Stellar network (XLM), launched in 2015, is a decentralized international payment network. Stellar is a payment technology aiming to connect financial institutions, payments systems, and people through blockchain technology and drastically reduce the transaction cost and time required for cross-border transfers. In addition to facilitating low-cost, fast transactions, Stellar aims to provide banking services and liquidity to developing markets.
A Stellar Lumen, which carries the ticker symbol XLM is the native asset of the Stellar Development Foundation. Lumens are cryptographically secured digital representations of liquid cash equivalents for nearly instant, ultra-low fee global payments and remittances.
Read on for our deep dive into the Stellar Network and the Stellar Lumen ( XLM) tokens, and learn how to purchase Stellar Lumens or check the real-time Stellar price on CoinStats, one of the best crypto platforms around.
Let’s dive in!
The stellar network aims to bring the world’s financial systems together under one network by making it easier and faster for people to create, trade, and send different types of currencies across the globe. The Stellar protocol started as a fork of Ripple in 2014 and has the same utility, focusing on accessible and affordable international payments and cross-border money transfers. However, unlike Ripple, the Stellar fork allows for a “free for all” altruistic payment network, much like Bitcoin.
How Stellar Lumens Work
Stellar is a decentralized protocol on open-source code to transfer digital currency to fiat currencies like the US dollars, Pesos, Yens, etc., across the globe with only a Stellar address. While a bank transfer charges a considerable commission, Stellar Network claims to charge virtually nothing.
The network achieves the money transfer through a process called “tokenization.” For example, when one user sends US dollars to another user, the network tokenizes the currency, using a mechanism similar to creating stablecoins. However, the critical difference is that Stellar Lumens don’t privilege any currency over the other. Instead, they tokenize fiat currencies in an integrated process into the protocol. The network claims that any asset can be tokenized similarly, including gold, silver, stocks, or working hours.
Stellar’s core advantage is interoperability, letting create, send, trade, and convert digital currencies very efficiently on a single platform. It’s energy-efficient and offers affordable and fast transactions. The Stellar Lumen (XLM) has seen significant price spikes and valleys like most cryptocurrencies. The XLM price rose by an astounding 34,900% in 2017, less than four years after the network’s launch, a massive return on investment (ROI) for early speculators and cryptocurrency enthusiasts backing the project.
In 2018, the value tumbled by 77%, but the price was relatively stable throughout 2019 and 2020. The Stellar Foundation originally had over 100 billion lumens in existence but burned roughly half of its outstanding coins in November 2019. The move induced a price jump, though the rally quickly faded.
Performance improved in 2021, with an increase of 226% from January through March. Its market cap as of Sept. 23, 2021, was $6.96 billion.
Stellar facilitates its transfers through third-party companies called Anchors, which bridge the gap between the Stellar blockchain and the real-world asset it transfers. The Stellar Foundation sets the following standards for all Anchors:
- Having reserves that match the issued tokens in a dedicated, audited bank account.
- Complying with local regulations.
- Applying AML (anti-money laundering) and KYC (know your customer) policies.
- Using local bank transfers.
The reasons above make it more convenient for both users and the Stellar network to have local Anchors responsible for a particular currency only.
Moreover, Stellar Lumens are available to trade right on the blockchain through the built-in decentralized exchange. But as that’s not the only option on the menu, let’s look into the ways you can buy and trade Stellar Lumens.
Buying XLM in 4 Quick Steps
Stellar Lumens are popular enough to be supported on many crypto exchanges, and you can even swap your Stellar Lumens for fiat currency on some of them. So to buy Stellar, you first need to choose a cryptocurrency trading platform that supports Stellar Lumens and best suits your needs.
Step #1: Choose a Cryptocurrency Exchange
As mentioned, Stellar is supported in many crypto markets today, and buying Stellar Lumens is straightforward on any of the exchanges. However, it’s essential to differentiate exchanges based on their decentralization, as it affects their crypto variety, the support of wire transfers, the extent of risks, and how they conduct transactions.
Centralized Exchange (CEX) vs. Decentralized Exchange (DEX)
A centralized exchange, like Binance or Coinbase, acts as a third party between a buyer and a seller. The exchange itself stands as an intermediary between the two sides of the transaction, so it’s not fully peer-to-peer.
On the other hand, a Decentralized Exchange, like Uniswap or SushiSwap, aims to reduce any intervention into the process by taking the middleman out of the equation and enabling a fully peer-to-peer transfer.
The listing process is quite different, too.
In the cryptocurrency market, security is paramount. To get listed on a CEX, tokens have to satisfy a list of requirements, including legal standards, security protocols, and trading activity.
Unfortunately, not all DEXs are picky and would list coins that might not be secure. However, on the flip side, they are better at maintaining your freedom, are less susceptible to hacks, and while users’ funds are more exposed to scams, DEXs seem more secure to many customers.
Stellar’s native token is listed on a wide array of platforms, so to buy XLM, you just need to choose a trading platform. Let’s look into the Binance exchange, one of the most popular platforms, as an example.
Step #2: Registration
Now that you’ve chosen the exchange, you need to register a brokerage account. You have to fill in your email address or provide a phone number and then come up with a password.
