The Stellar Development Foundation’s mission is to create equitable access to the global financial system, and we believe new, digital representations of money are part of achieving that goal. This will take the work of many different people and projects, all making progress together. That’s why we are following the work of projects like Libra, and were interested to see them announce the next steps for their work. Based on conversations with regulators, they now plan to offer single-currency stablecoins and enhanced compliance and safety models. They are also forgoing their previous plan to transition to a permissionless network.
This question of “permissioned vs permissionless” highlights a key feature of the Stellar network. From the very beginning, Stellar was designed to let entities (safely) issue digital representations of currencies with the certainty of a permissioned network, but the interoperability of a permissionless network. This is made possible by one of Stellar’s most powerful, but least understood, features: Issuer-Enforced Finality.
But what the heck does “Issuer-Enforced Finality” actually mean? And why does it give you the certainty of a “permissioned network?” That’s best answered by comparing two examples.Example 1: Issuing a stablecoin on Ethereum
Let’s first consider an entity that issues a dollar stablecoin on Ethereum (call it “e-USD”). Because Ethereum uses proof-of-work to achieve consensus, during its normal operation different (and potentially conflicting) branches emerge as miners verify different blocks. These are usually short-lived, because as soon as one branch gets longer than the other by additional blocks being added, most of the nodes in the network switch over to working on that branch (which is what they’re supposed to do).
A “double spend attack” is when somebody keeps one of these branches alive on purpos...