What is Stellar? An International open source payment technology

What is Stellar?

Stellar is an open source payment technology that is very similar to Ripple. Its founder is Jed McCaleb, who also co-founded the Ripple project.

Ripple founder same as stellar founder

He created this project with the aim of establishing communication between financial institutions. Moreover, the goal was to reduce the cost and time required for cross-border transfers.

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Stellar and Ripple

Initially, Ripple and Stellar used the same protocol. In early 2014, a fork in the Stellar’s protocol put an end to process. It led to the creation of the Stellar Consensus Protocol (SCP).

Ripple and Stellar have fundamental differences. For example Stellar is open source but Ripple does not have this feature.

Ripple and Stellar crypto currency

The two also have different clients. Ripple works with banking institutions and consortiums to facilitate international and cross-border money transfers. Stellar, on the other hand, focuses on developing markets. It also has multiple uses for the technology. This includes distributing bank loans to the unbanked.

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How does Stellar work?

Stellar’s core operations are similar to decentralized payment technologies. Stellar runs a network of decentralized servers with a distributed general ledger. It updates every 2 to 5 seconds across all nodes.

Stellar in banking and cross-border transactions

Consensus protocol

The most distinctive feature of Stellar and Bitcoin is the Consensus Protocol. This Protocol does not rely on a network miner to approve transactions.

Instead, consensus protocol uses Federated Byzantine Agreement (FBA) algorithm to confirm faster transaction. Each node within the network selects another set of trusted nodes. When all nodes within the set approve a transaction, that node authenticates the transaction.

Therefore, this shortened process makes the Stellar network very fast. As a result it can process as many as 1,000 network operations per second.

How does Stellar accelerate cross-border transfers?

The process of conducting over-border transactions is currently a bit complicated. Under the current system, the domestic banks of each country must have joint accounts and the necessary commonalities in the jurisdiction.


The Nostro-Vostro process is known for cross-border transactions with Fiat currencies. As this process allows for simultaneous verification, the Stellar’s blockchain can shorten delays and complexity. Its digital currency, Lumens, can be used to provide liquidity and improve the current trends.

How Many Institutions are currently using Stellar’s Blockchain? 

This Blockchain attracted public attention in October 2017 after announcing its partnership with IBM. The project aims to process up to 60% of all cross-border payments in countries like Australia, Fiji, and Tonga. This provides connections between small, non-profits businesses and local banking institutions to expedite commercial transactions.

In 2016, leading technology consulting firm Deloitte announced its partnership with this blockchain to develop a payment application. At a conference in 2017, McCaleb confirmed that 30 banks have registered to use this Blockchain for cross-border transfers.


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