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Stellar Blockchain - A Complete Guide for Beginners

Understanding the Stellar Blockchain

Stellar, also known as Stellar Lumens, is an open source, decentralized system that enables cross-border payments between any two currencies and low-cost digital currency to fiat currencies transfers. Jed McCaleb is the founder of Stellar Blockchain and is also known as co-founder of Ripple. Open-source payment system Stellar has many features in common with Ripple. Together with Patrick Collison, CEO of Stripe, the nonprofit Stellar Development Foundation was established, and in July of that year, the initiative was formally launched. Stripe provided $3 million in seed money to Stellar.

The Stellar Consensus Protocol SCP was developed due to a fork in the Stellar protocol in early 2014. Furthermore, the two systems' underlying principles diverge. Stellar is an open-source system, whereas Ripple is a closed system.

The fundamental workings of Stellar are comparable to those of most decentralized payment systems. It manages a decentralized server network with a distributed ledger that is updated across all nodes every 2 to 5 seconds. The consensus protocol that Stellar uses set it apart from Bitcoin the most.

The consensus protocol Stellar uses do not require transaction approval from every miner in the network. In its place, the Federated Byzantine Agreement (FBA) algorithm is used, which allows for quicker transaction processing. This is because it relies on quorum slices, or a network section, to confirm and approve transactions.

What is the Stellar Network as Described by Stellar.org?

According to Stellar Blockchain’s website, “it is a platform that connects banks, payment systems, and people" and is designed to "transfer money rapidly, reliably, and almost for free."

It is also explained on their website that Stellar Consensus Protocol has always been close to cryptocurrencies, but its goal has always been to complement rather than replace the current financial system. Stellar is a decentralized system that is perfect for trading any form of value transparently and efficiently, unlike the Bitcoin network, which was designed for trading only bitcoins.

Lumen, the native digital currency of the Stellar network, is needed in modest amounts for creating new accounts and processing transactions. Beyond those conditions, however, Stellar does not favor any single currency. It is explicitly intended to increase the usefulness and accessibility of traditional forms of value in the digital sphere.

What Features Make the Stellar Blockchain Unique?

Each token on the Stellar network can be exchanged for any other token, and the protocol itself links buyers and sellers. Users can easily and quickly post their bids or ask to the public network, and appropriate deals will automatically settle every few seconds. Due to the decentralized exchange (also known as a DEX) that is integrated into Stellar, neither a third party nor an organization manages settlement or serves as an intermediary custodian.

Stellar stands out from other blockchains in this respect. Its protocol maintains exchanges between balances in a decentralized, ownerless manner in addition to tracking balances (like Bitcoin or Ethereum do).

Open orders, for instance, for an NGN token versus XLM would resemble this:

As you can see, Stellar resembles conventional trading platforms in appearance and functionality, allowing you to monitor open orders, transaction history, and market depth. But the network ensures payment, and all of these offers are tied to on-chain Stellar accounts. You don't depend on an exchange to keep your assets safe or settle trades. Your possessions are your own. Further, the Stellar Development Foundation recently encouraged the usage of Stellar for a broader range of applications, such as smart contracts and NFT minting.

What Makes Stellar Valuable?

Although Stellar first launched with the goal of having 1% annual inflation, its economy has now shifted.

Stellar platform users voted to eliminate the annual 1% subsidy and the programmable supply increases in late 2019. In addition, the Stellar Development Foundation chose to limit its part of the XLM supply that year in an effort to regulate the XLM economy.

Stellar's worth stems from its limited supply and the fact that it may be used to quickly transfer digital assets across borders, cheaply and easily, among other applications. Financial companies that use open source, cross-border APIs, and no middlemen.

Understanding the Stellar Payment System

Stellar enables users to transfer money to one another, just like any other payment system. However, the network also enables users to send one currency while allowing the recipient to get another. In essence, sending and exchanging money is possible in a single atomic transaction.

