Decentralization of payment systems got to banks. Striving to be the first to occupy a new niche, Stellar creates its own system of interbank transfers, consolidating countries and currencies.
The company plans to include cryptocurrencies into the financial structures, gradually introducing them into a centralized turnover. In order for the system to work, Stellar representatives will need to make arrangements with the central banks.
To accomplish this, Stellar needs to get to windward of Ripple, which hit the top ten of most powerful platforms by the results of 2017. Stellar technologies are very similar to Ripple, but they are much weaker. In order reach the desired level, Stellar needed the support that was willingly supplied by the oldest company on the technology market, IBM. In addition, the running blockchain also brings income to the company.
It is important that several slogans have been added to popularization, which should lead to building of brand awareness. Stellar calls itself a non-profit organization and “threatens” to distribute 95% of tokens for free.
Why do we need the last statement?
The fact is that against the backdrop of powerful Ripple with a serious blockchain, Stellar′s development will be possible only due to building of brand awareness. Despite the support of IBM, the company will not break through without mass- market. Moreover, when the fight is in favor of the positions that SWIFT currently occupies.
What innovations and ideas does Stellar develop?
Is it possible to ensure that the cryptocurrency can be transferred through bank terminals or cash desks? The idea of Stellar is to turn them into official payment gateways. It will be easy to withdraw money in this system in any currency, regardless of the initial currency.
For example, a resident of Ukraine wants to transfer 300 hryvnias to the United States.
Accordingly, in California or New York, the recipient must withdraw 10 dollars. Today, for such an operation, you first need to convert the hryvnia into dollars, losing interest, and then only transfer, losing on other percentages. Thanks to Stellar and Ripple, the operation is simplified greatly, reducing the waiting time to several minutes.
For this, the system has an internal bank or an external intermediary, which converts and stores the currency. At the same time, the bank first gives a credit number, and then uses Ripple to find the most profitable exchange rate for itself.
There is an internal cryptocurrency in this system, intended for transactions with a minimum commission of about $0.000001. It is needed in order to consolidate all kinds of currencies of the world. For example, you decided to buy the currency of Zimbabwe. Due to the fact that there is not provided for direct exchange for such operations, lumens will become a helper-outer. They will serve as an intermediary between the two currencies.
Centralization of Ripple and “folk” Stellar
The launch of Stellar in 2014 coincided with a loud scandal, in which one of the founding fathers of Ripple, Jed McCaleb, participated. Criticism involved buying XRP tokens. In addition, McCaleb called Ripple a greedy corporation. Today it is difficult to say which events caused such a demarche, but on May 22 2014, the Ripple token collapsed by 40% because of his statement about the desire to withdraw 9 billion from the fund. The developers quickly froze the withdrawals, which further affected their reputation in the eyes of cryptors.
Centralization demonstrated once again: those who are at the head, can quickly take away the earned money, while completely not caring about the interests of investors
The result is the cloning of all McCaleb funds from one project to another. According to Stellar, it should serve the development of banking business in poor countries and is created for “human development”. And the decentralization of funds plays a special role here, because it is impossible to freeze them.
Stellar strives to give access to microcredit to more than 2 billion people, providing them with a decent banking system.
Today, the Stellar Development Foundation (SDF) is a non-profit banking organization with an initial capital of $3 million. The money was provided by Stripe at 2%. Today, all debts are paid by lumens, it is 100 billion in the total amount.
In 2017, the Stellar program code was completely rewritten. From thеn onward it ceased to be the fork of Ripple. Its code is unique and reliably protected, because all the work on the code was carried out by SDF developers. The system was implemented with the Lightning Network technology, which is several times faster than blockchains. It is more intelligible for users. The bottom line is that now you do not need to write the whole block into the blockchain, but just inform it that the transaction has passed.
This involves smart clients – programs that monitor observance of the terms between the three parties to the transaction and allocate assets. Yes, it is necessary to build a high level of trust for this technology, but Stellar was able to provide maximum anti-hacker security. On the negative side, unlike Ethereum, Stellar imposed restrictions on the creation of smart contracts.
At the same time, high throughput and excellent transaction rates quickly attracted users who do not want to wait for the blockchain. And already in January 2018, the platform opened a decentralized application store from the Mobius Network, which managed to raise 39 million dollars.
Free cheese will feed the world
100 billion XLM were issued by the supply of money. According to the company, 95% of lumens will go for free. Therefrom:
• 50 billion XLM will be distributed to people in small amounts in stages;
• 20 billion XLM will be distributed among Bitcoin and Ripple holders;
• 25 billion XLM will go to the development fund of non-profit organizations.
What is left for Stellar, and at the cost of what will they develop? After all distributions, the company altogether has only 5%, which should cover system maintaining and operating costs. It is important that the system works without involving miners, like Ripple Labs.
How to become popular and carry out your plans?
In order for good intentions to be realized, Stellar will have to negotiate with the central banks. No bank has so far wanted to participate in the revolutionary movement, but in 2017, dozens of participants in the financial market wanted to become “anchors” for direct transfers.
A striking example of Tempo, the French money transfer service. Thanks to it, Filipinos living in France can already send money to their relatives, indicating only the phone number. Within 5 minutes it is converted from euro into pesos.
The second service Coins.ph automatically creates an account for recipient, and its owner can withdraw funds from any bank in the Philippines. So far, these transfers are daily, and the total amount of them is tens of thousands of euros.
Who else is involved or is going to become an “anchor”?
• In Europe – SatoshiPay and EXCH.one;
• in America – B & T Corredora and Remitr;
• in the Persian Gulf – Bahrain Finance Company;
• in Australia and the South-Pacific region – KlickEx and Novatti;
• in Africa – SureRemit, Flutterwave.
You will agree that the list is solid. But the greatest success was the contract with IBM on October 16, 2017. For IBM, this contract will significantly reduce the cost of any financial transactions. Its own blockchain set in motion, which includes multicurrency transactions. According to the representatives of IBM, this was done so that “a farmer from Samoa could conclude a trade contract with a buyer in Indonesia”.
For Stellar, this is an important step towards the implementation of the whole venture and the possibility of cooperation with the central banks of the world.
It would seem that a large corporation, like IBM, could well release its own token. However, according to IBM Vice President Jesse Land, the company is fully satisfied with the cooperation and currency of Stellar. Today, each bank can release its own cryptocurrency. IBM uses lumens and convinces its rather not poor customers to create digital assets. This is not only cryptocurrencies, but digital gold as well.
And no matter how surprising this statement of the cryptoinvestors, today Stellar tokens are used as a “fuel” for internal operations and IBM′s transactions. With the support of IBM, Stellar has huge chances to become one of the most powerful players on the interbank cryptocurrency market.