My Introduction to Stellar

I published my first and only trade idea on TradingView on Valentine’s Day of this year. Kind of ironic and a little funny the way that worked out. The idea was to go long on Ethereum in the new year. I guess I was on to something.

There is no doubt 2017 has been the biggest year the industry has seen. These are times I had only dreamt about but as a trader, I’m always seeking opportunity. Stellar has been around longer than a lot of other projects but for some reason never caught my eye. Recently, I was going through charts looking for your typical buy low/sell high setup. I liked the Stellar chart but was clueless about the project’s story. Time for some research.

The Current Problems with Blockchain

I think anyone that has been around long enough realizes Bitcoin’s mining power is centralized in China. Slight problem for a decentralized store of value. We saw a chain split in August and my guess is we’ll see one in November. I’ve always been a fan of Ethereum but recently took the time to better understand the project’s roadmap. My understanding is that even after the addition of Plasma subchains, there is a possible security flaw that remains unsolved. Not saying it will remain unsolved.

SCP Basics

The Stellar Consensus Protocol white paper can seem complex because it’s not blockchain. The protocol is more like an evolution of blockchain and that’s a good thing. The paper highlights key features: decentralized control, low latency, flexible trust and asymptotic security. Of these four features, proof of work blockchains are only capable of decentralized control and even that can be compromised as we have seen in Bitcoin.

The protocol works through the use of quorums, which are a set of nodes used to reach an agreement. The Stellar network is able to process a large number of transactions quickly and for fractions of a penny because there is no mining involved. The quorums securely reach consensus by exchanging signatures. For a better understanding of how this works, I encourage you to read the white paper but what we are left with is a platform that solves blockchain’s shortfalls right now.

The Road to a Billion Dollar Market Cap

I think it’s human nature to resist change. A lot of time and money has been invested in blockchain technology. My hope is that current and future blockchain developers realize things like scalability no longer need solving if they transition to Stellar. They’re also big things coming down the pipeline like a decentralized exchange and the first ICO deployed on the platform, Mobius.