An example of this is a route payment. It's a significant invention for cross-border payments; as an illustration, a business in the Philippines may send money to Kenya using U.S. dollar tokens, which the recipient would then receive as shilling tokens. Both parties avoid exchange risk and delays. Only the desired currency is exchanged.

This is how it goes:

  • The sender in the Philippines communicates to the network that they want to send the vendor shilling tokens in exchange for their dollar tokens.
  • The decentralized exchange (DEX) stated above will be searched to determine the optimal price for the sender in path payments on the Stellar network. OR, if rates are better than those on the DEX, execute against liquidity pools formed utilizing automated market marker (AMM) capabilities.
  • The prices and amounts are fixed by the network.
  • The dollar tokens leave the sender's account after they confirm the transaction.
  • The exchange is completed, and the beneficiary receives the shilling tokens. The payment is single-transaction-submitted to the network and is atomic. Both parties avoid being "caught in the middle" and holding unwelcome tokens.

In the case mentioned above, the sender in the Philippines need not keep shillings in order to pay Kenya. In Kenya, the recipient does not get dollars that they must exchange for shillings. Stellar will automatically determine the optimum conversion rate, so neither party needs to do it manually. It is intended for all of the world's financial systems to collaborate on a single network. Stellar's promise of interoperability—where value moves seamlessly from account to account, in whatever form is most practical—is realized by path payments.

Scale your Stellar projects with us

Fees and Transactions on The Stellar Blockchain

Stellar has decided to charge its users a pay transaction fees of 0.00001 XLM for every transaction. Stellar's low cost of transactions is one of the primary reasons for its massive user base. Stellar ensures the network’s integrity using cryptographic methods that use public keys. Transactions are carried out on Stellar with the assistance of consensus reached by nodes. On the Stellar network, the consensus is achieved in a matter of seconds, making it possible for transactions to occur in three to five seconds. It is created to allow world's financial systems throughout the world to function together on a single pay network.

Stellar makes it possible for users to conduct transactions in any currency of their choosing. Stellar can facilitate quick transactions in various currencies since it has its own cryptocurrency called Stellar Lumen. It should be emphasized that Lumens cannot be mined; instead, 100 billion Lumens were distributed by the Stellar Development Foundation in 2014 when the network went live, but 50 billion were later reduced by vote.

What You Need to Build DApps on Stellar

While Ethereum has been the platform of choice for developing decentralized applications (dApps), Stellar has perhaps the lowest transaction costs and is significantly faster than other blockchains (including Ethereum). It is envisioned functioning is as follows:

Let's consider how we might put that into practice.

On the Stellar testnet, we must first register for an account. A testnet is what? It's a blockchain designed for testing where you don't pay actual costs. In this instance, we'll add 10,000 fictitious lumens to our test account to test with.

The user will be able to publish their post to the app using a simple JavsScript client that we will build next.

By inserting it in the transaction's note field, we could take this post and have the user send it directly to the account for our app. However, it appears that Stellar's transaction only permits a small number of memo forms, including Text (a UTF-8 string of up to 28 bytes), ID (an unsigned 64-bit integer), and Hash (32-byte hash in hex format). Therefore, it is impossible to store a lot of text or JSON.

Understanding Anchors and Distributed Exchanges on the Stellar Blockchain

Anchors function as a trusted entity that holds your deposit and issues credits for those deposits into the Stellar network. This is done inside the context of the Stellar network. Anchors function as a bridge between various currencies and the stellar network by providing credit in place of the currencies that are already in circulation. These credits can be put to use when dealing with stellar business.

The offers that individuals made on stellar ledger while purchasing or selling the currencies are stored there. The public can view one type of credit interchange for another at a pre-determined rate. These orders, when grouped together, create an order book in stellar, which has columns for each currency and issuer. If you want to engage in an exchange, you will need to check the particular order book contained within the stellar ledger.

