Stellar blockchain is a distributed ledger network designed for fast, efficient cross-border payments and digital currency transfers. Created in 2014 by Jed McCaleb, who previously co-founded Ripple and Mt. Gox, Stellar aims to connect financial institutions and facilitate global transactions.

Key Features:

• Uses Federated Byzantine Agreement (FBA) for consensus
• Processes transactions in 2-5 seconds
• Handles thousands of operations per second
• Requires minimal computing resources
• Native token: Stellar lumens (XLM)

How Stellar Works:

• Operates through decentralized servers with a distributed ledger
• Uses quorum slices instead of network-wide mining
• Nodes choose trusted validators for transaction approval
• Maintains minimum wallet balance requirement of 1 XLM

Primary Applications:

• Cross-border payments and transfers
• Banking institution connections
• Money remittances
• Nonprofit organization transactions
• Small business financial services

Advantages Over Traditional Systems:

• Faster transaction processing
• Lower costs
• Reduced complexity
• Energy efficient
• Minimal IT requirements

Notable Developments:

• 2016: Partnership with Deloitte
• 2017: Integration with 30 banks
• 2019: Destroyed 55 billion lumens tokens
• 2021: XLM price peaked at $0.73

Challenges:

• Centralization concerns around Stellar Development Foundation
• Limited node network
• Network stability issues (2019 outage)
• Price volatility

Comparison with Ripple:

• Both target cross-border payments
• Stellar is open-source; Ripple is closed
• Stellar focuses on developing markets
• Ripple targets established banking institutions

The Stellar blockchain continues to evolve as a viable solution for global payment processing, particularly in developing markets and among smaller institutions requiring efficient cross-border transaction capabilities.

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