There is no shortage of digitally backed currencies in the world. There’s bitcoin, that granddaddy of them all but the list goes on and gets longer each day. More or less, they are all based on the same innovation: the open source block-chain and the distributed public ledger of transactions. Some enter the scene with more star-power than others and with a Square founder on its board, a $3 million pre–deployment investment from Stripe and the founder of Ripple Coin behind it, the Stellar is certainly shaping up to be a high wattage entry.
Stellar is a cryptocurrency, but it is also a decentralized protocol for sending and receiving money. It is not a competitor to bitcoin insofar as its purpose isn’t to act as a competitor to fiat currency or to act as a hedge investment against the maniacal abuses of federal government gone mad with power, so much as it is meant to be a platform where internet users can easily move between types of currency.
Broadly, it also hopes to make digital payments a possibility for everyone, everywhere in the world. That is why there will be a large initial distribution to non-profits working in financial inclusion.
Users can tap into the service to send and receive payments in pairs of currencies, euros to dollars for example, or they can hold the balance at certain gateways with the in-house crypto-currency, the Stellar.
The network will initially have 100 billion Stellars, and unlike bitcoin, has a 1 percent per year inflation rate built into it. Coins will be distributed to cover operating costs of the nonprofit, 50 percent for those who sign on, 25 percent for other non-profits working on financial inclusion with the rest going to those who already hold bitcoin or ripple coins.
“All the financial structure today is fragmented and out of date. They can’t communicate with each other,” Stellar Executive Director Joyce Kim said in an interview with Venture Beat.” Bitcoin hasn’t really made it mainstream. What we decided to do with Stellar is create this common language. Money, [the Stellar coins], is now is for the people, by the people…It shouldn’t be owned by anyone.”
That last shot is directed at mined currencies, which Kim notes thus become hard to understand and expensive to obtain.
Out the door, Stellar has some impressive backing. Stellar’s board includes Khosla Ventures’ and former Square executive Keith Rabois, Stellar (and Ripple Coin) developer Jed McCaleb, and Stripe chief executive Patrick Collison. Stripe has also agreed to purchase 2 percent of the Stellars in existence for $3 million.
