Stellar CFD Trading

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Stellar (XLM) Crypto CFD Trading - What Is Stellar ?

A centralised payment system relies on a central ledger, whose accuracy can be verified and maintained. Decentralised systems do not have a centralised ledger. However there needs to be a mechanism to ensure that the information being written to the ledger is accurate.

The blockchain is a decentralised technology to read from and write to a ledger. However there is no centralised system to do this. In fact the ledger is stored in multiple copies. Therefore the blockchain has a range of methods to ensure the integrity of the ledger. One method is called consensus. This enables the distributed network to agree on the content they are writing to their copy of the ledger, while being able to tolerate incorrect data coming from a node in the network, without there being a central control process (because it's a distributed system, like the Internet it is built on).

In the case of Stellar, agreement is reached on the basis of a quorum of nodes in the network, that is trust is established based on a range of factors related to the transaction. The reason Stellar uses consensus is because it processes cross-border payments and needs to do this fast (the consensus mechanism used is called the Stellar Consensus Protocol). Consensus in general potentially has an inbuilt advantage in terms of latency, i.e. the delay in processing data. Stellar says it can resolve payments in 2-5 seconds.

CFD trading is trading Contracts for Difference. These are contracts which allow the trader to trade a market without owning it. Therefore when trading a Crypto CFD, the trader does not own any cryptocurrency, does not need to trade on an exchange (they trade with their CFD provider), can go long or short and can use leverage (though cryptocurrencies are extremely volatile and increasing leverage increases risk). Additionally as the trader does not own any cryptos, they do not need a wallet.

Stellar CFDs are based on the cryptocurrency used in the Stellar network, which called Lumens and has the ticker symbol on cryptocurrency exchanges of XLM. Thus when trading a Stellar CFD, the trader is in fact trading a CFD which references the price of XLM on exchanges.

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