Cryptocurrencies have sparked disruptive changes in the global financial industry. Because it is not bound by a specific institution, government or country, digital assets have gained the attention of many people around the world.

When blockchain-based payment networks take off, many see it as a very positive development. Because it challenges the traditional concept of payment transfers and provides a whole new way for people to send and receive money. In these networks,Stellarauthor of this article

author of this articleDaniel WonAn introduction to the Stellar network and an analysis of Stellar'sRipplesecondary title

Stellar network

Stellar is a distributed open-source blockchain-based network designed for instant payment transfers. Stellar by Ripple co-founder Jed McCalebCreated to provide financial services at extremely low cost, especially to those not covered by traditional banking.

The Stellar network allows people to send and receive any currency (including cryptocurrencies) anywhere in the world. Payments can be sent and received instantly—the average transaction on the network takes only about two to five seconds, and transactions are password-protected.

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How Stellar works

Like other blockchain-based platforms, the Stellar platform runs on a series of distributed servers. It consists of a distributed ledger that records every transaction that occurs on the network. The ledger is updated every two to five seconds, which is the average time it takes for a transaction on the network.

Stellar platform throughAnchorcross border payment

cross border payment

You can also use the same method to send money to people around the world. Only in this case does the money need to be credited to the recipient's Stellar account via an Anchor in a particular region.

The currency exchange process during cross-border transactions takes place in a decentralized manner, which is part of the Stellar network. If you want to send $100 to someone in France, the network will automatically find the Anchor that is willing to exchange dollars for euros and offer the best exchange rate.

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What makes Stellar special

First, the transaction speed is fast. The reason is that Stellar, unlike Bitcoin, does not require every transaction to be verified and confirmed by the entire network. A small group of nodes called a quorum can be based on federated Byzantine agreement (Federated Byzantine Agreement) to verify the transaction.

Every node on the Stellar platform has its own set of trusted nodes. Transactions only need to be verified by this specific set of nodes, not the rest of the network.

Therefore, the whole process is much faster and the network can handle up to 1000 transactions per second. Each transaction has its own sequence number, allowing the network to verify transaction order and making recording easier.

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How is Stellar different from Ripple?

decentralized

decentralized

Compared to Ripple, Stellar is a decentralized network. It is an open source, non-profit network. While Ripple is a private companyRipple LabsThe product of Ripple Labs, Ripple Labs has some control over the Ripple network, making people question whether its network is really "decentralized."

For example, in 2015, Ripple co-founder Jed McCaleb had his funds frozen by the company. People who use the Ripple network will wonder if transactions are controlled by a central authority; if they are, it violates the concept of a distributed network.

growth trajectory

Some believe that Ripple has made its mark in the industry by partnering with multiple banks and has reached a saturation point for growth. And Stellar is on an upward trajectory and will likely continue to grow in the coming years.

Work with IBM

Stellar's partnership with IBM could make it a game-changer for the Internet. last year,IBM has established a "foreign exchange corridor" supporting 12 currencies,To facilitate cross-border payments between countries in the South Pacific. Stellar Lumens was chosen as the cryptocurrency for transactions.

Stellar isHyperledger Fabric, while Hyperledger Fabric is an important IBM project responsible for developing blockchain-based tools to improve payment infrastructure.

More recently, IBM has partnered with Stellar,StrongholdCo-launchedStronghold USD, a stablecoin pegged to the U.S. dollar. Currently, Stronghold USD is mainly for hedge funds, financial institutions and multinational corporations. In the future, it may also be open for retail use. According to Jed McCaleb, the partnership with IBM and Stronghold can facilitate mass adoption of the Stellar network.

Need to use their cryptocurrency

Ripple has come under fire lately, as some say Ripple's cryptocurrency, XRP, is not actually used by banks. Ripple's flagship productxCurrent, which helps banks settle cross-border payments cheaper and faster through real-time messaging and end-to-end tracking, is being used by banks such as Santander to build international remittance services. However, xCurrent does not require the use of XRP.

The Stellar network must use its cryptocurrency star to run. For example, IBM's establishment of a "Foreign Exchange Corridor" that supports 12 currencies requires Stellar as a bridge between transactions in different currencies.

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The Future of the Stellar Network

Daniel Won believes that Stellar's inherent advantages, its growing popularity in developing regions of the world, and its partnerships with various well-known players in the industry bode well for the Stellar network and Stellar Lumens. While Stellar still has a long way to go, it seems likely that it will overtake Ripple in the future as the blockchain-based payment network of choice.

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