Stellar.org, the non-profit technology provider aiming to connect financial institutions using consensus-based cryptography, has announced it will be giving away 19 billion of the network's native currency, lumens, to holders of bitcoin.
The lumens will be distributed in several rounds, said Stellar CTO Jed McCaleb in a blog post. The first round will include three billion lumens, and will follow a snapshot of all coin balances taken on 4 July. The lumens, which constitute 19% of the initial lode in existence, will be distributed in proportion to how much bitcoin individuals are holding. On 5 July Stellar will publish a claim page, allowing bitcoin holders to verify that they control a given bitcoin address and send that address's share of lumens to a Stellar account.
McCaleb told IBTimes: "What Stellar is trying to do is be this common protocol between financial institutions so the idea is that if some bank in the US plugs into Stellar then all their customers can send and receive from anybody that's on the Stellar network. So, say some mobile money operator in Nigeria integrates with Stellar then their customers can send and receive to anyone that's also on the Stellar network.
"This will make the customers of the bank and customers of the mobile money operator able to send and receive currency from each other. The person in the US would be holding dollars, and the person in Nigeria would be holding naira, but they would be able to interoperate with each other because the assets can be exchanged through the Stellar network."
McCaleb said the same would apply if someone has a Coinbase account, for instance, and if Coinbase plugged in then the customers bitcoin assets could be traded for dollars or naira in the same way.
"Our goal eventually is this sort of internet-like payment protocol, in the same way that there's one for email. It doesn't matter who your domain provider is; you could be on Yahoo and I could be on gmail, but we can easily send emails back and forth because they follow the same protocol. If we can get these financial institutions to follow a common protocol, then they can all interoperate with each other.
"The integration process is very simple; we tried to make it as easy as possible. The biggest challenge is just in getting people to understand the concept and get on board with the idea."
Lumens like bitcoin and other cryptocurrencies are traded on exchanges like Kraken and Poloniex. If people do not hold accounts at well-known exchanges, Steller said it will use Facebook to get users' names so these can be checked against the sanctions database.
Steller has been doing some worthy projects to reduce the cost of moving money around. One such project right across Nigeria aims to connect micro-finance institutions using the Stellar payment rails. Another project is Stellar-powered smart coffee kiosks that automatically pay out farmers in the Democratic Republic of Congo. Each kiosk, which functions like a Coinstar for coffee beans, will serve around 4,000 farmers.
McCaleb added: "We are talking to a mobile money operator down there [Nigeria] and a couple of banks to get them connected to the network as well. So hopefully we should have announcements about that in maybe in a month or two.
"This kind of technology allows you to do things that you couldn't do before, like for instance that coffee bean thing. You can't really do that without this kind of system. We are excited about stuff like that."