What Is Stellar Blockchain?

Released initially on the 31st of July 2014, Stellar Blockchain is one of the leading Blockchains in the market now. It is an open-source network which means that it is an open network that has no owner besides the public. it is optimized for payments and asset issuance. On the stellar blockchain, transactions such as creating, sending, and trading digital representations of all forms of value can be carried out.

Of all the several cryptocurrencies and cryptocurrency platforms like Bitcoin and Ethereum that have in the last few years become popular, grown in value and racked up impressive gains & tractions among developers, Stellar also stands out. Unlike their predecessors, all emerging cryptocurrency and blockchain platforms are now improving their speed and scalability while also reducing the cost of transactions. Without laying strong emphasis on these three areas, any blockchain platform would find it difficult albeit impossible to even take off.


Stellar blockchain and its cryptocurrency lumen are currently ranked among the Top ten popular blockchain platforms in the current market.  It has been globally accepted, recognized and adopted. In 2017, the value of the lumen grew by 34,900% but it collapsed in 2018 by 77%. In 2019 and 2020 though, its value remained fairly stable. Last year, 2021, its value and performance increased for three months (January to March) by 226%.

What Is Stellar Used For?

Stellar is a blockchain that makes payments easier by enabling its users to perform all forms of transactions- Buy, Sell, and trade all forms of money, from dollars and euros to cryptocurrencies such as Bitcoin.  It was founded in 2014, launched in 2015 and operated by the Stellar Development Foundation. This is a non-profit organization that was founded by Jeb McCaleb who also co-founded Ripple. Stellar is an open-source payment technology, like Ripple, this payment technology aims to connect financial institutions and significantly reduce transaction costs and speed. It offers an interesting opportunity for investors looking to trade on other cryptocurrencies besides Bitcoin.

Stellar is focused on developing markets and has several uses for its technology besides banking like money remittances and bank loan distribution to the unbanked, unlike Ripple which only works with established banking institutions and consortiums to streamline its cross-border transfer technology. Stellar software runs across a decentralized open network and handles millions of transactions per day.

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How Does Stellar Work?

The Stellar network has a native digital currency called the lumen, the lumen is used in making transactions and is required in smaller amounts to initialize accounts. Besides this, Stellar does not privilege any particular currency. Lumen is often used to pay transaction fees on Stellar. They also act as the intermediate currency and allow for trades to be executed quickly. A protocol has been built-in and set in place to automatically convert money sent through Stellar to Lumen and then to your desired coin.

Stellar’s operation is basic and quite similar to that of most decentralized servers with payment technologies. Its network of decentralized servers with distributed ledgers is updated every 2 to 5 seconds on every node.

The Stellar consensus protocol (SCP) on the Stellar network makes it different from Bitcoin. It is a unique algorithm that keeps everything in sync via the proof-of-agreement(POA). The SCP does not rely on the entire miner network to approve transactions. It instead uses an FBA which is the Federated Byzantine Agreement algorithm. This algorithm ensures that transactions are processed faster because it uses quorum slices (or a portion of the network) to validate and approve transactions.  Stellar has shortened the transaction process by ensuring that each node in the network chooses another set of “trustworthy” nodes. Once the transaction is approved by all nodes within the set, it is considered approved. This shortened process has made transactions extremely fast and efficient on the Stellar network as it can now process as many as a thousand (1,000) network operations per second.

For instance, when you send someone one euro token on a Stellar-built app, the nodes check that the correct balances were debited and credited. Then each node makes sure every other node sees and agrees to the transaction. Once consensus has been achieved, the details of the transaction are published in the ledger. The nodes’ communication is public information even as Stellar is being verified by hundreds of nodes across the world so anyone can install “stellar core” which is an implementation of SCP and join the consensus process.

