Stellar, a new payment infrastructure, has a chance to create some positive movement in improving our payment infrastructure. With the backing of Stripe, Stellar hopes to become the platform on which transactions are done. Stellar attempts to solve some of the issues that have prevented the widespread adoption of Bitcoin. Namely, the lack of liquidity within the Bitcoin network. Stellar uses an algorithm different to Bitcoin's for trusting and communicating transactions on the network. It is because of this algorithm that Stellar can more easily facilitate transactions between currencies.
Liquidity is one of largest problems Bitcoin is facing before widespread adoption. Banks are avoiding adopting Bitcoin because of the currency's' extreme volatility that is largely the result of poor liquidity. The point of currency is to easily exchange goods, but it remains daunting for a newcomer to 'buy in' to the Bitcoin network - a problem that any cryptocurrency will need to contend with. The backing of Stripe could play a major role in the adoption of Stellar, but the system would still need to be backed by a number of other banks and companies. Stripe invested $3M to receive 2% of the 100 billion Stellars. Stripe plans to sell the majority of these Stellars at auction, presumably to bolster interest in the currency.
Stellar needs the interest of banks, companies, and universities for more than liquidity. Indeed, they'll need a number of such institutions to run key components of the Stellar infrastructure. Stellar requires trusted institutions to run 'gateways' that work together as auditors of the transactions on the payment network. They already boast an impressive list of board members and advisors and they'll need to use them to get gateways up and running. Gateways act like virtual checking accounts - you choose to trust a gateway to hold your $100 USD. A user of Stellar only needs to trust their gateway. The algorithm ensures that any transactions between two users can be trusted. A majority of these gateways would need to collude in order to falsify or modify any transactions.
Finally, Stellar is focusing on ease of use for the consumer up front. A daunting part of Bitcoin is the long cryptographic hash that is used for payments on the network. With Stellar, your username on the network is the address that is used to send and receive money. Furthermore, Stellar allows you to connect your Facebook profile, similar to applications like Venmo which has major mass appeal since everyone (and their dog) is on Facebook. Signing up for a Stellar account is easy and you receive 5,000 STR (Stellars) for your trouble. Stellar is also being transparent about the success of the currency so far and they boast nearly half a million Facebook signups. I think Stellar has potential - they're making a solid effort to create a currency that is actually used like a currency, not held like an asset in the hopes of arbitrage.
Updated January 24, 2022