While registration alone is enough to start navigating the website and trading, in many cases, it’s not enough to unlock the full capacity of the platform.
Most exchanges require their customers to undergo AML (anti-money laundering) and KYC (know your customer) procedures, requiring them to submit a valid ID, photo, and personal info, like current address, phone number, etc.
While decentralized exchanges don’t typically bother with KYC, it’s common on regulated exchanges, and once you do that, the trading limits, withdrawal, and deposit amounts go up.
Now that your account is set up, it’s time to think about the deposit.
Step #3: Deposit Funds
Depositing funds onto a crypto trading account can be accomplished differently, depending on the platform you are dealing with. For example, most decentralized exchanges don’t accept deposits in fiat currencies, meaning that you cannot link your credit or debit card to your account or transfer money from your bank accounts. To do that, you must buy other crypto assets, like Bitcoin or Ethereum, on a crypto exchange that does allow fiat transfers and then swap the BTC or ETH to buy Stellar. However, as we’re discussing Binance, which lets users choose their preferred payment method, the steps are much easier.
You can choose to buy Stellar Lumens on Binance using your bank account. In this case, you purchase a stablecoin listed on Binance with a wire transfer from your bank account and exchange it for XLM on the same network.
As Binance is relatively intuitive and user-friendly, there shouldn’t be problems completing these steps.
NOTE: Always check and double-check the amount you deposit before confirming the transaction. Also, be aware that linking a bank account to a cryptocurrency exchange does carry certain risks, do your research before making a decision.
You can choose to purchase Stellar directly with your credit or debit card, skipping the extra step of exchanging stablecoins for Lumens. Standard options of using Visa or MasterCard are available to new users and existing accounts.
If you already own a crypto wallet and have crypto holdings supported by Binance, you can transfer them from your digital wallet right onto Binance. This option will let you buy XLM quickly and efficiently, with no need for intermediary currency.
Congratulations, now you’re the proud owner of your own Stellar tokens. So once you’ve bought Stellar Lumens, what can you do with them?
What to Do Once You Buy Stellar Lumens XLM
Once you obtain the digital currency, you have an array of choices to reduce the market risk and gain profit from holding XLM.
Hold the Stellar Lumens Securely
Holding on to your digital assets is always an option, and you can store Stellar Lumens on a hardware wallet. This way, your funds will be secure and hack-proof.
Hold them as an investment if you believe your Stellar Lumens will be worth much more in time; then, once you decide to sell, you can transfer your XLM from the hardware wallet to an exchange.
Stake Your Stellar Lumens
You can also earn interest on your Stellar Lumens instead of idly storing them in a hardware wallet. As the crypto market is highly volatile, staking is a high-risk endeavor, but it also promises rewards.
In short, staking is like owning a savings account. You trust the bank with your money, and they provide you with yield in return. Crypto staking is a similar process – you lock a certain amount of coins on a platform that supports XLM-staking and get annual yields.
Trade Stellar Lumens XLM
While staking and holding on to the coins are popular options, trading your XLM could be profitable. Binance provides a rich currency selection and trading pairs available for swapping Stellar with over 300 cryptocurrencies in total.
If your desired digital asset is not available for direct XLM trade, it’s possible to trade for Bitcoin (BTC), Ethereum (ETH), Bitcoin cash, or any other popular coin, and then trade it for the desired crypto.
Now that you have a better idea of how to buy Stellar Lumens XLM, let’s conclude the guide with frequently asked questions.
Frequently Asked Questions
Is Stellar a Trustworthy Blockchain
Owning Stellar Lumens XLM is secure. The blockchain has been around for almost a decade, and the developing team is available to review on social media. The project is instrumental for people who often require cross-border transactions and choose not to overpay on a bank transfer.
Are Stellar Network Transfers Cheap
The network typically charges a nominal fee, and however, the transfers cost fractions of a dollar.
Which Cryptocurrency Exchange Should I Choose for Trading Stellar Lumens
As mentioned earlier, Stellar Lumens are available on multiple platforms. In addition, both Centralized and Decentralized exchanges feature Lumen pairs so that you can choose a cryptocurrency exchange according to your convenience and preference. Moreover, buying XLM with fiat currencies isn’t an issue either.
Is XLM Considered a Risky Investment
Any cryptocurrency investment is considered risky due to the volatility of the crypto market. The general rule of thumb is not to invest more than you can afford to lose. However, as with other popular cryptocurrencies like Bitcoin, Ethereum, or XRP, the coins have utility, which their value stems from.
The Stellar network has a reputation for being a trustworthy project. Lumens (XLM) have been around since 2014, and they work as money transfer tokens within the blockchain. Stellar can potentially tokenize any asset and send it anywhere in the world if the recipient is a blockchain user as well.
The transfers on Stellar feature low fees, and the process itself is relatively user-friendly. The Stellar Lumens are popular on multiple cryptocurrency exchanges, so you can start buying XLM on virtually any platform you trust or the one to offer the best rates. Lumen’s price has not yet exceeded $0.80.
NOTE: Cryptocurrency investments carry a high-risk factor. The XLM value is susceptible to volatility, so always do your own research before you buy Stellar Lumens XLM, or consider holding or trading any other cryptocurrency.
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