Cryptocurrencies have been around for roughly ten years now. In this time, thousands of cryptocurrencies have been created, and the overall cryptocurrency market capitalization has grown to hundreds of billions of dollars. The concept of a reliable online currency, or “e-cash” that could not be double spent or tampered with has been around for a long time. But a tangible currency solution did not arrive until 2009, when Bitcoin was released by Satoshi Nakamoto.
Since Bitcoin was released, cryptocurrencies have been steadily rising in popularity. Many visionaries and pioneers have appeared in this sector and some of these people have done groundbreaking work. One such person is Jed McCaleb. Jed McCaleb has worked on a number of high profile cryptocurrency projects and has had a tremendously positive impact on the cryptocurrency world and on financial institutions in general. However, his latest project, Stellar Lumens, could perhaps be his most important and influential.
What is Stellar Lumens?
Stellar Lumens is a blockchain-based cryptocurrency and payment network that was created by the Stellar Development Fund (SDF). Jed McCaleb is a co-founder and CTO of the Stellar Development Fund. The STF is a non-stock organization and was created primarily for philanthropic reasons.
The vision of McCaleb’s Stellar Development Fund, and of its cryptocurrency and payment network is essentially to bank the unbanked, to make cross-border transactions extremely efficient, and to improve the world financial infrastructure in general. To accomplish this lofty goal, 100 billion “Lumens” or XLM (the name for Stellar’s cryptocurreny) were created.
Of the 100 billion Lumens brought into existence, 50 % were dedicated to people who originally signed up for the network, 25 % were for partnerships with businesses and non—profits, 19 % were for Bitcoin holders, 1 percent for XRP holders, and 5 percent for Stellar’s operational cost. Only 18 billion Lumens have been distributed so far according to this plan.
With the SDF and the Stellar Lumens cryptocurrency, Jed McCaleb hopes to make banking much easier, cheaper, and reasonable for people all over the world. With Stellar Lumens, all that people in developing nations will need to be able to have access to banking is a smartphone.
Why is a lack of banking such a problem?
Many people in the developed world take banking completely for granted and can’t even imagine living without having access to a bank. But the reality is that over 2.5 billion people around the world do not have access to banking. These people often end up storing their money and valuables inside of their home which makes them a major target for robbers. Sadly, many unbanked people are robbed every year because of this fact.
However, despite the fact that being unbanked makes people targets for being robbed and prevents them from accessing all of the benefits of banking, there are many reasons why people in countries all across the globe do not, or cannot bank. For example, all of the following are things that prevent people from banking:
– A lack of awareness/understanding of how to use banks
– Banking fees including transaction fees, deposit fees, overdraft fees, and hidden fees (many in developing nations cannot afford them)
– Extensive paperwork which complicates the process
– Accessibility issues – banks are often located too far away for them to be feasibly used by many people
– Disqualification – people who have bad credit, no credit history, or who earn low amounts of money may be disqualified from opening a bank account
So, basically there are billions of people around the world who cannot become banked using traditional banking methods. But, Stellar Lumens can liberate many of these people from this problem. It does this by allowing people to store wealth in the form of Lumens on their phones or their computers. Therefore there is no need to store money in a bank. This completely eliminates accessibility issues, disqualification issues, extensive paperwork issues, and the lack of banking awareness issues. Using Stellar is so cheap that it is essentially free, even for cross border transactions. So, this solves the banking fee issues.
The end result of all of this problem solving is that the SDF through its cryptocurrency and payment network is likely to dramatically improve financial inclusion for millions of people around the world. There is very good chance that this could bring about rapid positive change for many financially underserviced communities around the world.
When people who previously did not have access to banking can suddenly send, receive, and store money electronically, this can make everything from conducting business to preventing being robbed much easier. One of the reasons why developing nations are still “developing” is because of poor financial infrastructure and difficulty for conducting business. So, it is possible that Stellar Lumens could help developing nations take significant steps forward towards becoming fully developed.
There are many interesting cryptocurrencies that have been created since 2009. But few of them have been created with the philanthropic vision of Stellar Lumens. With SDF, Jed McCaleb has put together a very strong team, and Stellar Lumens is already doing a lot of good. Stellar Lumens has some of the lowest transaction fees of all of the cryptocurrencies. It is also highly scalable, which is another key advantage. In its few short years of existence, Stellar Lumens has already become very popular and has broken into the top 10 cryptocurrencies by overall market cap. Because of the many benefits that it provides, it is possible that it will continue to grow substantially in popularity in the next few years.
Connect with Jed McCaleb on LinkedIn: https://www.linkedin.com/in/jed-mccaleb-4052a4