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What is Stellar Lumens?


The disruptive nature of cryptocurrency is self-evident, offering the world an excellent alternative to the already existing financial model that has controlled the ownership, storage, and the transfer of value for ages.

While many may see cryptocurrency as a virtual currency of destruction that has come to destroy the existing financial structure, others see it as a great opportunity that makes life easier when used as a medium of exchange of goods and services.

Unlike most cryptos, Stellar is entirely complaint with regulators and although Stellar was initially against banks, its partnership with IBM last year changed Stellar’s fate.

What is Stellar?

Stellar is a nonprofit organization payment network that aims to make the process of sending and receiving money internationally to be easy and cheap. Just like sending a mail from the comfort of your home is, that is precisely what stellar plans to achieve.

It might be of interest to note that Stellar also engages in social missions like helping the poor in the world. They recently partnered with Praekeit to help South African girls bank airtime units. More surprisingly, about 50% of Stellar’s workforce is female. This is surprising because, in most tech organizations, it is hard to see more women in such organizations.

What is Lumen?

The token used in Stellar is called Lumen (XLM). Lumens are used to pay for transactions on the Stellar network, and they act as a link between currency pairs of which a sizeable direct market is not available. There are 100billion lumens and its supply increases by 1% annually.

Interestingly, the Stellar Lumen is now part of the top 10 cryptocurrencies in the world. This is a great feat because it has not been long since the Stellar network was launched.

History of the Stellar

The Stellar network was founded by Jed McCaleb (the founder of the P2P file-sharing network eDonkey and also the co-founder of Ripple) and Joyce Kim in early 2014.

The Stellar advisory board includes Keith Rabois, Patrick Collison, Matt Mullenweg, Greg Stein, Joi Ito, Sam Altman and others.

Before the official launch of Stellar, McCaleb set up a website called ”Secret Bitcoin Project” seeing alpha testers. In August 2014, Mercado Bitcoin, the first Brazilian Bitcoin exchange announced that it would be using the Stellar network for its operation. And in January 2015, Stellar had approximately 3 million registered users, and its market cap was almost $15million.

The Stellar development foundation released an updated protocol with a new consensus algorithm in April 2015 which went live in November 2015.

How does Stellar work?

The network works in a straightforward way for its users. Users submit their transactions to ‘anchors,’ according to Stellar, anchors are banks, companies or any trusted entity, they act as bridges between a given currency and the Stellar network. The anchor works with the network to record fiat currency as credit. Credits are then given to users that have submitted fiat currency to anchors, which are kept in an online account. Credits can then be sent among users, and it is converted automatically into other currencies at the best rate. The Stellar network charges 0.00001 Lumen (XLM) per transaction, and it takes approximately 2-5 seconds for a transaction to be complete.

Stellar Vs. Bitcoin

Stellar is based on a consensus algorithm, that is, transactions are confirmed within few seconds (2-5 seconds). However, the bitcoin’s mode of transaction confirmation takes much time because bitcoin uses miners who engage in a competition to solve a complex mathematical puzzle before a transaction is confirmed and this takes some minutes to hours as the case may be.

Stellar Vs. Ripple

Even though Stellar may have started as a fork of the Ripple project, the two platforms are entirely different.

While Ripple is a profit organization that is responsible for creating payment network for large financial institutions, Stellar is a nonprofit network that works closely with financial institutions.


Stellar is a decentralized network that connects people that wants to send and receive money faster, cheaper and secured without stress. The network uses anchors which serve as a bridge between the network and a given currency.

Did you know that the Stellar network became the first cryptocurrency network to publish a graphic novel? The novel was used to explain the concept of distributed consensus which they use, and they called it Federate consensus. It is a real piece of art and can be found on the stellar website.

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