We know some of you are here because of the recent boom in the crypto market and we totally get your curiosity! Cryptocurrencies are challenging the very existence of the current financial system, hence the topic does make a fascinating read! But you cannot expect to excel in this world without having an understanding of the basic principles that instruct how cryptocurrencies work essentially. And in this article, we familiarize you with these fundamental principles! Not only that, but we also talk a bit about the Stellar Lumens network and which applications are utilizing Stellar right now!
So, without further ado, let us start this discussion by understanding what blockchains are?
What is blockchain?
Let us start with the basics, shall we? Before we talk about blockchains, answer this first: what is the purpose of a spreadsheet? Data storage, right? But while spreadsheets are storing data at the smallest levels possible, significantly larger quantities of data are stored in databases.
Blockchain is one such database, which differs from the usual databases in the manner in which it stores the data.
As some of you might have gathered it from the term itself, blockchains store data in the form of blocks (or chunks, whatever helps you understand things better). The incoming fresh data is stored into a new block, which is then chained to the previous block, all of this happens in chronological order. It is worth mentioning here that each block that enters this chain is time-stamped, as per the day and the time when it was added to the chain.
But wait a minute. We have answered the “what” question but there is still some ambiguity about the why bit of things. Why blockchains are relevant in this discussion and what is their significance to cryptocurrencies? Let us explain this with the help of an example. Bitcoin is the most popular crypto these days, and every transaction ever made in the form of Bitcoins is stored in decentralized blockchains. This means that all the computers that make up the Bitcoin database network (called nodes) are located in different geographic locations. You will understand the concept of blockchain with more lucidity in the sections to come in this discussion.
How does a transaction get into the blockchain?
Don’t worry, we are not going to bombard you with technicalities! Instead, we are going to present in front of you, a summary of key steps that a transaction must go through before it enters the blockchain. Firstly, a transaction is requested and authenticated, authentication is courtesy of cryptographic keys that allow a user access to the popular wallets. A combination of private and public keys creates a secure digital identity. Next up, post transaction agreement between the users, the next step is that of authorization. Who authorizes a transaction, you must ask! Well, think of this authorization as a verdict passed by a jury of members. Only, the members, in this case, are nodes that we talked about earlier. Linked with this authorization is the concept of proof of work. You can think of it as a reward that each node in the network gets for verifying a transaction. Easier said than done though! It requires members in a network to solve complex problems of mathematical nature. Only then a block can be added to the chain. This is what mining refers to in the crypto world! Once the block is added to the existing chain of data blocks, the update is sent out to the entire network, thereby completing the transaction.
How blockchain data is stored and secured?
We guess that by now, you have understood the storage part clearly enough. The decentralized manner in which blockchain data is stored offers a lot of advantages over the centralized storage of the cloud systems, a topic that demands a separate discussion of its own. But for now, we are going to focus more on the data security bit of the question. Well, the blockchain data is kept secure through hashing, an algorithm that converts a transaction into a set of numbers and letters, unique and cryptic. But the process doesn’t stop here, rather, it continues as two transaction hashes are combined to produce another hash, and then with further hashes until what we are left with is just a singular hash, commonly dubbed as the root hash of multiple transactions. A major role in ensuring that the blockchain data is not tempered with is played by Merkle Tree, which also makes the singular root hashes possible.
What is a cryptocurrency?
Before we talk about the Stellar Lumens network, we need to revisit the very basic concept of cryptocurrency, just to rid of any ambiguities or vague notions that might be floating in your mind right now. So, let us start with a definition, shall we? What is a cryptocurrency?
Well, in simpler words, you can think of a cryptocurrency as a digital/virtual currency that is almost impossible to counterfeit.
Sounds unbelievably amazing, right? Well, you have already seen how blockchains are secured, you should hardly be surprised at the way cryptography offers optimal data security. Explaining things in a slightly sophisticated way, this system of currency allows online payments (secure is a given) denominated as tokens. We know the word crypto must have had you thinking about some mysterious language that cannot be debunked easily, and guess what, you are spot on! Encryption, public & private keys (which we have talked about earlier), hashing all of this can be combined under the umbrella of the term crypto.
Why are cryptocurrencies so popular?
