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What is Crypto?

Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability. The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference. Cryptocurrencies can be sent directly between two parties via the use of private and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions.

What is Stellar (XLM)?

**Stellar** is an open-source, decentralized blockchain network designed to facilitate fast, low-cost international money transfers and financial transactions. Launched in **2014** by **Jed McCaleb** (co-founder of Ripple) and **Joyce Kim**, Stellar aims to provide a platform for financial institutions, payment processors, and individuals to connect and exchange value efficiently. ### Key Features of Stellar: 1. **Focus on Cross-Border Payments**: - Stellar is designed to streamline international remittances and payments by enabling near-instant, low-cost transactions. - It aims to improve financial inclusion by providing affordable solutions for unbanked or underbanked populations. 2. **Native Cryptocurrency: Lumens (XLM)**: - The Stellar network uses **Lumens (XLM)** as its native currency, primarily to facilitate transactions and prevent spam. - Lumens can be used as a bridge currency for cross-asset transfers, enabling seamless exchanges between different fiat currencies or cryptocurrencies. 3. **Consensus Protocol**: - Unlike Bitcoin's Proof-of-Work (PoW) or Ethereum's Proof-of-Stake (PoS), Stellar uses the **Stellar Consensus Protocol (SCP)**. - SCP relies on a federated Byzantine agreement (FBA) model, allowing faster transactions and reduced energy consumption compared to PoW. 4. **Anchors and Asset Issuance**: - **Anchors** are trusted entities on the network, such as banks or payment processors, that issue digital representations of assets (e.g., USD, EUR) on Stellar. - Users can hold and trade these tokens, making it easy to digitize real-world assets. 5. **Built-in Decentralized Exchange (DEX)**: - Stellar has a built-in decentralized exchange where users can trade assets directly on the blockchain. - The network automatically finds the best path for multi-currency conversions. 6. **Smart Contracts**: - Stellar supports basic smart contracts, enabling more complex financial operations like multi-signature accounts, time-locked transactions, and conditional payments. ### Use Cases: - **Remittances and Cross-Border Payments**: Stellar facilitates fast, low-cost transfers, particularly beneficial for people sending money internationally. - **Tokenization of Assets**: Companies can issue digital tokens representing fiat currencies, commodities, or other assets. - **Micropayments**: Low transaction fees make Stellar ideal for micropayment use cases. - **Financial Inclusion**: Provides accessible financial services to those without traditional banking. ### Partnerships and Adoption: Stellar has formed partnerships with various organizations, including: - **IBM**: For building blockchain-based payment systems. - **MoneyGram**: To enhance cross-border payment services using Stellar. - **Circle**: To enable USDC (USD Coin) on the Stellar network. ### Comparison with Ripple: Stellar is often compared to Ripple, as both aim to improve global payment systems. However, while Ripple primarily targets financial institutions and banks, Stellar emphasizes financial inclusion for individuals and smaller organizations.