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Recently, the Cryptocurrency known as Stellar Lumens has been gaining a large amount of attention in the media, which has subsequently sent the price up over 100% in the last few days. Today on Cryptoblog, I am going to talk about Stellar Lumens and how it works, as well as why this Cryptocurrency has been gaining so much traction lately.

What is Stellar Lumens?

Lumens, or XLM for short, are the currency of the larger Stellar network.They can be used to make payments, similarly to all Cryptocurrencies, they can be used to make payments on a public electronic ledger. According to their official website, they are whats called a native asset, meaning they are built and stored on the Stellar network.

What are some differences between Lumens and Bitcoin?

The Stellar network has a couple of rules when it comes to the storage of Lumens that contributes to the network being more reliable. For example, in order for someone to send Lumens to another person, they must pay a transaction fee called a base fee. Even though Bitcoin has a transaction fee, Lumens operates differently. When you pay a transaction fee on the Bitcoin network, the payment goes to miners. Lumens is what is called a “pre-mined” currency, meaning that when the currency initially came out, an set amount of the currency was already generated. Some pre-mined currencies are already 100% generated and some have their own systems of “inflation” so to speak. The Lumens transaction fee goes to the network instead of miners, since there are no miners. The network then redistributes the Lumens as an inflation system, meaning in order to gain more Lumens, you must have Lumens to begin with.The extra XLM is added to the network at a rate of 1% per year. The base fee is super low, only 1/1,000,000 XLM to be exact. The fee also is used to protect against Dos attacks, or an orchestrated take-down of the network by spam. This technique has been used to shut down countless websites and networks of giant corporations, and while these attacks are temporary, they can cause great damage to any network. If a Dos attacker tried to spam the Stellar network, they would incur a giant fee.

There is also a very unique system called the Lumen Giveaway. This is when at times, the main group behind Stellar Lumens or Stellar.org, gives away XLM to the public in order to promote their currency. When Lumens initially came out, 5% of the total population of the currency was to be given to the Stellar Foundation which is ran by Stellar.org. These are given away to XLM holders, Bitcoin holders, and even to groups of underprivileged populations.

What company did Stellar Lumens partner with?

Stellar Lumens recently partnered with the giant tech company known as IBM which sent a media frenzy as well as a buying frenzy for XLM. IBM for a temporary amount of time, will be using XLM to process international payments in which they would be converting back to whatever local currency the people use. This is a huge step forward for the Stellar network, and it is another step towards integrating Cryptocurrencies and Blockchain technology into the mainstream world.

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