Integrity and Multi currency Transactions on Stellar

Stellar's consensus mechanism is FBA (FBA). Each node's quorum slices determine system-level quorums for FBA. Similar to how peering and transit decisions unify the Internet, quorum slices bind the Stellar network.

FBA involves

  • Mini-networks are formed.
  • Each mini-network node understands its key players
  • A node waits until the majority of its mini-network agrees on a transaction before considering it settled.
  • Other participants don't agree to the transaction until essential members do.
  • Eventually, enough network participants accept a transaction, making it impossible to reverse.
  • The transaction is settled only then.

FBA's consensus mechanism ensures Stellar financial network security and integrity. As long as participant failures don't prevent trust dependencies, SCP is free from blocked states (in which consensus is no longer achievable).

By utilizing the decentralized exchange built into a stellar network, users can convert any cash they possess into any other currency. Users are credited with any cash from an anchor they have added.

For instance, A wishes to give B USD by employing B's EUR as the medium of exchange. Stellar is able to make a bid for the sale of the euro to the dollar and enters it into the order book of the distributed exchange. The star network will determine the most advantageous exchange rate for this particular transaction.

Someone who wants to buy US dollars with Euros can ask Stellar to find them the best order on the internal EUR/USD exchange, and the currency will then be automatically exchanged between the two parties.

Apps You Can Build on the Stellar Blockchain

Stellar is a distributed ledger-based payment protocol that allows quick cross-border transactions like other blockchain-based coins. Stellar blockchain "connects banks, payment systems, people" and transmits money "quickly, efficiently, and cost-effectively.” Stellar Lumen (XLM) operates the whole Stellar blockchain network.

Only inflation produces XLM. Annual Lumen inflation is 1% to compensate for economic growth and lost Lumens. Each week, Lumens are created and given through direct vote.

Beyond capital markets, Stellar has initiatives to ensure businesses carry out essential tasks safely. One may imagine the platform's numerous potential uses and applications when considering the Stellar blockchain's varied capabilities. Leading application concepts are included below:

  • Anchors in more monetary units
  • Clients that trade on the go
  • API fusions
  • commercial plugin
  • Micro savings go for education, health, and insurance
  • P2P microinsurance financing
  • Conditional payments
  • Mechanisms for nonprofit donations
  • Reward points schemes
  • Currency in a community
  • Timebanks
  • Recording of volunteer hours
  • Anywhere Mobile apps for ATMs or actual ATMs

How to build an app on Stellar Blockchain?

The use of blockchain technology has increased since it was first made available. Early uses of blockchain technology included cryptocurrencies in the financial sector. As the world grows increasingly globalized and the need for cross-border payments increases, businesses will be motivated to innovate in blockchain payments. Stellar Core is one of the most important distributed technologies that anyone may use to develop quick, low-cost financial solutions, according to blockchain experts.

Stellar Blockchain app development steps:

Step 1: Installing the SDK that corresponds to the technology you want to employ to build your app should be your first step. For instance, you would install the Python SDK if you wanted to build a Python-based application. The pip tool can be used to install the Python SDK.

Step 2: Connect SDK to Horizon Network. Connect Python to Horizon after installing it. Horizon is Stellar's API client. It acts as a channel between the Stellar core and apps. Horizon can send network transactions, subscribe to event streams, and verify account status. cURL/web browser accesses Horizon.

Horizon has streaming ledger endpoints. It streams effects, ledgers, offers, operations, accounts, order books, transactions, payments, and trades. Import the Stellar Python Horizon object. horizon accesses Horizon API endpoints. Create two functions: one to manage Horizon answers and another to stream Horizon/ledgers.

Step 3: Register. Create a Stellar Network account after connecting the SDK to Horizon Server. Accounts hold and send Stellar funds. Secret seeds and public keys identify each stellar account. Every Stellar transaction uses public-key cryptography. Others will need your public key to authenticate your account and verify a transaction.

