and no central authority dictates whose vote is required for consensus. SCP aims to prioritize fault tolerance and safety over liveness, meaning it strives to continue operating despite node failures or malfunctions and it is intended that no two nodes agree on different values. However, there may be instances where block progression is delayed pending node agreement. This approach to consensus is one of the characteristics of SCP within the cryptocurrency space.

Stellar uses its native digital currency, Lumens (XLM), to potentially enable swift and affordable transactions. Stellar's platform is currency-agnostic, meaning it can facilitate transactions between any currency or asset, making it a potential option for cross-border transactions. It strives to reduce dependency on intermediaries, which could potentially affect costs and transaction speed. Stellar's blockchain technology also allows for near-instant payment confirmations, making it a potential choice for businesses and individuals looking for a quicker and potentially more cost-effective way to transfer assets overseas. Moreover, Stellar aims to make its network accessible and integrable with existing financial systems through partnerships with financial institutions and payment gateways.

Anchors in the Stellar network serve as vital bridges, facilitating the transition of real-world assets held off the network to a form that can be held on the network. These anchors are typically organizations with the capacity to facilitate the transfer of fiat and digital assets, such as banks, digital asset platforms, and money transfer operators. They form the global Stellar anchor network, facilitating global user interaction with various blockchain-based services. Anchors address the challenge of regional payment systems that were built to serve specific jurisdictions rather than the broader global community. By bridging their payment services to the Stellar network, anchors link the established traditional economy to the Stellar blockchain's efficiency. They facilitate services that unite the fiat and digital asset economies, facilitate the transition between fiat and digital assets, represent real-world assets as digital tokens on the network, and bridge their services to the Stellar blockchain via the network’s technical standards.

Yes, Stellar Lumens (XLM) is designed to facilitate everyday transactions. It is intended to enable quick, low-cost transactions on a global scale. Stellar Lumens is designed for various transactions including remittances, peer-to-peer payments, and account-to-account transfers among others. The Stellar network supports digital assets of any type, making it versatile for various use cases. However, the acceptance of Stellar Lumens may vary depending on the businesses and service providers. It's important to note that the Stellar network is global, and it has established relationships with various financial institutions and fintechs. The acceptance of Stellar Lumens may vary depending on the businesses and service providers.

The Stellar Development Foundation (SDF) is a non-profit organization that participates in the development and promotion of Stellar Lumens (XLM). The SDF aims to support global financial access, literacy, and inclusion. It strives to achieve this by broadening worldwide access to cost-effective financial services through the development and maintenance of technology and partnerships. The SDF is tasked with developing and maintaining a global transaction network with an emphasis on cost-effectiveness that is high quality, open-source, and publicly accessible to everyone. It also provides guidance and direction for the Stellar ecosystem, supports the use of Stellar for global transactions, and disseminates Lumens (XLM), the native asset of the Stellar ecosystem, with the intention of broadening network participation. The SDF also provides support to projects that contribute to the Stellar network's development.

The Stellar network is designed to handle scalability concerns effectively through its unique consensus protocol and network structure. Stellar uses the Stellar Consensus Protocol (SCP), a proof-of-agreement consensus mechanism that aims to offer improvements in speed, cost-effectiveness, and energy efficiency. This protocol allows the network to process transactions quickly, with an average confirmation time of around 5 seconds. The Stellar network can process up to 1000 transactions per second, comparable to the volume handled by traditional financial systems like SWIFT. The network's scalability is potentially enhanced by its capacity to incorporate nodes, distributing the processing load across a larger network. Stellar's payment channels enable off-chain transactions between two parties, reducing the number of on-chain transactions and potentially increasing scalability. These measures aim to equip the Stellar network to handle a high volume of transactions while striving to maintain speed and security.

Yes, individuals or entities have the ability to issue their own tokens on the Stellar network. This process is a fundamental aspect of Stellar, enabling the representation of various assets in a digital format for interaction within the Stellar network. This can be facilitated by a variety of participants, including banks, money service businesses, payment processors, local communities, enterprises, and individuals. The process of issuing tokens involves creating an issuing account and a distribution account, establishing a trustline, and initiating a transaction. The issuing account serves as the origin of the digital representation of the asset and remains linked to the asset's identity. The distribution account is the initial recipient of the asset. A trustline is established to specify both the issuer and the asset code. The issuing account initiates a transaction using the asset it is issuing, which results in the creation of the digital representation of the asset on the network. After issuing the asset, it is a common practice to provide information about the digital representation of the asset and its intended purpose by linking a home domain to your issuing account and making a stellar.toml file available on it.

Stellar Lumens (XLM) has established various partnerships within the financial industry. One of these collaborations is with IBM, where Stellar's blockchain technology is used to facilitate cross-border transactions in the South Pacific region. This partnership allows for the conversion of locally denominated currencies into Lumens, processed over IBM's blockchain network, and then converted into the recipient's local currency, all within a matter of seconds. Another collaboration is with ICICI Bank, one of India's largest banks. This collaboration seeks to improve the efficiency and speed of financial transactions, particularly for the underbanked populations in India. Stellar Lumens has also collaborated with Deloitte to develop digital banking solutions. A project by Stellar in collaboration with the International Rescue Committee (IRC) aims to streamline the disbursement of aid to affected areas globally. Stellar has also collaborated with DSTOQ, a FinTech company that aims to tokenize and issue digital assets on the Stellar network.

Stellar Lumens (XLM) operates within a complex and evolving regulatory environment, which can present certain risks and challenges. Regulatory decisions, particularly those from influential financial institutions like the U.S. Treasury, may influence the course of Stellar Lumens. For instance, proposals targeting foundational aspects like unhosted wallets can introduce market uncertainty, potentially leading to price volatility. However, Stellar Lumens is designed to navigate these regulatory shifts due to its compliance-friendly design, transparency, scalability, and interoperability. Stellar's network facilitates compliance with regulatory requirements, and its public ledger ensures transparency, a feature that regulators appreciate. Moreover, Stellar's ability to bridge various financial systems means it can adapt to diverse regulatory environments and requirements. Therefore, while regulatory changes can present challenges, Stellar Lumens aims to address these challenges, maintaining its commitment to financial inclusion and privacy.