The Stellar Platform
THE STELLAR NETWORK
What It Is and What It Enables
In basic terms, Stellar is an open-source protocol for exchanging money. Servers run a software implementation of the protocol, and use the Internet to connect to and communicate with other Stellar servers, forming a global value exchange network. Each server stores a record of all accounts on the network. These records are stored in a database called the ledger. Servers propose changes to the ledger by proposing transactions, which move accounts from one state to another by spending the account’s balance or changing a property of the account. A quorum of the servers come to agreement on which set of transactions to apply to the current ledger through a process called consensus. The consensus process happens at regular intervals, typically every 2 to 5 seconds. This keeps each server’s copy of the ledger in sync and identical.
Stellar’s decentralized network consists of peers that can run independently of each other. The power to transmit information is distributed among a network of servers, instead of being driven from one primary source.
This means that the Stellar network does not depend on any single entity. The objective is to have as many independent servers participate in the Stellar network as possible, so that the network will still run successfully even if some servers fail.
Anchors play a crucial role in the Stellar ecosystem. Anchors are entities that people trust to hold their deposits and issue credits into the Stellar network for those deposits. They act as a bridge between different currencies and the Stellar network. All money transactions in the Stellar network (except the native currency of lumens) occur in the form of credit issued by anchors.
The Stellar ledger is able to store offers that people have made to buy or sell currencies. Offers are public commitments to exchange one type of credit for another at a pre-determined rate. The ledger becomes a global marketplace for offers.
All these offers form an orderbook. There is an orderbook for each currency / issuer pair. So, if someone wants to exchange Virgin Bank / EUR for bitstamp /BTC they would look at that particular order book in the ledger to see what people are buying and selling it for.
This allows people to not only buy and sell currencies in a foreign exchange-like manner but also to convert currencies seamlessly during transactions.
Stellar.org operates as a non-stock nonprofit organization. Their mission is to connect people to low-cost financial services to fight poverty and maximize individual potential. Although Stellar is nonprofit, commercial enterprises are invited to build and operate on the network.
As a Stellar token, all transfers, conversions, and verification of funds concerning Moneda will be enabled and take place on the Stellar network. Likewise, the mechanism for verifying transactions, a federated Byzantine Consensus Algorithm known as the Stellar Consensus Protocol, or SCP, is implemented by Stellar and ensures a swift and secure transfer of funds.
A detailed explanation of the SCP process can be found here.