American IT giant IBM has tackled with Stellar Lumens to create a huge new project: making international payments easier, faster and (almost) free of charge.
Paying fee for wire transfers is really annoying and not up-to-date to the current possibilities of moving money from one point to the other. Why do we have to pay fees when we exchange money in another currency? This problem is addressed by the development teams of the two big companies.
Who is behind Stellar?
Stellar is a platform that aims to connect people from around the world, whether rich or poor, with low-cost forms of payment by using their own cryptocurrency, the Stellar Coin. The team behind stellar.org is a mix of top developers and finance personalities. The fight against poverty is paramount.
The Stellar Development Foundation is a nonprofit organization behind the project, founded in 2014 in the state of Delaware.
What are Lumens?
Lumens are the actual native asset of the Stellar network. This means that lumens exist in the network for it to work. A lumen is thus like Bitcoin a virtual payment unit, and therefore a cryptocurrency. The “Lumen Coin” ensures that payments can be made within the community and processed across the world, quickly and easily.
There are currently 100 trillion Stellars that were put into circulation in 2014. In 2015, there was an update of the network, which led to Stellar being transformed into Lumen, allowing a better distinction between the Stellar Network and the non-profit organization stellar.org.
The lumens take on two different functions:
- An anti-spam role: for every transaction made, a very small fee of 0.0001 lumens will be destroyed. This prevents the blockchain from being flooded with denial-of-service attacks and attacking the network.
- Lumens can facilitate payments between different currencies. The tokens act as a kind of bridge between the pairs (for example, the euro and the pound) and enable an exchange at low fees.
This project is being jointly developed by IBM, Stellar Lumens and KlickEx to simplify cross-border payments, using a common blockchain solution.
The lumens token thus acts as a means of payment within the blockchain and is intended to connect up to 12 different currencies and countries, including those from the South Pacific Ocean (Australia, New Zealand).
How does the network work?
As with many cryptocurrencies, the network is organized on a decentralized basis. Therefore, all transactions are stored on a blockchain. There is a copy of this “virtual cash book” on every server in the Stellar Network. See here how payments work.
Should I invest in Stellar Lumens?
The Coin is currently experiencing a hype and is on the rise because of the above-mentioned news. The recently released roadmap (January 2018) announces two major goals:
- Development and publication of the Stellar Decentralized Exchange (SDEX)
- Implementation of the Lightning network on the Stellar Blockchain
The SDEX is said to have incredibly low transaction fees (1 cent on 100,000 Stellar Lumens transactions) and it should be possible for anyone to launch an ICO.
Furthermore, the Lightning network is to be implemented, just as Bitcoin plans to do. This should solve the scaling problem and paves the way for mass suitability.
If it actually succeeds in implementing the project and simplifying global payment transactions by reducing fees to a few cents, we believe the coin can definitely continue to gain in value. We also published a detailed guide on how to buy Stellar.