Last week we looked at Ripple, and today we’ll look at Stellar. It’s no secret that Jed McCaleb founded Ripple, and is now the cofounder and CTO at Stellar. He also founded eDonkey, Overnet as well as the Bitcoin exchange Mt. Gox (before selling it to Mark Karpelès).

I want to look at Stellar for a few reasons. The first one being that it is decentralised, open source and transparent. The second reason is that unlike Ripple, Stellar is focussed on the true benefit of using their network and currency (Lumens, XLM) which is to “connect low cost financial services to fight poverty and develop individual potential”. –

Many of the next few currencies that I look at moving forward will be lower value top 50 currencies. This is simply because its far easier for a coin to go from $0.10 to $10.00 than it is to go from $10.00 to $1000.00, so the focus will be on currencies that have the potential for lots of multipliers as opposed to a coin that you might want to hold longer term, like Ethereum, DASH or Litecoin for example.

What is Stellar?

Stellar is a financial platform that was designed to be open and easily accessible to everyone. They point out four specific use cases for their platform.

  • Micropayments
  • Remittances
  • Mobile Money
  • Mobile Branches


In 2016 Deloitte partnered with Stellar as part of a pilot in Nigeria that aimed to reduce the cost and time taken to make a cross-border payment. The solution developed, which took 4 weeks, reduced the cost of transfers by up to 40%, with an average transaction time of 5 seconds.


Tempo and Stellar partnered to reduce the cost of their cross-border payments services. Using the Stellar network, Tempo can now power 600,000 transaction for just $0.01 in fees.

Mobile Money

Parkway (Nigeria) uses Stellar to connect 5 of Nigeria’s telecommunications providers, which allows customers of different mobile money services to send money to one another. This is a particularly interesting concept for the developing world and I look forward to seeing more ideas like this being developed in Africa and Asia in particular.

Mobile Branches

With this solution, which Stellar does not seem to have found a pilot partner for, is also pretty interesting for banks, lenders and financial services providers. Using lightweight tech like Stellar, and its various wallet types, as a bank you could essentially use a mobile branch in the form of a truck or stand, and go into less built up areas to offer your services to people who may not have access to a branch. I think that this not only applies to the underprivileged, but also to the elderly for example, many of them may not be able to easily leave their homes, so brining the bank to them is not only beneficial to the client, but also the provider.

You wouldn’t be wrong to notice that the services seem quite similar to Ripple, however there are a few fundamental differences.

  • Stellar is a not for profit company, whereas Ripple is very much for profit company.
  • Stellar focuses on bringing funds and banking services to the developing world, and the poor to assist them in joining the global financial world, Ripple, while mentioning a similar motivation, also is very happy to partner with large banks that cater to the financially well off.
  • Stellar does not seem to have coordinated product types, product names or a heavy marketing plan, Ripple has a very well-oiled marketing plan and is very focussed on selling their product.

There are also technological differences, and also a few differences in implementation, however they don’t really affect the performance of the end product on either side when it comes to each company’s respective goals.

Why would you invest in XLM?

Much like Ripple, your XLM will perform not only in relation to supply and demand, but also in relation to what the organisation is doing. If it makes a great announcement, it will affect you, if there’s a failure of a pilot, or a problem with their network, it will affect the price too. Just as I said with Ripple, you can’t only watch the charts if you are looking at buying, trading or holding XLM, you need to know the organisation too.

One of the most important things I keep stressing is knowing your investment, and Stellar is no different. Visit their website, read their mandate, read their news and decide if the organisation is one that you believe will fulfil their promises and goals, or one that might fall by the wayside.

Stellar has one interesting little concept, which might turn you on to it a little more. The current fee for a transfer is 0.00001 XLM, (this fee can however increase if the system suspects that you are submitting transactions with malicious intent i.e. SPAMMING the system). This fee is collected by the ledger (blockchain) and redistributes them via their inflation plan.

The inflation plan

The Stellar network has a built-in inflation mechanism. New lumens are added to the network at a rate of 1% per year. The fees from the transfers are also collected and placed into the inflation pool.

Anyone who holds lumens can vote weekly on where the funds in the pool goes, and each week the protocol distributes these lumens to any account that gets over 0.05% of the votes from other accounts on the network.

Tomorrow I’ll release a short piece on how to set up your own Stellar wallet and how to vote on an inflation pool to get weekly XLM for free.


Ultimately each person needs to make their own decisions regarding their investment, hopefully this article has helped you learn a little more about Stellar, and if it has piqued your interest, I hope that you go over to and learn a little more before deciding if it’s your next investment. If you have any questions or comments, feel free to contact me on Twitter: @CryptTee