Why is Stellar (XLM) so popular?

Bittime - In the midst of the crowd of crypto assets and their volatility, there is one cryptocurrency that has attracted quite a lot of attention this month.

Let's explore the reasons for the rising popularity of Stellar (XLM) in this article. Could one of them be the reason you started investing in XLM?

What is Stellar? 

Stellar is an open-source blockchain network designed to facilitate fast, cheap, and efficient cross-border transfer of value. 

Unlike most other blockchains, Stellar aims to connect financial institutions, payment systems and individuals globally. 

The ultimate goal is to create a more inclusive financial system and enable access to financial services for the unbanked.

Stellar uses its native token called Stellar Lumens (XLM) to pay transaction fees and help transfer assets on its network. 

This process allows users to convert various fiat currencies and digital assets in real-time.

Read also: $XLM Price Prediction December 20: Bullish or Bearish Signal?

Stellar Technology and Working Mechanism 

One of the main reasons why Stellar is so popular is its unique technology. Unlike Bitcoin which uses a proof-of-work (PoW) algorithm, Stellar uses a mechanism called the Federated Byzantine Agreement (FBA).

This mechanism allows transaction authentication to be performed only by a small group of “trusted nodes” (quorum slices) rather than the entire network. 

This process allows transactions to be completed in 2 to 5 seconds, making it faster and more energy efficient than traditional blockchain networks.

Additionally, Stellar enables automatic cross-currency exchanges. For example, if you send US dollars to a recipient who uses euros, Stellar will automatically convert the dollars to euros at the best exchange rate available on the open market. 

This capability makes it an effective tool for international remittances.

Collaboration and Partnerships Matter 

Stellar has succeeded in establishing strategic partnerships with a number of financial institutions and large companies. Some notable partnerships include:

• IBM: This collaboration enables the use of the Stellar network to facilitate real-time cross-border payments in various countries.
• MoneyGram: Stellar is also working with MoneyGram to enable money transfers using the USDC stablecoin.
• Regional Financial Institutions: Several banks and financial institutions in various countries have adopted Stellar as a cross-border payment infrastructure.

These partnerships have helped expand the Stellar ecosystem and increase trust among large financial institutions.

Low Transaction Fees and Transfer Speed 

One of the main reasons why Stellar is so popular is its extremely low fees. Compared to networks like Ethereum that have high gas fees, Stellar offers almost zero transaction fees. 

The average transaction fee on the Stellar network is only 0.00001 XLM, which is equivalent to almost zero in fiat currency.

Additionally, transaction processing time on Stellar only takes 2 to 5 seconds, making it much faster than many other blockchain networks. This makes it an ideal choice for cross-border transfers and microtransactions.

Support for Multi-Asset and Cross-Currency Transactions 

Stellar allows users to convert and transfer various types of assets, including fiat currencies, stablecoins, and other cryptocurrencies. 

This capability is especially useful for users who want to send money across borders without having to deal with complicated and expensive currency conversion processes.

This feature gives users the flexibility to send money easily and efficiently from one currency to another. 

For example, a user in the US can send dollars to a user in Europe who wants to receive euros. Stellar will automatically convert dollars to euros using the best exchange rate available.

Strong Community 

Stellar's large and active community is one important factor in its popularity. The Stellar Community actively participates in development discussions, technical updates, and user support.

Additionally, Stellar's presence on GitHub with many public repositories shows that the project has active and transparent development. 

Developers from all over the world can contribute to the development of Stellar, which helps increase trust among its users.

Conclusion 

Stellar (XLM) has become one of the most popular blockchain projects in the world due to its unique technology, strategic collaboration, low transaction fees, high transfer speeds, and strong community support. 

With its vision to create an inclusive global financial system, Stellar continues to attract the attention of financial institutions, developers and users around the world.

FAQ Stellar (XLM)

What is XLM Coin?

Stellar Lumens (XLM) is the native digital asset of the Stellar network. The Stellar Network itself is a decentralized blockchain platform designed to facilitate cross-border transactions quickly, safely and at low costs. 

Simply put, XLM functions as “fuel” to run transactions on the Stellar network, much like gas for a car.

What year was Stellar launched?

The Stellar Network was launched in 2014. However, its roots can be traced back to the Ripple project, where several of Stellar's key developers were previously involved.

Stellar Network What?

Stellar is an open blockchain network. This means anyone can participate in this network, be it an individual, business or organization. 

The Stellar Network uses distributed consensus to validate transactions, so no single entity controls the network.

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Reference

Time Money, What Does Steller Mean? Why Is XLM So Popular?, accessed December 20, 2024

Colin Harper, What Is Stellar (XLM)? | A Guide to the Common Man’s Financial Network, accessed December 20, 2024

Author: SD