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Everyone is running away from traditional financial institutions for various reasons but most importantly because they are playing catch up to the more innovative Fintechs. Banks have reached a point where they have no option but to adopt technology in its fullest. Moreover, blockchain has been the industry’s major disruptor. That aside, what remains to be the most significant innovation yet is blockchain integrated microfinance.

While several startups have quickly adopted blockchain innovation in microfinance, it is not without its shortcomings. The major challenge of blockchains is that they are not decentralized by default, thus creating room for disintegration in no time. To curb that, consensus protocols become a necessity.

What is a consensus protocol

To better understand what a consensus protocol is, we consider a simple classroom scenario. If you are a new head in a school that initially had no set of rules or regulations, your first mandate is to formulate some.

These rules are intended to be common grounds on which all the stakeholders agree upon and which are familiar to all. That is what consensus protocols do for lenders by providing a principle of functioning agreeable to all the lenders.

In the history of consensus protocols, there have been quite a number, but if your interest is fintech, the notable one is the Stellar blockchain protocol. This protocol evolved from the Federated Byzantine Agreement (FBA). Ripple saw the initial application of FBA but Stellar streamlined and made it better.

Common terms used in Stellar Consensus Protocol(SCP) include:

  • Quorums, which refers to an agreement that cannot be redefined in the future
  • Quorum slices, made up of several nodes, are used for reaching a consensus
  • Nodes which represent the participants.
Why Stellar Protocol

AssetStream and Stellar have one common goal – to expand global access to low-cost financial services to eradicate poverty and optimize socio-economic development.

The reason AssetStream chose to adopt this protocol is that it:

  • Has the easiest potential to reach a consensus, especially among many lenders (as expected on AssetStream)
  • The entire network can achieve consensus when the trusted circles overlap
  • Unlike FBA, SCP uses open membership
  • Speeds up transactions.

Some of the financial institutions and payment aggregators that have successfully used this blockchain include; RippleFox (China), Cellulant (Nigeria), Sendx (Singapore) among others that operate globally such as TranferTo.

Stellar consensus – creating trust among lenders

If you are told that you will be teamed up with a colleague at work to complete a certain project, you will want to make sure that the person can be trusted. No one wants to look over their shoulder forever.

The Stellar blockchain protocol ensures that little time is wasted bringing lenders to an agreement. Platforms such as AssetStream rely on lenders to pool resources to fund a single project so it goes without saying that all the investors must agree first. And this is where SCP comes into play.

Like any other agreement system, Stellar protocol is fault-tolerant which is why it can be relied upon to produce consistent results at all times.

Join AssetStream now and take advantage of the revolutionary Stellar Consensus Algorithm

Time waits for no man, and AssetStream’s adoption of the Stellar blockchain protocol to speed up consensus among lenders means that there will be no time wasting on the platform. Investors are already streaming to the platform by the truckload, and you shouldn’t wait any longer.


(Excerpt) Read more Here | 2019-05-26 08:04:05


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