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Stellar is essentially an open-source blockchain platform for developing currency and payment networks. It enables creations, sending, and transfer of digital representations of all types of money like dollars, pesos, and more. Stellar blockchain development enables fintech solutions around the world to operate together on a single network.
Stellar does not have a proprietor; people own it. The software runs across a decentralized network and manages millions of transactions every day. It is much faster, simpler, and energy-efficient compared to typical blockchain-based systems.
Stellar Blockchain
The Stellar network started operations in 2015. More than 450 million transactions have been made by more than 4 million user accounts since then. Stellar has been selected by large corporations and businesses as small as single-dev fintech startups to build solutions for transferring capital and entering new markets.
Stellar has been cryptocurrency-adjacent since its launch. However, the software development platform intends to strengthen rather than disrupt or replace the current financial system. Whereas, for instance, the Bitcoin network enables users to transact only bitcoins, Stellar is a decentralized framework that is ideal for transparent and efficient trading of any kind of currency.
Also, Read | Building Next-Gen Fintech Solutions with Stellar Blockchain
The Stellar network's native digital currency is the lumen, required to initialize accounts and make transactions in small amounts. Stellar does not privilege any particular currency beyond those requirements. It explicitly intends to make conventional sources of capital more valuable and accessible.
For example, you can build a digital U.S. dollar representation—on Stellar, it will be a "dollar token." You can inform the community that if anyone deposits a conventional dollar with you, you're going to give one of your new tokens to them. If anyone returns this "dollar coin" to you, you promise to exchange it for one of the standard dollars in the bank account in turn.
What is Stellar for?
Essentially, between your digital token and a conventional dollar, you set up a 1:1 connection. An equivalent investment funds each of your tokens out into the world. When people keep the tokens, they should treat them just like traditional money, because at the end of the day they can trade it for real money.
That may sound unusual—issuing electronic dollar credits is essentially what any local bank does hundreds of times a day. Yet this 1:1 guarantee of a token for a currency has significant implications in a global scheme. For example, no matter how a token travels through the economy, the underlying dollars never exit that bank account. So, someone lends their tokens to someone else, and then that person uses them to buy a car. No bank has to settle the offer or accept the loan. Also, it doesn't matter if the car seller lives in Brazil or Singapore, or somewhere else, they can still own the tokens and exchange them however they want. The Stellar network establishes borderless transactions.
Also, Read | Stellar Blockchain App Development | A Comprehensive Guide
Digital dollar tokens also mean that people around the world can own, purchase, and sell a dollar's worth without needing a U.S. bank account themselves. A Venezuelan can keep a certain net worth of his family in dollars. A Filipino expatriate can send dollars home, and the receiver can keep them securely and digitally until they can exchange it.
An American corporation can reimburse a Mexican vendor in dollars, and the vendor, in exchange, can repay its suppliers with a five-second wait to settle, instead of a five-day. Although the money changes hands, the dollars represented by the digital token never actually move. Therefore, these transactions sidestep the complexity and cost of the traditional banking system.
Who can Build on Stellar?
Stellar is an easy, efficient network for end-users to transact, save, and spend digital money. Stellar blockchain is a transparent finance network for entrepreneurs to build fintech solutions. It is open to anyone; no permission or application is needed. This same transparency also applies to the token layer: a financial institution may create new digital tokens for, say, the Swiss Franc, to meet a market need without entering a proprietary association. With each new company and developer, Stellar's total power increases.
How does Stellar work?
At the simplest stage, Stellar is a proprietary tracking system. It uses a ledger to do so as accountants have for decades, but its novelty is that there is no real accountant. Then, there's a network of independent computers that test and recheck each other's work. Stellar is a network without a centralized authority — implying no one can interrupt the network or secretly change the numbers to his preference — nodes check and update ledgers updated every five seconds, even without a central authority.
A unique algorithm, called the Stellar Consensus Protocol (SCP), keeps everything in sync. SCP strives to be better by being configurable, fast, and highly energy efficient.
Also, Read | Is Stellar Blockchain a Right Fit for Cross-Border Payment Solutions
The computers operating the core Stellar program, and therefore publishing and testing the ledger, we call them nodes. So, when you give someone a euro token on a Stellar-built device, the nodes verify debits and credits, and each node ensures that every other node sees the transaction and agrees to it. Thousands of nodes across the globe check the existing Stellar network; the nodes and the way they interact are public knowledge, and everyone can install the Stellar program and enter the consensus process. This is different from how accounting works at, say, a bank where a single corporation decides unilaterally what's going on, more or less in secret.
Right beyond the core framework sits an efficient API. It eliminates the need for you to grasp the nuances of the distributed consensus to build on Stellar. Simple and well-documented functions allow you to transfer new digital money using conventional models. Trading tokens between accounts, making markets, and issuing assets are very easy.
Conclusion
To put it very clearly, Stellar allows for a future in which ordinary people can submit money affordably and easily anywhere. We at Oodles believe that only when capital can flow unburdened across the globe can we unleash the true power of the modern digital economy. That's what Stellar is about and that's what Stellar is going to do.
A legion of developers, businesses, and consumers are sharing that dream. We would love to hear from you if you share it, too. Get in touch with the Oodles blockchain development team for more information on developing Stellar blockchain-based fintech solutions here.
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