The secret seed establishes account ownership. You can't distribute seed. Like a lock's combination. The lock's combination is known to all. Whoever knows your account's seed can control it.

Step 4: Fourth, make assets. Stellar Distributed Network stores, tracks, and transfers euros, dollars, equities, gold, bitcoin, and other value tokens. On the Stellar network, assets can be traded. Stellar asset creation requires no stable operation. Instead, you can pay for an asset. The issuing account pays for the network asset using the issued asset. Issuing asset pays distribution account with renamed asset.

The distribution account can create new tokens until the issuing account is unlocked. Create a stellar if you plan to use the asset. Tool file contains information needed by exchanges, wallets, market listing services, and token holders.

Then, post a sell offer to list your asset on Stellar's decentralized exchange and participate in market-making to establish liquidity.

Step 5: Transaction fees must be specified as a part of this stage. For Stellar to operate effectively and avoid ledger spam, modest transaction costs and a minimum account balance are necessary. Transactions on Stellar can have a value between one and a predetermined maximum of 100.

Step 6: Transacting is required in this step. The commands that change the status of the ledger, such as transferring payments, adjusting account settings, or generating offers, are known as transactions. Every transaction has a source account that covers the charge and assigns a sequential number to the transaction. Each operation that makes up a transaction has a default source account that is the same as the source account of the transaction.

Step 7: Establishing a payment transaction is what this stage requires. Create, sign, and submit a transaction using the Stellar Python SDK. You must use multi-signature accounts if a transaction needs to be signed with several different public keys in order to be accepted. The threshold values for your account must be configured to achieve this. There are three different threshold levels for each operation: low, medium, and high.

Step 8: Finally, monitor. Once the network is configured and operational, it must be monitored for efficiency. Stellar Core reveals vital information to help monitor nodes and discover problems.

Stellar Core commands and output provide monitoring information. You may connect the Prometheus server for easy and speedy monitoring, link it with Alertmanager to automate notifications, and construct Grafana dashboards to visualize node health.

Stellar isn't widely used yet, yet it's one of the most important open-source initiatives. Stellar support Python, Go, C++, and JavaScript SDKs. Stellar creates affordable, easy-to-integrate payment solutions. Stellar Blockchain App Development offers entrepreneurs new prospects, but implementing solutions on the network may need technical knowledge.

Let's build together on Stellar Blockchain

Work With us to Build Your Next Application on Stellar

Do not hesitate to reach out if you are confused about where to start or how your business can benefit from integrations with the Stellar blockchain. Our blockchain consultants and experts in distributed systems will help you think through the use cases and explore the integration possibilities. We also check using proof-of-concept to see that the actual blockchain development isn't a vain exercise.

You might want to consider using a Stellar blockchain explorer if you're looking for more real-time details about the Stellar blockchain.

You may view a live stream of all the blocks added to the Stellar blockchain, as well as real-time insights into the most recent blocks that have been mined on the blockchain thanks to a Stellar blockchain explorer. Making more informed judgments is aided by the availability of specific data, pricing histories, and insightful reports for each asset in the Stellar network.

Contact us if you have an idea or a business case for building a Stellar network transaction process. You can move your proposal from an idea to actual commercial results with the aid of our Stellar blockchain expertise.

To guarantee zero downtime, we provide the best maintenance and support services for the Stellar Blockchain network. We take care to keep the entire blockchain system updated and functional on all platforms. We also assist our clients in smoothly transitioning from traditional methods to Stellar Blockchain-based networks.


Stellar's services are already being utilized by a large number of notable international organizations, which demonstrates the company's commitment to furthering the spread of blockchain technology. Stellar has been successful in making Satoshi Nakamoto's vision of a decentralized financial system and distributed ledger technology a reality. This is now feasible as a result of its decentralized, open network and mission-driven organizational structure. Stellar blockchain has unquestionably become an appealing option for users as a result of the development of a super-fast network and token insurance.

Next Article

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