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How to mine Stellar cryptocurrency?

XLM

Stellar (XLM) is a platform for fast and low-cost international transactions. It is a cryptocurrency based on the Stellar Consensus Protocol (SCP) system, which is different from Proof of Work…

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How to mine Stellar cryptocurrency?

Stellar (XLM) is a platform for fast and low-cost international transactions. It is a cryptocurrency based on the Stellar Consensus Protocol (SCP) system, which is different from Proof of Work (PoW) or Proof of Stake (PoS). For this reason, the process of “digging” Stellar looks different from traditional cryptocurrencies such as Bitcoin or Ethereum.

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Understanding the Stellar Consensus Protocol (SCP)

Stellar Consensus Protocol (SCP) is a unique consensus protocol used in the Stellar network that provides reliability, scalability and transaction speed. SCP is based on the Federated Byzantine Agreement (FBA), a decentralized consensus model that allows groups of nodes to work together, rather than relying on a completely open model where every node communicates with every other node. This allows for greater flexibility and adaptation to the needs of the network.

Functioning of SCP

  • Nodes and quorum sets: In SCP, nodes participating in the network form quorum sets, which are a subset of all nodes in the network. Each node chooses other nodes with which it wants to communicate, creating its own quorum sets. A node considers a transaction valid only if a majority of its quorum sets consider the transaction valid.
  • Consensus Process: During the consensus process, nodes submit their proposed transactions and vote on those they consider valid. Voting takes place at several levels, starting with voting for proposals, then for candidates, and ending with final confirmed transactions. This process improves reliability by rejecting false or invalid proposals.
  • Transaction speed and scalability: SCP enables fast transaction confirmation because nodes need consensus only from their quorum sets, rather than from all nodes in the network. This reduces the time it takes to reach consensus and enables the network to scale. In a Stellar network, transaction confirmation time is typically a few seconds.

Security and trust in SCP

Security in SCP comes from a combination of trusted nodes in the network and the cryptographic algorithms used to secure transaction data. The Stellar network creates a trust hierarchy in which each node knows other trusted nodes, as well as those it does not consider trustworthy. The nodes work together to reach a consensus, rejecting transactions from untrustworthy sources.

Participation in the Stellar network as a validating node

To actively participate in the Stellar network and support the transaction validation process, you need to run your own validating node. These nodes are responsible for validating transactions and maintaining the integrity of the network.

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Hardware and software requirements

To run a validation node on the Stellar network, you need:

  1. A computer with a good internet connection: The node must be constantly connected to the network and have access to up-to-date data.
  2. Computing power: It is recommended to have at least 4 CPU cores, 8 GB of RAM and 100 GB of free disk space to ensure stable operation of the node.
  3. Stellar Core Software: This software is responsible for maintaining the connection to the Stellar network and validating transactions. It can be downloaded from the official Stellar website.

Configuration of the validating node

Once the hardware and software requirements are met, the configuration of the validating node includes:

  1. Installing Stellar Core on the computer.
  2. Creating and configuring the Stellar Core configuration file.
  3. Running the node and synchronizing it with the Stellar network.

Participating in the Stellar inflation program

Stellar has a built-in inflation mechanism that distributes newly generated XLM tokens among network participants on a weekly basis. To take advantage of this mechanism, you must:

  • Set up a Stellar wallet: there are many wallets that support XLM tokens, such as Solar Wallet, Lobstr and Keybase.
  • Set up funds in the wallet: After setting up a wallet and purchasing XLM, you must indicate an inflation address to receive weekly dividends. For some cryptocurrency wallets, one click is enough, while others may require you to manually enter the inflation address.
  • Join the field: Due to the minimum votes needed to receive dividends, it is recommended to join a pool. Such a pool combines the votes of many participants, which increases the chance of receiving dividends. There are different types of pools, such as Lumenaut, InflationX or XLMpool. Choose one and follow their instructions to add your vote.
  • Receiving dividends: Once you join a pool and set up your portfolio, you will receive weekly dividends in the form of XLM. Dividends are proportional to the number of tokens you hold.

Summary

Digging Stellar cryptocurrency (XLM) is different from digging other cryptocurrencies. With Stellar, there are no diggers or staking, but participating in the network as a validating node and using the program are the two main ways to engage with the network and receive rewards. Follow the guide above to start your adventure with Stellar cryptocurrency.

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Łukasz Michałek
Łukasz Michałek
Founder of the rapidly developing cryptocurrency channel "Biblia Kryptowalut" on YouTube. He also co-creates the Arena Trading group with Marek. Łukasz is fascinated and passionate about blockchain technology and cryptocurrencies, which constitute the central element of his activity in the cryptocurrency industry.
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