Like Ripple, Stellar is a payment technology aimed at consolidating financial institutions and significantly reducing the cost and time required for cross-border transfers. Initially, both cryptocurrency used the same payment protocol, but over time these similarities ended. As Ripple goes through a closed code system, Stellar has an open source coded system feature.
Stellar aims to constantly change between currencies and connect all users to payment platforms with small transaction costs. In addition, Ripple and Stellar have different customer portfolios. Stellar focuses on emerging markets while Ripple works with settled banking institutions and consortia to arrange cross-border transfer technologies. Apart from that, it has multiple uses for its own technology, including money transfers and bank loans.
How Does Stellar Work?
Stellar’s basic operations are similar to most decentralized payment technologies. It runs decentralized server network with a distributed ledger updated every 2 to 5 seconds between all nodes. This ledger records every transaction in the system for both people and companies. Each Stellar server has a copy of this ledger. With more than one server, this network becomes even more robust. The servers communicate with each other to keep their movement and synchronize the ledger constantly. This mechanism, known as the consensus, is one of the most distinctive factors between Stellar and Bitcoin.
Stellar uses the Federated Byzantine Agreement (FBA) algorithm, which allows transactions to be processed faster. This algorithm is used to confirm and verify a transaction.