There are more than a dozen reasons, but we are going to talk about only the most prominent ones that have made cryptocurrencies so popular. Let us start with transparency, the factor that is so crucial to any financial system right? Well, the decentralized nature of blockchains, the fact that only responsible beings in a transaction are payers and the payees, and the immunity from any bank’s influence makes the crypto transactions super transparent and reliable. But that is only of the many reasons, we got more to share with you! Ever since the bigger firms have started investing in blockchain software that can be used in financial markets, cryptocurrencies have grabbed a very reputable status among traders and not just the netizens. Then, the transaction speed of cryptocurrencies is unparalleled, unmatched with any other payment method. Why would you not want to pay and receive at a rate of 7/transactions per second? There are no middlemen, and more importantly, no additional charges that are an essential feature of bank transactions. One last point that adds more weight to cryptocurrencies and their popularity is about how they promise a cashless society. We see that many online stores and even some industrial outlets have started accepting payments in cryptocurrencies like Bitcoins. So, when we say that this form of currency is likely to become the only accepted form of currency shortly, it is not random ranting!
Are cryptocurrencies a good investment?
We have talked about plenty of good reasons already in the previous section, and there are a few more that we would love to talk about. Included in this list of reasons are sold facts like the hack-free nature of crypto-transactions and the decentralized nature of these currencies. But too many pros might have had you thinking there are no cons attached with cryptocurrencies. That is far from true. Some key points that you must keep in your mind when you are about to invest in a cryptocurrency:
1- Cryptocurrencies swing in a more volatile fashion than the mood swings of modern-day teenagers, and that is saying something! So, be of stout heart if you are venturing into this arena!
2- There is every chance that cryptocurrency transactions are and will be used for legitimizing illicit wealth. So the risk of fraudulent activities cannot be ruled out.
3- You might become a victim of fraud yourself if you don’t read and learn all the basics that govern the crypto market.
What is Stellar Lumens?
Stellar Lumens is a digital currency that was created by Jed McCaleb, the same guy who came up with Ripple, another cryptocurrency. We must make it clear here, the Stellar Lumens is the decentralized network (P2P), while the token used on this peer-to-peer platform is labelled as Lumens. It has been going strong since its inception i.e. circa 2014, and in Jan 2021, Stellar Lumens touched the 11th spot in the race of best cryptocurrencies.
At this point in the discussion, you should be intelligent enough to ask: what was the need for creating something like Stellar Lumens? Well, the idea behind the invention of lumens was to reduce the time per transaction and the high fee that came with cross-border transactions. And the developers remained true to their words! The transaction time is around 3-5 seconds, which is hell faster than Bitcoin or Ethereum. This lightning quick transaction time comes with no compromises made on the Stellar Lumens cost-effectiveness. We know you are craving for more dirt on this platform, and there is plenty of that in the next section!
What are the features of Stellar?
In this section of the discussion, we talk about some of the sterling features of Stellar. But before we delve into the details of these features, you should know how the network works in the first place. Well, as you might recall from the previous section of the discussion, the token used in this platform is called Lumens. Thanks to the anchors within the network, lumens allow a peer to send one type of currency which then arrives as a different currency on the receiver’s ends. Lumen transforms into different currencies during this journey! So, we would like you to think of Stellar Lumens as something more than money. In fact, thinking of it as a bridge that converts different currencies in an incredibly short span of time. This amazing feature of Stellar is known as Path Payments.
Coming towards the features that illuminate the worth of Lumens more aptly, a Lumens transaction will cost only 0.00001 XLM. Is that ridiculously cheap or what? But there are other benefits associated with Stellar Lumens as well. It can be easily accessed, allows an easy exchange of currency, and what is more, features a decentralized network. Again, this means that it is the community that has the power to authorize transactions and not any bank or government agency. Want more reasons to believe in Stellar Lumens? How about the fact that IBM has partnered with Stellar Lumens? Or that a payment service as reputable as Stripe is the first major investor of the Stellar network? Geez, we don’t know, Lumens does sound like a coin to watch out for in the future!
What are some of the best applications that utilize Stellar blockchain?
StellarX: StellarX is a decentralized crypto exchange that comes with global fiat gateways. It's fast and free! The StellarX team even claims to refund the transaction cost that incurs during trading.
Lobstr: To avoid network spam, Stellar requires the user to deposit 1 XLM for activating his wallet. Thus, Lobstr comes in handy in such a scenario. Anyone willing to quickly add funds into his wallet or maybe receive an airdrop can simply signup to Lobstr and create his wallet address. Lobstr would automatically deposit the required minimum of 1 XLM into your wallet address, which you can return later. Additionally, Lobstr also offer a clean and simple dex interface that allows the user to trade his lumens or stellar-based assets.
