What is the Stellar cryptocurrency? As one of the oldest in the game, Stellar specializes in making cross-border payments and digital asset exchanges simpler, quicker, and cheaper with its native token known as Lumens. Furthermore, the platform allows for the creation of smart contracts and decentralized applications.


What is ‘stellar’ about, well, Stellar? This blockchain network has been one of the oldest, and while nowhere near the realm of Bitcoin or Ethereum, it nonetheless still deserves attention. 

Stellar bills itself as a network revolutionizing the old and dated remittance systems bogged by long waiting times and high fees, instead favoring lightning-quick and super-cheap payments thanks to blockchain technology.

Stellar is the tenth-most traded cryptocurrency, according to CoinMarketCap. It boasts a market capitalization of approximately $6.3 billion with a per-token value of $0.30 (all stats taken at the time of writing).

Due to the complexity of most digital currency projects, this article will explain in the simplest terms what Stellar does, how it started, how it’s structured technically, and what makes it valuable currently and futuristically.


Stellar and Ripple share a similarity in that American serial entrepreneur and programmer Jed McCaleb co-founded both. Stellar was also initially based on its predecessor’s protocol.

As with Ripple, McCaleb was not alone in the formation of Stellar in 2014, relying on the American lawyer Joyce Kim, who is the other co-founder. During the construction of Stellar, McCaleb was embroiled in drama with the fall of the Bitcoin exchange he founded, Mt. Gox, and his position at Ripple. 

Eventually, McCaleb distanced himself from both. Like many cryptocurrencies, Stellar proceeded through a non-profit organization structure, the Stellar Development Foundation, a collaborative effort with Stripe’s CEO, the Irish billionaire entrepreneur, Patrick Collison. 

Through $3 million seed funding from Stripe and other generous donations from the likes of Google, BlackRock, and FastForward, Stellar launched as a decentralized cryptocurrency on 31 July 2014. To avoid confusion, it changed the name of the token to Lumens (XLM) in 2015.

How does Stellar work?

Stellar bills itself as ‘an open network for storing and moving money.’ In practical terms, Lumens is an open-source, peer-to-peer decentralized cryptocurrency while also allowing for the seamless exchange of fiat, digital currencies, and other securities. 

It allows all these services at a fraction of a penny. Furthermore, Stellar permits developers to build smart contracts (programmed, self-executing contracts) and dApps (decentralized applications), making it more versatile than many of its competitors.

Aside from being available at countless top cryptocurrency exchanges, XLM is also a tradable financial market through many derivatives or CFD brokers. When Lumens was originally created, Stellar planned to have 100 billion tokens with a 1% yearly inflation for five years.

However, the Stellar community eventually disputed and instigated the foundation to change this protocol, which effectively resulted in the burning of half the supply at the end of October 2019—as with other coin burns, reducing the supply makes the coin more valuable.

Thus, currently, there will only be 50 billion Lumens, with about 22.2 billion (45%) presently in circulation.

Stellar’s ledger

Lumens is not a mineable (proof-of-work) nor a staked (proof-of-stake) coin. Instead, it uses its special consensus mechanism known as Stellar Consensus Protocol (SCP). Most blockchains operate on what is known as the Byzantine Agreement concept, which simply means a group of nodes or computers all reach consensus for the creation of each block.

In contrast, the SCP operates on the Federated Byzantine Agreement (FBA), a protocol initially pioneered by Ripple. With FBA, the protocol doesn’t need to rely on the entire network of nodes or computers to approve transactions, which is one of the main reasons it boasts an impressively high throughput (as many as 1,000 operations a second) with low latency.

Barely any information exists on how much XLM is created daily nor the rewards of those involved in this process.

What makes Stellar valuable?

Stellar, along with its more established counterpart, Ripple, is one of the leading cryptocurrencies in cross-border payments and financial asset exchanges at breakneck speeds and dirt-cheap cost. 

Certain remote global markets have largely been excluded by traditional payment processors such as PayPal and Western Union, making cross-border transfers tricky in terms of accessibility and cost.

With a platform like Stellar, accessibility and cost aren’t factors anymore. The cryptocurrency already performs exceptionally well in this regard, though there is another area that makes it more valuable. 

As mentioned previously, Stellar also does allow for smart contracts and decentralized applications, two fields that have been a hot topic in the crypto space for the last few years. Cryptocurrencies with such versatile use cases are likely to stay afloat in the long-term, and Stellar is definitely one of those.

Future of Stellar

One of the advantages of XLM is age. As one of the oldest cryptocurrencies, analysts have enough historical data to make conservative value predictions based on its cycles. Investors can make several technical distinctions of where they think the price of XLM may head towards.

However, equally as important are the underlying fundamentals of the broader market and possible developments. One of its confirmed plans is an up to $3 million investment in the Settle Network, one of the largest digital assets settlement networks in the LATAM region.

Looking at the broader cryptocurrency market, although Lumens’ value tanked along with many others during the bear run that succeeded 2018 and 2019, 2020 became a fortune turn. Stellar has started strong for 2021 as it looks to reach its 2017 all-time high of $0.87 and beyond.


Stellar has rightfully earned its place firmly in the top 10, which should dispel any doubt over any fears that this isn’t a cryptocurrency with no utility or unique features. Due to being versatile in serving both the digital payment and smart contracts market, investors should keep a keen eye on this project going forward.