The Rise of Cryptocurrency
While the idea of digital cash and virtual currencies has been around for a long time, it only materialized in 2009 when Bitcoin was released. Many saw the potential of a revolutionary technology in the Bitcoin blockchain. But even so, it would be nearly a decade until it started to go mainstream, with many setbacks along the way. One of those responsible for bringing cryptocurrency to mainstream attention is Jed McCaleb, something of a hero within cryptocurrency circles.
The original idea of cryptocurrency was essentially to make payments cheaply, quickly and transparently. Payments, including micropayments, could be sent across borders nearly instantaneously for tiny fees. A fair financial system for all was the initial purpose. But we seem to have lost the essence of what cryptocurrencies stand for in a sea of Initial Coin Offerings (ICO’s), many of which are scams or will not succeed. The markets are also awash with speculators and those who intend to get rich quickly without any belief in the underlying technology.
Jed McCaleb and Stellar
Jed McCaleb is an interesting figure in the world of cryptocurrency. After working with numerous technology companies, he became aware that despite all apparent progress, people in third world countries were simply not seeing any benefits. He came to the conclusion that the financial model was broken, and global issues would not be resolved through the existing infrastructure. This is what led to the creation of Stellar, with its altruistic approach towards a fairer financial system for all. McCaleb is also responsible for the creation of eDonkey and Code Collective.
Jed McCaleb created Stellar in 2014, a non-profit organization that envisages to create a better financial system. It is said to be the bank for the people and provides banking services for those who have no bank account. Banking the unbanked, is the slogan. The stellar coins were initially called Stellars, before being renamed to Lumens (XLM). The inflation rate of the worlds’ “New Financial Network” is set to 1% with the Stellar Network. The network is geared towards social causes and humanitarian missions. Behind Stellar is the Stellar Development Foundation (SDF) which was formed in 2014. The aim of this foundation is primarily to provide banking activities for those without these essential services.
In 2016, McCaleb gave an interview to IdeaMensch where he outlined that 2.5 billion people did not have access to a bank account. While this figure primarily relates to third world residents, there are still large numbers of individuals in developed countries without access. There are a number of hurdles when opening a bank account. These include fees, not having the paperwork at hand, distance, finance, or largely because people simply cannot qualify. People need an address to gain a bank account, as well as a social security number and passport in many cases.
The Stellar Solution
Stellar eliminates nearly all problems associated with bank accounts. No paperwork is required, nor is a home address. Fees are tiny. Registration is quick. Transactions are lightning fast. In most cases, all people need is a device such as a smart phone. Their address is their wallet address, and it doubles as a bank account. It can cost up to $45 to send wire transfers to different countries. But residents of third world countries can now be the beneficiaries of micro payment charity, where first world citizens can send them $10 without any exorbitant transaction fees. And it reaches the address within minutes, not days. According to McCaleb:
“With Stellar, our aim is to use an open source financial network to tie the disparate, siloed institutions together and move money cheaply and seamlessly.”
Transactions are practically free on the network, costing .00001 XLM. This is necessary to protect the system from attacks. Users need to keep .5 Lumens in their “bank” account. There are currently three ways to send money across borders on the Stellar network. All are easy to perform and cost close to zero to complete. Stellar also has numerous first world applications. IBM are set to use Stellar as its first cryptocurrency token on its new public blockchain.
Stellar is a fantastic technological innovation. The fact is that the technology is there to bank the unbanked. But there are other considerations that need to be kept in mind. Most people who are unbanked are simply not aware of the available software. And the vast majority of third world residents are not familiar with any type of digital technology, so they cannot make use of available help. Only 37% of women in developing countries have access to bank accounts.
The SDF is working on all of these issues. The Praekelt Foundation was founded in 2014 to help South African Women save money on their mobiles, and it has been a massive success. In 2014, Stellar worked with Oridian to create a financial transfer system in Nigeria. Almost 300,000 Nigerans (90% women) are now able to enjoy free financial transactions. Stellar has also worked with Parkway Projects, SureRemit, Cellulant, Cowrie Integrated Systems and FlutterWave. All of these projects aim to help women in developing countries improve their lives. Stellar has also done much work in the Philippines, an area without much banking infrastructure due to its makeup as a collection of over 7000 islands. Stellar has given away 19% of Lumens to Bitcoin holders to give everybody the opportunity to become XLM holders.
The Future of World Finance
Many cryptocurrency ecosystems talk about financial inclusion. But stellar is light years ahead of the rest. Its has a comprehensive infrastructure for bringing about a new financial network that has been proven effective in the past in many regions. Its team members include former Facebook, Microsoft and Yahoo employees. It is an incredibly inclusive network for all involved. The Stellar Foundation is a tax exempt not-for-profit organization. The community is regularly updated with roadmaps and developments. The future looks better than ever for citizens of developing countries. And Stellar will continue to play a large role in accommodating a brighter future for them all.
Listen to the recent podcast from Blockzero: https://www.blockzero.show/c4e67558