Stellar is an open-source protocol designed for moving money across borders, quickly, reliably and for minuscule transaction costs. It was founded in early 2014 by Jed McCaleb and Joyce Kim. Jed, a rockstar developer also created the first version of Mt Gox which he sold to its more infamous owner, Mark Karpelès who took it to Tokyo and drove it over a cliff.
McCaleb, by the way, was also a co-founder of Ripple in 2011, which he left to start Stellar in 2013.
Okay so in order to understand the Stellar Network, you need to understand the concept of a Byzantine Agreement. The Byzantine agreement takes its name from the Byzantine Empire which was part of the Roman Empire. More specifically, it refers to what is called the Byzantine Generals Problem. This is where a group of generals surround a city but need agreement on whether they are going to attack or retreat i.e. they need consensus. Doing either half-heartedly would result in a rout, so they need to reach agreement without getting distracted by a few bad actors. Thinks of the generals as nodes on the network striving to reach consensus.
Complicating matters, however, is that with a typical Byzantine Agreement all parties must agree on the the exact list of participants. If you don’t know who’s voting, then chaos rains and a Sybil attack looms. So this works best when a central authority governs the list.
Problem is Stellar wanted a much more decentralized, organic network that could ebb and flow more naturally, and take on a life of its own. So they came up with the genius idea of a Federated Byzantine Agreement.
With a Federated Byzantine Agreement, the quorum is decided in a decentralized way. Each node selects a small subset of other nodes that it trusts. The nodes only waits for consensus from its trustworthy group. As all these groups overlap with different combos of trustworthy nodes, a system wide quorum can be reached really fast and bad actors are left isolated.
The result is that the Stellar Consensus Protocol is fully decentralized, it can reach consensus really fast and Sybil attacks are almost impossible. Brilliant!!
Thats it from me. Please drop a comment if you enjoyed this video. You can also find me on Twitter.