Features Of Stellar Blockchain

  • It is decentralized and open source.
  • It supports thousands of transactions per second.
  • It enables multi-signature
  • It enables smart contracts
  • It has a 1% annual inflation.
  • It confirms transactions in 3-5 seconds.
  • It is faster, cheaper and more energy efficient than typical Blockchain-based systems.
  • It is open to the public unlike how accounting works in a centralized network where a single authority more or less in secret makes unilateral decisions for the network.
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How Stellar Protocol Ensures Integrity Of Financial Network

To ensure a financial network’s security and integrity running on a Stellar network, the FBA (Federated Byzantine Agreement algorithm)consensus mechanism is used. Peak efficiency is achieved through quorum slices made by each node. In the FBA system,

  • Users are organized into mini-networks.
  • Each node within such mini-networks knows its valuable users.
  • When a transaction is initiated, a node waits for most users within its mini-network to agree on the transaction after which it considers the settled transaction.
  • Similarly, the other users do not agree with the transaction until the members that are considered valuable agree.
  • Eventually, a required number of users in the network accept a transaction making it impossible for a hacker or an attacker to roll it back.
  • Only then will any user considers the transaction settled.

Applications Of Stellar Network

The stellar network is not just limited to financial markets, it has a wide range of applications and potentials as listed below:

  • Anchors in more currencies
  • Mobile and trading clients
  • API Mashups
  • Merchant plugin
  • Micro savings account for school, health, insurance
  • Microinsurance
  • P2P lending
  • Conditional cash transfers
  • Donation systems for nonprofits
  • Loyalty points programs
  • Community currencies
  • Time banks
  • Volunteer hour tracking
  • Anywhere ATM or human ATM mobile apps

Stellar Lumen

The Stellar network was created to support all currencies but it also has its native token, the lumen(XLM). There is a required number of lumen that each account on the lumen network must hold. It is a modest account as a few is enough for most accounts. Unlike other blockchains, lumen isn’t awarded upon opening a Stellar Blockchain account nor is it mined over time. Only 100 billion lumens were created when the Stellar network went live. It’s supply by design increases by 1% annually. This number was reduced from 100 billion to 50 billion in 2019, and no more lumens were created.

Currently, there are 20 billion lumens in the open market with the remaining 30 billion lumens being retained by the Stellar development foundation. This foundation was created to develop and promote the supply and growth of lumen. You need lumen to use Stellar, they are available for purchase directly on the stellar network as well.

Frequently Asked Questions



For instance: Jack lives in the U.S., and Jane lives in the U.K. let’s assume jack wants to send USD 1,000 to Jane as payment for a business transaction which converts to Jane in GBP (Pounds Sterling) so she can easily access the funds. If they are both account holders in their respective countries with institutions that are linked to stellar networks, this transaction will be possible and easy too. Jack sends $1,000 through his bank and within seconds, his bank checks to see if Jane is compliant with the transaction. If she is, her bank sends approval to his bank and the fund is deducted from his account as USD. This USD is converted to lumen (XLM) and sent to Jane’s bank Stellar account. Here, it is converted at the best rate possible to pounds sterling and deposited into her account. The entire transaction described above happens in minutes.


Currently, the base fee is .00001 XLM. The sender of the transaction incurs this fee. This expense is a nominal amount associated with each transaction operation. It does not have a profit motive it acts as a deterrent for malicious activities. The fee is collected by the ledger and redistributed immediately in the process of inflation.


Anchors in the Stellar Network are entities that can hold deposits and issue credits based on a requirement. All money transactions on the Stellar network, besides lumen XLM, take place in credit issued by Anchors. Anchors are similar to a bridge between diverse currencies in the world today and the Stellar network.


Stellar requires lumen as a way to prevent the ledger from being filled with spam or used as an arbitrary database system. It also discourages cyber attacks like hacking. This action also deters fraudulent users that post as participants, users, or investors. This also prevents the system from giving preference to any one type of currency. The lumen was intended solely for dominating network requirements.


For more real-time information on the Stellar blockchain, you should consider having a look at a Stellar blockchain explorer. A blockchain explorer is a browser for the blockchain, similar to internet explorer or Google Chrome.

A Stellar blockchain explorer will provide you with live insights on recently mined blocks on the Stellar blockchain and a live feed of all the blocks added to the blockchain. Also, it presents detailed statistics, pricing history, and insightful reports for all the assets on the Stellar network, which helps better decision-making.

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