What is Stellar?

Stellar advertises itself as an open-sourced, distributed payment infrastructure. Built on the premise that the international community needs “a worldwide financial network open to anyone.” The project is filling this need, connecting individuals, institutions, and payment systems through its platform.

In doing so, the Stellar team wants to make monetary transactions cheaper, quicker, and more reliable than they are under current systems. Additionally, their protocol connects people from all over the world by allowing for more efficient cross-border payments.

Like (almost) all other cryptocurrencies, Stellar bears that beautiful buzzword that has become the hallmark of blockchain technology: decentralization. The network runs on a web of decentralized servers supported by an international consortium of individuals and entities. These servers support the distributed ledger that keeps track of the network’s data and transactions.

In practice, the Stellar protocol functions like a more inclusive, more flexible PayPal. To start using it, you need to upload funds to an anchor on the network. Much like a bank or PayPal, this anchor then holds your money and issues credit to your virtual wallet in its stead.

You might be wondering why you need to exchange debit for credit with an anchor in the first place. Well, anchors serve as a bridge for any given currency and the Stellar network. The swap allows you to formally convert your funds into Stellar’s public ledger.  

This integration means you can send funds instantly on the network without having to wait for a bank transfer, as with PayPal. It also streamlines cross-border payments. Let’s say you wanted to send funds to your impoverished expat brother living in France. You would use your credited USD balance to shoot him funds through the Stellar network. Stellar would then automatically convert the USD to EUR using the lowest exchange rate, and your brother’s account would be credited with the exchanged amount in EUR. After receiving the transfer, he can withdraw the funds from an anchor that supports EUR and go about living his Bohemian lifestyle.

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