Coinqvest: Coinqvest is a unique payment processor that allows you to accept cryptocurrencies and settle the incoming payments into fiat. That amount can then be transferred into your bank account.
Dstoq: Dstoq is a mobile application that allow the users to buy and sell stocks, bonds, or ETFs with zero fees.
Satoshi Pay: A company that offers a wide range of different products/services, some of which include Stellar wallet, micropayments and instant cross-border payments.
Stellar Battle: This platform allow the projects and users to create contests and assigning rewards (in Lumens) for winning participants. This proves to be a pretty useful website for those crypto projects who are giving away bounties for performing different tasks.
Scopuly: Scopuly offers a nice stellar-based decentralized exchange and wallet.
Smartlands: Smartlands offers a decentralized system for companies to raise funds. This can potentially provide a very useful solution for those companies who are willing to do an STO (Security Token Offering).
Ternio: Ternio offers some very impressive solutions for companies and individuals. These consists of bank accounts for startups and a crypto card that allow the users to spend their cryptocurrencies straight from their bank account.
SureRemit: SureRemit offers easy and instant remittance solutions.
What is Answerly
Now that we've covered pretty much all basics regarding Blockchain, Cryptocurrency, and Stellar Lumens, now it's time to introduce the project that we've been working on for the last 2 years. By now, you should already know why we chose to built Answerly on the Stellar blockchain.
Answerly is a Q/A based platform (similar to Quora) that allow the users to earn rewards for their answers. The basic concept of Answerly is to reward the users for posting well-explained and accurate answers to different questions. Answerly allows users to earn rewards for two different types of activities:
- Posting Questions: Users will receive fixed rewards for posting questions.
- Posting Answers: Answer rewards would vary depending upon the user’s level on the platform.
Once the user has reached the minimum withdrawal threshold, he can easily withdraw his earnings on his Stellar wallet. Upon withdrawing his earnings, the user will receive an email along with other important instructions. To make this process smooth, we’re utilizing the services of a very well-known Stellar based project called Lobstr.
How Answerly works?
- Every answer posted for any question is evaluated in terms of it's accuracy, relevancy, and quality. This process is done automatically through an algorithm that chooses the best answer based on 18 different factors.
- The user who posted the best answer is then rewarded in ANSR tokens. The amount of reward depends upon his Answerly user level (you'll find more details below).
- As soon as the user reaches his minimum withdrawal threshold, he may withdraw his earning on his stellar wallet.
User Levels on Answerly
The user levels on Answerly range from 1-5. A new user on Answerly starts with User Level 1. As he begins contributing to the platform, his user level starts to progress. As we’ve already mentioned above, the best answer reward varies from user to user depending upon his level.
Here’s a list that shows the amount of reward each user is eligible to receive on different levels:
Required to upgrade (Level 1 -> Level 2) = 10 Best Answers + 50 ANSR tokens
Rewards - 1 ANSR token / Best answer
Required to upgrade (Level 2 -> Level 3) = 50 Best Answers + 150 ANSR tokens
Rewards - 2 ANSR token / Best answer
Required to upgrade (Level 3 -> Level 4) = 100 Best Answers + 300 ANSR tokens
Rewards - 3 ANSR token / Best answer
Required to upgrade (Level 4 -> Level 5) = 500 Best Answers + 500 ANSR tokens
Rewards - 4 ANSR token / Best answer
Rewards - 5 ANSR token / Best answer
For posting an answer or a question on Answerly, the user would require Answerly credits. As soon as the user posts a question or an answer, 1 answerly credit will be deducted from his total balance. Just to clarify, answerly credits are not the same as ANSR tokens because the credits don't hold any sort of monetary value, neither they can be withdrawn like ANSR tokens.
A free user will get 30 answerly credits per month which he can utilize to post
- 30 answers
- 30 questions
- Or a combination of both
To get more credits, the user will need to opt for any of the 3 pro membership packages mentioned below.
Package 1 - $10/month
- 100 credits
- No ads
- Integrating social profile links on every answer
- Pro membership tag
Package 2 - $20/month
- 500 credits
- No ads
- Integrating social profile links on every answer
- Pro membership tag
Package 3 - $30/month
- 750 credits
- No ads
- Integrating social profile links on every answer
- Pro membership tag
By now we hope that you've understood all basic details about Blockchain, Cryptocurrency, Stellar network, and Answerly. Let us know if there's any question and we'll definitely do our best to answer your queries.
Thanks for reading!