The Stellar platform is widely used for cross-border settlements and remittances; hence, the Stellar blockchain is sometimes regarded as the future of global micropayments or banking.
Stellar is an open-source, decentralized network known for its low transaction fees and fast transaction confirmation. The Stellar blockchain development primarily focuses on fast cross-border payments and on providing banking services for the world’s unbanked, thereby creating financial access for everyone.
In this article, we’ll take a look at the future of Stellar blockchain and its entire ecosystem; why Stellar could become the future of micropayments, some key partnerships and ongoing developments on the Stellar blockchain.
Sending money on the Stellar blockchain is as easy as sending an email. However, behind this seemingly easy medium-of-exchange platform, there is a rather sophisticated underlying architecture and process.
The Stellar blockchain network is somewhat different from the typical blockchain network. Unlike blockchain networks like Bitcoin that run on proof-of-work (PoW) —which are typically slow and expensive, as they require nodes to compete for computing power (hash) to generate a block — or Byzantine Fault Tolerance (BFT) consensus mechanism, the Stellar blockchain network runs a Federated Byzantine Agreement (FBA) mechanism, called Stellar Consensus Protocol (SCP).
FBA is a more decentralized alternative to the BFT consensus mechanism. Unlike BFT where there is a pre-approved validator list defined by a central authority, validators in an FBA consensus are free to choose a node to trust. A validator on the network forms a quorum slice with its trusted nodes.
FBA consensus mechanism is a lot faster and cheaper, without compromising decentralization. In FBA, there is no need for powerful computational power or resources; consensus is reached when a message is voted on and passed among quorum slices — when quorum slices overlap.
Stellar boasts a very robust decentralized payment network. Stellar powers a ton of applications and services; the Stellar platform has built-in logic that developers can leverage to build financial systems and applications right off the bat.
Some popular applications powered by Stellar include Mobius, a payment platform that enables fast and free mobile payment integration into apps and businesses. Mobius had a successful Initial Coin Offering (ICO) in 2018, raising $39 million; the ICO was launched on the Stellar platform and only accepted Lumens (XLM), Stellar’s native token, for participation.
Vibrant, a wallet app developed on Stellar has helped protect people in Argentina from inflation. Users of Vibrant have direct access to the dollar-pegged USDC stablecoin, into which they can convert their pesos. Vibrant has simplified the traditional process of opening foreign dollar-based bank accounts or sourcing physical dollar bills before conversion into a stable currency could occur.
Wyre has developed a full suite of Application Programming Interfaces (APIs) and tools to bridge the gap between the fiat world and the blockchain ecosystem. Wyre is powered by the Stellar blockchain. Wyres API suite includes a fiat-crypto checkout gateway. Using Wyre APIs and tools, fintech companies could easily deploy on Stellar. The future of Stellar blockchain will see more of both fiat and crypto apps being deployed.
MoneyGram, one of the world’s largest cross-border money transfer companies, has teamed up with Stellar to build MoneyGram Access, a cash-to-crypto solution. MoneyGram Access is built on Stellar. With MoneyGram Access, users can walk into a participating MoneyGram location worldwide, and convert their cash into crypto, or crypto into cash. Businesses could also integrate MoneyGram Access into their payment systems to perform cash-to-digital and digital-to-cash transactions.
These quality projects and applications being built on the Stellar blockchain will be a driving force in the future of Stellar blockchain adoption for cross-border payments and the mass adoption of cryptocurrencies.
Most blockchain platforms own a native token. Native tokens are used to pay fees, vote in Decentralized Autonomous Organisations (DAO), or stake in proof-of-stake systems. The native token of the Stellar platform is the lumen (XLM).
The supply of the native token of most blockchain networks is unlimited — more tokens are mined or minted based on a schedule or contract. A total of 100 billion XLM were created when the Stellar blockchain launched. No further XLM will be mined or minted in the future.
Initially, the supply of XLM increased by 1% every year; the Stellar community voted in 2019 to put an end to the 1% yearly inflation. The Stellar Development Foundation has also taken steps to reduce its share of the 100 billion XLM total supply. The total supply has been reduced by half to 50 billion XLM.
XLM reached an all-time high of $0.94 in January 2018 and has remained a top-50 cryptocurrency by market capitalization over the years; it is actively traded on major cryptocurrency exchanges.
XLM has been an actively used cryptocurrency in the Stellar ecosystem and for a wide range of blockchain-powered payments. XLM will see expanded use cases and utility as more applications are built on and integrated into the Stellar blockchain platform in the future.
Though Stellar is open-source and decentralized, there is a foundation that oversees and maintains the ecosystem. The Stellar Development Foundation (SDF) was formed in 2014 to support the development and growth of the Stella Network and its entire ecosystem. SDF maintains Stellar’s codebase, updates the Stellar documentation, and enacts key upgrades and decisions that are good for the future of Stellar blockchain. SDF act as a representative of the Stellar platform when regulators demand a “face” of the project.
SDF provides transparent and live updates on the progress of the project; it is a non-profit organization and has no shareholders or dividends. The foundation is funded by XLM allocated during the launch of Stellar. SDF sells its allocated Stellar through cryptocurrency exchanges or direct sales.
SDF offers research and development grants which go to qualified teams. These grants encourage the active development of payment solutions and financial systems on Stellar.
The future of Stellar blockchain largely depends on the mass adoption of cryptocurrencies as a medium of payment. Peer-to-peer payment is one of the prominent use cases and implementation of blockchain technology.
Though blockchain technology has gained popularity as a peer-to-peer means of payment, fiat systems are not going away just yet. Hybrid solutions, like Stellar, that integrate fiat gateways and blockchain networks will be the real deal. With Stellar, it is easy to create, store, send and trade digital representations of all forms of money, including fiat and crypto. Stellar has done a great deal of work over the years, building a futuristic finance system and forming global partnerships. It is just a matter of time before the mass adoption happens.