Stellar network and the cryptocurrency “The Lumen”

It is a protocol and cryptocurrency that was launched in April 2015 by Jed McCaleb, co-founder of Ripple, as a decentralized project unlike the Ripple protocol. Like the latter, it aims to make international monetary flows easier and cheaper for banks, companies and individuals.

But, what is this Stellar Project about and what is its purpose?

Today’s global infrastructure has a big communication problem. There are a lot of different currencies and a lot of different payment systems. Each one speaks a different language so they have a hard time understanding each other. Which makes moving money slow and expensive and a lot gets lost in translation. Stellar’s visión is to unite the world’s financial infrastructure so money can flow quickly and cheaply between banks, businesses and people.

If the internet connected the world’s computers so information could be shared globally, Stellar is doing the same for money. To accomplish this visión and ensure integrity and neutrality, Stellar is not a bank or a business, instead it’s a non-profit foundation that handles every currency and speaks to every payment system in its native language. That means businesses can move money globally in seconds, no matter what bank they use back home. And people all over the world can use Stellar to send money to family overseas to convert one currency to another or to make payments that are too small to cover fees traditionally charged by today’s institutions using the SWIFT system. Just the same purpose as Ripple but using a different technology.

In the future Stellar hopes that you won’t need to use traditional infrastructure to ge your money where you want it to go. Instead, you will just use Stellar.

In other words, Stellar's purpose through its protocol and his cryptocurrency "the Lumens" is to unite the world's financial infrastructure in such a way that money flows quickly and economically between banks, companies and individuals.

What are Stellar Lumens (XLM)?

The Stellar network has its own cryptocurrency: the Stellar Lumens. The Lumens make economical and universal payments possible using Stellar network and protocol.

Stellar is a platform that connects banks, payment systems, and people so they can move their funds easily anywhere in the world. To help make this happen, Stellar has created a cryptocurrency called "Lumen". The lumen is a native resource within Stellar network and serves as a kind of universal translator between each currency, like a converter element. Here's how it works: imagine a business in the US that needs to pay a supplier in China, typical, right? well, the business in the US has dollars in its local bank account but needs the Chinese Yuan to appear on the China supplier's account. Instead of sending the money in the traditional way using a SWIFT, which is slow and expensive and will take days to get approved between numerous intermediary banks which collect their commissions to be accumulated, we use the Stellar system which has a decentralized exchange built into its protocol. You can send a payment in USD, these are transformed into Lumens, the lumens arrive in China, and are immediately transformed into Yuan, the lumens act as a single intermediary and all is done in less than 5 seconds and with costs as lower as a 1/1000 part of one cent. Apart from serving as a universal currency translator, the Lumen also protect the integrity of the network by preventing spam. Transaction fees are paid in Lumens and each Stellar account has a minimum balance as well. The transaction fees and minimum balances are so low that legitimate users do not notice them, but they are high enough in order not to encourage spammers. Therefore, the Stellar network's Lumens are a fundamental component in its protocol that allows it to be efficient, scalable, and serve as a universal resource translator. Thus we can move funds internationally in a cheap, transparent and secure way that only a decentralized blockchain can provide. Thanks to Stellar, we have an extremely efficient and innovative financial infrastructure.

Sending money with Stellar: Stellar gives us the opportunity to send money to our relatives around the world without having to pay large percentages even for small amounts. The sending is safer, faster, and cheaper than using the old international transfer system.

How can banks, companies and individuals use the Stellar network?

Stellar allows banks, companies and individuals to convert traditional assets such as dollars and euros into tokens. Tokens that can be transferred and exchanged with other participants in the Stellar network.

Stellar is a platform that aims to connect banks, businesses and individuals in a much more efficient way than the traditional financial structure. Let's see how it works with these agents. Firstly, each agent, whether bank, company or individual, has to register a Stellar account to use its network. On this platform there are tools designed to integrate the infrastructure of the bank or company with the Stellar infrastructure so that they can convert their monetary assets, dollars, euros or pounds into Stellar tokens, or into Lumens, and in the case of banks, any of their clients can have US dollars on Stellar tokens and viceversa immediately. This only takes a few seconds at a fraction of the cost. Anyone can transfer, accumulate, or "trade" Stellar tokens, just like Lumens, anywhere in the Stellar network.

Well now the bank can take a dollar, transform it into a token, transfer it around the world in 2 or 5 seconds and convert it back into a dollar at another bank. For banks, Stellar can make fund transfers fast, simple, and affordable.

But also for companies, imagine that a company wants to sell a product online and wants to charge it in dollar token on a Stellar basis, using the platform, create the token that runs on the stellar platform that is backed by real currencies. Well, this company could sell its products with stellar-based dollar tokens and immediately could transform it into real dollars on its bank account. With this Stellar system, companies will not only be able to charge customers cheaply and instantly, but reward them and create a new economy and markets for their brands.

Finally for individuals it is even easier, each person can create a Stellar account, can transfer funds to the system within their account, and then transfer them to anyone else who has another account in the same Stellar system anywhere in the world, the recipient can convert the stellar tokens into their local currency instantly and from there to their bank account within seconds.

As an index that qualifies the cryptocurrency and its technology the FCAS (Fundamental Crypto Asset Score) can be used and in this case Stellar has a FCAS of 880, which is a high qualification (green zone) and close to other very important cryptos such as ETH and even better than ZCash (ZEC) as you can see in the graph.

FCAS is a marker that analyses the health of a cryptocurrency and its technology, using parameters such as its technical team, the maturity of the asset and the activity of its users.

In short, any currency or asset can be converted into a Stellar Token and from there it can be exchanged for Lumens or another cryptocurrency to be able to operate with them.

And whether you are a bank, a company or an individual, Stellar makes it possible to exchange and transfer any asset quickly, safely and cheaply in an entirely new way.