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Payment processor Stripe helps launch a new currency, the Stellar

Above: Stripe cofounders John and Patrick Collison

Stripe might be best known for enabling online merchants and websites to process payments more easily, but its team also strongly believes in decentralized payment networks and cryptocurrencies.

Today, Stripe announced that it has invested $3 million into Stellar, which is an open source project, a currency-exchange network, a currency in its own right, and a non-profit. Stellar also launches today.

Stellar, like Bitcoin, is a decentralized payment network and protocol. Unlike Bitcoin, it supports traditional currencies such as U.S. dollars, euros, and so on.

From Stripe crypto specialist Greg Brockman’s blog post:

Stellar’s goal is to build a great transport layer for transmitting monetary value. Figuring out how to efficiently move money is something we support very strongly: Stripe spends a lot of effort integrating different banking and finance protocols in various countries (17 at last count). We’ve always considered it unlikely that these systems would be just as fragmented in twenty years. Bitcoin has already changed the world by drawing attention to the value of open, distributed protocols that enable the transmission and storage of money. Stellar aims to advance this success by providing a way to transact in one’s currency of choice, whether that currency is fiat or digital.

Here’s how Stellar works: You can use the network to send and receive payments in a pair of currencies (sending dollars that arrive in euros, for example), or you can hold a balance with a gateway, which is a network participant that accepts a deposit in exchange for credit on the network, according to Stellar’s site.

Stellar also has its own native currency, the stellar. Its value will be market-determined, and its main purpose is to provide a conversion path between currencies.

“All the financial structure today is fragmented and out of date. They can’t communicate with each other,” said Stellar executive director Joyce Kim, in an interview with VentureBeat.

“Bitcoin hasn’t really made it mainstream. What we decided to do with Stellar is create this common language,” she said.

She added that the trouble with Bitcoin and other cryptocurrencies is that they’re challenging to understand and can even be hard to acquire, as they must be “mined” or bought from specialty exchanges, which creates a lot of friction. Stellar, she says, is creating a universal network.

As for Stellar, the non-profit, it will be in charge of distributing the coins only. “Money, [the stellar coins], is now is for the people, by the people…It shouldn’t be owned by anyone,” said Kim.

The network will initially have 100 billion stellars, and will grow 1 percent per year. The coins will be distributed as follows: 5 percent for operating costs of the nonprofit, 50 percent for people who sign up for an account, 25 percent for other non-profits working on financial inclusion, and 20 percent to current bitcoin and Ripple holders.

The 25 percent for non-profits is particularly important to Stellar. While Facebook’s Internet.org and Google’s Project Loon are working to bring internet to the whole world, “bringing the next billion [people] onto the Internet economy is even harder than bringing them online,” said Kim. This chunk of the stellars will go to nonprofits working on micro-lending, community banks, and the like.

Stellar’s board includes Khosla Ventures’ Keith Rabois, Stellar developer Jed McCaleb, and Stripe chief executive Patrick Collison. Its advisors include Sam Altman, Naval Ravikant, Matt Mullenweg, and a host of others.

More information:

Stripe is a simple, developer-friendly way to accept payments online. We believe that enabling transactions on the web is a problem rooted in code, not finance, and we want to help put more websites in business.... read more »

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14 comments
Alex Agle
Alex Agle

Do you know that there are over 450 virtual currencies?  Bitcoin is the #1 virtual currency with a market cap of $7.76B.  The next runner up is Litecoin with a market cap of $219M.  Ripple is #3 with a $45M market cap.  Stripe/Stellar is #32 with a market cap of $1.1M.  If Stellar is going to become a major coin, it has an uphill battle to fight.  Source: http://coinmarketcap.com/

Salim Kaci
Salim Kaci

Bullshit, this company is in charge of distributing the coins, how is this decentralized in any way? long live bitcoin

Kou Navi
Kou Navi

YET ANOTHER "me too" fad.

Jamil Voss
Jamil Voss

Likely we'll eventually have a universal declaration of value that's used to understand the values of the currencies. It might be dollars or something new. Also, as we travel further if we still have money, there might be localized value, or location-based value weights on money, which there kind of are, already -- it's just not very formalized, as different locations have different currencies, that want is generally already met.

Mohamed Hussein
Mohamed Hussein

You can't call it currency. It's an imaginary monetary substitute.

Jason Curry
Jason Curry

I'm a Stripe user and promoter and I like it.  They're an appropriate company to create such a thing.  Thankfully they didn't call it StripeCoin.

Jose Llisterri
Jose Llisterri

Distributed != Decentralized. Who is doing the issuance? A central entity... Who is doing the verifications? only selected and pre-approved nodes (ripple consensus)... So certainly it is NOT like bitcoin: it's premined and centralized...

Glenn Darwis
Glenn Darwis

Stripe is saying Stellar is "money for the people, by the people" yet issuance of this currency is straight from Stripe. This is a massive contradiction. And right off the bat they're already telling you that they're going to inflate 1% a year so the value of a Stellar is GUARANTEED to drop in the future in real terms. Did they not consult with anyone that has a proper understanding of the quantity of money?

Jonathan Lefebvre
Jonathan Lefebvre

i think the jey is security ? and usefullness for the darknet ;)

Klancy Kennedy
Klancy Kennedy

I gotta say one thing... there's too many companies making currencies and then giving them names. Like would anyone take Dwolla seriously if your balance was held in Dwollars? Of course not. What if PayPal held your balance in 'pals'... Stellar? - I'm having a fit of coughing right now, except let's call that coughing out for what it really is, scoffing. Enough with the currency names. Just be real with us. We're business professionals, cute shouldn't be part of your business plan any more than comic sans.