Like Ripple XRP, which McCaleb created, Stellar Lumens (XLM) is a digital currency. Despite having the exact origins, these two are pretty different. In Lumens, Jed’s aim was more of a bottom-up approach, as the currency is designed to aid individuals in money transfers. On the contrary, Ripple is more focused on helping institutions to move money. Thus, adopting a top-bottom approach.

The name of the decentralized network is known as Stellar, while the token that’s being used by the network is the Lumens XML. Jed developed the Stellar network in 2014, and today it’s among the top 20 cryptocurrencies in the world.

The Invention of The Stellar Network

The main reason why Lumens was created was to help individuals in global money transfers. Transferring money across borders was a lengthy and costly process. However, with Lumens, one could quickly and cheaply transfer money to nations across the globe.

Lumens’ developers knew that not everyone in the world could access or afford the financial services provided at a national level. The team sought to empower anyone with an internet connection, and simple electronic hardware was able to send money across borders.

The Tech Powering Lumens and Its Fundamental Working

As mentioned above, the Stellar network is a decentralized and peer-peer network. Lumens, tokens used in the Stellar network, are deployed on the net to send and convert money to different currencies.

The token facilitates the theory of money in one currency from the sender to another currency to the receiver. It is important to note that it will convert the money to several currencies before arriving at the receiver. The network performs this action by checking the availability of straight currency exchange.

Suppose there isn’t; the network checks for the demand of the initial currency from anyone holding the Lumens token. It can then find a pair of Lumens followed by the destination currency. This technique is advantageous because it allows a fast and easy currency exchange between currencies that lack a commonly traded pair.

The Fees

The Stellar Lumens doesn’t have any intrinsic value. However, considering its ability to send and convert different currencies at a ‘super speed,’ it’s fair to view the token as being more than just real money.

Lumens allows individuals to send fiat currencies incredibly fast and cheaply. It will only cost you around 0.00001 XML. Basically, when you are buying the tokens from any online platform, the fee will be charged by the same online platform for your Lumens purchase.

Benefits Of the Lumens Token

The most common advantage of the Stellar network is the speed of transactions. This primarily applies to transactions happening across borders. It usually takes about three to five seconds for your money to be received by the recipient.

The other advantage is that sending money using Stellar Lumens is incredibly cheap compared to other means available for money transfer today.

Being decentralized also means no single person or government has power over the Stellar network. Therefore, the movement of the Lumens tokens is entirely unrestricted.

Furthermore, sending money via Lumens is incredibly easy. You only need a few basic computer hardware and an internet connection, and you are good to go.

Ultimately, it eases the currency exchange process. Especially for currencies without a standard exchange pair.

Conclusion

The invention of the Stellar network has helped in transferring money across borders. It is fast, cheap, reliable, and relatively easy to set up compared to its competitors. Better still, the fact that it’s also a cryptocurrency means that it operates on a decentralized network which is much safer than a centralized network.

Image Source: Adobe Stock

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.