Stellar Lumens are the currency used by the Stellar network with 100 billion Lumens (XLM) in circulation. Starting as a fork of Ripple, Stellar deviated from a focus on banks and took another route. Promising fast confirmation times, 3–6 seconds, and along with minimal fees, Stellar aims to be “a worldwide financial network open to anyone”.
Supporting thousands of transactions per second, Stellar works off of an open-sourced, decentralized network and ledger. Where this network begins to differ from Bitcoin is a lack of Proof-of-work consensus protocol. In its place, Stellar uses the Stellar Consensus Protocol (SCP). The goal is to offer more protection against “bad actors” or malicious parties in the system and an increase in transactions.
All parties running the Stellar Consensus Protocol communicate with each other to validate transactions and add them then to the ledger. At the core of the network are “anchors”. Anchors are entities that people rely on to hold deposits and even issue credits for those deposits. Any asset transaction on the network, except the native XLM currency, occur in the form of credit issued by these anchors.
To get started using Stellar, funds are deposited to an anchor that is part of the network. This anchor will then issue you credit like a bank would. An integration like this allows users for instance to use their credited EUR balance to send funds through the Stellar network. The network then converts EUR automatically to your friend’s account in their preferred currency, which could even be USD. Facilitating this cross-border trading of money removes the need for bank transfers and solves issues associated with remittances, micro payments and helps serve the under banked of the world.