Stellar Lumens (XLM) Price
Here you can see the current Stellar Lumens (XLM) price and its historical trend. Stellar Lumens (XLM) is one of the cryptocurrencies you can trade on BISON.
Table of contents
What is Stellar (XLM)?
The Stellar network serves as a bridge between different currencies, aiming to simplify and economize the process of transferring from one currency to another. Using “Anchors”, financial service providers can communicate with each other. Imagine Stellar as an international marketplace for currency offers. For example, if you want to exchange euros for US dollars, you can place your offer in the network and wait for a matching exchange partner.
This network uses the cryptocurrency Lumens (XLM) for exchanges. If a direct exchange is not possible, Stellar forms a chain of exchanges until the desired currency exchange is achieved. For example, Person A has euros and wants dollars, Person B has pesos and wants euros, and Person C has dollars and wants pesos. Person B exchanges pesos with Person C for dollars and then exchanges these dollars with Person A for euros.
Users pay for transactions in the network with XLM to protect the network from being flooded by unnecessary transactions. Therefore, a small fee of 0.00001 XLM is burned with each transaction, which amounted to approximately 0.000001081 euros per transaction in October 2023. Lumen can also be used as an intermediary in currency exchanges.
What currencies can be exchanged with Stellar?
In the Stellar network, it’s possible to exchange all kinds of cryptocurrencies and fiat currencies. For example, Bitcoin can be exchanged for euros, or Ether for US dollars. Theoretically, any type of currency can be exchanged, including airline miles or loyalty points. However, whether this is utilized in practice and how such an exchange would function is unclear.
What is Stellar's purpose?
According to its official white paper, Stellar aims to revolutionize the traditional international payment system with its primary goal being financial inclusion. By bridging political and geographical barriers in the financial system, Stellar seeks to enable every person in the world to participate in the international currency exchange system.
In countries like Germany, having a bank account is standard and often necessary. Without an account, you generally won’t receive payment from your employer. However, some people do not have a bank account and are also denied one by banks in their country. Stellar aims to resolve this disparity.
Stellar differs from its crypto competitor Ripple (XRP) in that it was specifically developed for the general public, while Ripple focuses more on integration within the banking and corporate context.
For comparison, in October 2023, Ripple had a market capitalization of 25 billion euros, ranking it as the fifth-largest cryptocurrency according to CoinMarketCap. Stellar was in 22nd place with a value of 3 billion euros.
Why is the Coin XLM necessary?
The Stellar network requires Lumens for a simple reason: to prevent spam and misuse. Without a small barrier, which is well below 1 cent, the ledger could be flooded with nonsensical transactions. Therefore, Lumen was introduced. Each person wanting to use the network must a) possess 1 Lumen (worth 10 cents) and b) pay 0.00001 Lumens per transaction (0.000001081 euros).
Stellars Konsens-Algorithmus
Founded on the Ripple protocol, Stellar switched to a new, proprietary consensus algorithm after the system became overloaded. This new algorithm, known as the Stellar Consensus Protocol (SCP), connects trusted networks into a larger network, resulting in a more efficient and secure consensus. Like most consensus mechanisms, Stellar’s is open source.
The consensus mechanism is explained in detail in an almost ten-minute video:
