The cryptocurrency industry has much in common with traditional financial institutions. It is a space where greed and profiting at the expense of others is commonplace and sometimes even encouraged. While this capitalist utopia isn’t inherently wrong, it also doesn’t generate all that much goodwill. Projects like the Stellar payment protocol may go a long way towards solving that issue. Their vision is to provide banking serves to the unbanked and those that are currently under-banked.
The initial impact of such a project may seem low at first glance, as those who live in abject poverty rarely have the additional assets to bank in the first place. However, this is often as a result of two factors – lack of storage and an inability to gain the critical loans that help create new businesses. Providing these opportunities to areas that previously lacked any access to a traditional bank could open entire nations to greater economic prosperity.
Lumen’s Integration in to the System
Stellar’s native cryptocurrency, the Lumen, provides the payment protocol with a necessary component. Much like Ripple’s XRP token, the XLM Lumen is designed to act as a bridge currency. A bridge currency allows users to trade their fiat currency for another, using the bridge as an intermediary. While the traditional foreign exchange industry charges exorbitant fees for this process, Lumens provide an almost frictionless method for forex transactions. Currencies are sent to the network and converted to XLM, then back out into the new fiat as necessary. The process is inherently secure and does not require any middle-men to accomplish.

This is critical for the worldwide remittance industry. Foreign workers often send their earnings home, losing a solid percentage through a series of fees. Even when the payment arrives, it must still be converted into the local currency before it can be used. Each step along this path provides a potential location for failure or fraud. The Stellar protocol completely revolutionizes this process, while also allowing users to store their money directly within the system.
Stellar Adopts the Lightning Network
Bitcoin, the first blockchain currency and a market juggernaut, ran into some technical issues at the end of 2017. Faced with an unprecedented number of transactions per second, the process slowed to a halt. Higher fees faced anyone looking to trade the currency, and the development team was left to scramble for a solution. Luckily, the Lightning Network foresaw this event and began development of a system to solve it. Adding a second layer to the transaction process relieves some of the original blockchain tension. This second layer opens inter-user channels that can be used to create temporary transactions. These transactions are only published to the full, public blockchain when one of the involved users closes their channel.
Stellar chose to implement this Lightning Network technology, not because it was immediately required, but to solve scalability issues down the road. Their forward thinking, proactive development speaks well for the project. Further, their altruistic goals and focus on developing nations gains them good will and strong growth potential in equal portions.
Article By: Adam Stone