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Investing in Stellar Lumens (XLM) – Everything You Need to Know

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While investing in the crypto market, it doesn’t take long before you run across Stellar Lumens. This unique cryptocurrency features a rocket ship blasting off as its logo and a catchy name that makes you envision futuristic space travel. Aside from their savvy marketing, Stellar brings a lot to the cryptocurrency sector.

Stellar is a distributed payment infrastructure that features an open-source code. The platform entered the market with the goal to facilitate a more streamlined approach to international money transfers such as remittance payments. Today, the Stellar ecosystem is known for its affordable, fast, and reliable transfer capabilities. Specifically, the platform facilitates frictionless cross-border transactions.

What are Stellar Lumens?

Unlike its main competitor in the market, Ripple, Stellar focuses on the needs of the individual rather than large financial institutions. In this manner, the platform is able to seamlessly connect individuals, institutions, and payment systems throughout the world. Today, the platform consists of an international consortium of individuals and entities located in every region.

Stellar Homepage

Stellar Homepage

How Does Stellar Work?

Stellar leverages decentralization to improve on the current transfer systems in use. The platform incorporates a distributed ledger to improve efficiency and transparency for users. This ledger maintains all of the network's data including its transaction history to transfer systems in use. This ledger maintains an unbroken record of all transactions since day one.

Using the Stellar platform is easy. Similarly to popular payment processors such as Paypal, the process begins when you upload funds on the network. In the Stellar ecosystem, these funds upload to Anchors. The anchor functions as a medium between fiat and Stellar's distributed ledger. In this way, Anchors serve a critical purpose in the Stellar ecosystem.

Once your funds are available on Stellar's distributed ledger, it’s easy to send anywhere in the world. For example, let’s say you wanted to send $1000USD to a friend in the EU. You would just upload your USD to a Stellar anchor to receive a USD credit on the network.

Next, you could transfer your credit over to your EU companion. At the moment of transfer, Stellar would automatically convert your USD credit over to EUR. Importantly, the platform automatically seeks out the lowest exchange rate. Once the funds are converted they deposit in your friend's account. Here they can withdraw the funding directly.

Amazingly, this entire process takes place in seconds and completely behind the scenes. In this way, Stellar is able to fulfill its goal to simplify money transfer systems for the average person. The platform provides a truly streamlined approach to the market.

Support for Multiple Fiat Currencies

Impressively, Stellar is able to accomplish this task through the use of three specific protocols. In the first scenario, stellar converts your funds from its order book and simply facilitates a streamlined exchange. In the next process, Stellar converts your funds to XLM. Then, your funds are transferred internationally. Once they arrive at their destination, the XLM is sold and the local fiat currency. In this scenario, XLM is used as an intermediary.

Critically, sending cryptocurrencies globally costs only a fraction of the costs of traditional money transfer systems. In the current market infrastructure, a user could end up losing over 7% of their funds during the transfer. These lost funds are used to cover a host of third-parties involved in the fiat transaction.

Chain Transactions

Stellar's platform operates in a smart manner that makes it possible to accomplish complex chain reactions. For example, you may find that there is no direct currency pair for your desired trade. In this instance, Stellar is able to complete a multiple trade transaction. Imagine your USD first converting to GBP, then, GBP to EUR.

Stellar Exchange

Another unique aspect of the Stellar is the ability to place exchange orders directly within the platform. These orders go instantly on the public ledger. Here you can choose between a host of other currencies. Importantly, you can exchange your funds for both Fiat and cryptocurrencies using this system.

What is XLM?

Even though Stellar was designed to handle digital representations of any currency, the developers still choose to create their own native crypto called XLM. In fact, all Stellar users must hold a tiny bit of XLM to participate in the network. This requirement is meant to prevent the ledger from becoming filled with spam or other uselessness.

The decision to create a unique currency for this task stems from Stellar's desire to remain free from any particular currency in general. For example, if Stellar required you to hold a certain amount of USD, then the platform would be somewhat tethered to the performance of USD, or, at the very least, it would be tied to the US market. This is a situation that developers were keen to avoid.

Unlike most cryptocurrencies, Stellar Lumens don't require nodes to mine blocks of transactions. Nor do network participants receive awards for their efforts to validate the blockchain. This approach is in stark contrast to cryptocurrencies such as Bitcoin. Notably, the firm decided it was better to issue 100 billion XLM during the platform's launch. From there, the supply of Stellar would see an increase of 1% every year for around 6 years.

Critically, developers altered this approach in October 2019. Developers decided it was more conducive to their goals to reduce the supply of XLM moving forward. As such, they reduced the amount of XLM down to 50 billion. Additionally, there are now no plans to issue anymore XLM in the future.

This strategy leaves around 20 billion XLM in the market currently with another 30 billion retained by the firm. These retained funds are to go towards the expansion of the XLM ecosystem. Tasks such as development and marketing are the main use of the funds per Stellar's plan.

A quick glimpse of Stellar's capabilities and it’s easy to recognize that this platform came from the mind of an experienced blockchain professional. The founder of Stellar is none other than the Crypto heavyweight Jed McCaleb. McCaleb is best known for founding the now-defunct Mt.Gox exchange.

At one point, Mt.Gox controlled 70% of the world's Bitcoin trading volume. However, a major hack saw the exchange dissolve after losing $450million in Bitcoin. Notably, McCaleb had already left the firm and sold his stake prior to the hack.

Notably, McCaleb also founded Stellar's main competitor, Ripple. However, he left the company in 2013 citing irreconcilable differences in the direction of the company. Not surprisingly, the two cryptocurrencies share many aspects, mainly, their goal to facilitate cross-border payments in a more streamlined manner.

Stellar's board includes some of the biggest names in the industry. The company managed to secure Stripe CEO, Patrick Collison, WordPress Founder, Matt Mullenweg, and AngelList Founder, Naval Ravikant.

How to Buy XLM Tokens

Investing in Stellar Lumens is easy when you know where to look. First, it’s key that you understand that Lumens trade under both the XLM and STR ticker depending on the platform you are on. The firm decided to change its ticker from STR to XLM years ago, but some exchanges decided to keep the original ticker regardless of the choice.

Stellar Lumens (XLM) is available on the following exchanges:

eToro USA – Established in 2007,  eToro is a leading cryptocurrency exchange that accepts USA residents. (Hawaii, Minnesota, Nevada, New York, & Puerto Rico are prohibited).

eToro Disclaimer: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Uphold – This is one of the top exchanges for United States residents that offers a wide range of cryptocurrencies including XLM. UK & European residents are prohibited.

Paybis is a truly global company offering services to residents from 180+ countries, including Canada, Europe, UK, & USA.

Kraken – Founded in 2011, Kraken is one of the most trusted names in the industry with over 9,000,000 users, and over $207 billion in quarterly trading volume.

The Kraken exchange offers trading access to over 190 countries including Australia, Canada, Europe, and is a top exchange for USA residents. (Excluding New York & Washington state).

Coinberry – This regulated Canadian exchange is for Canadian residents only.

WazirX – This is the best exchange for residents of India.

Uphold Disclaimer: Assets available on Uphold are subject to region. All investments and trading are risky and may result in the loss of capital. Cryptoassets are largely unregulated and are therefore not subject to protection.

Where to Store XLM

When it comes to storage of your XLM, you have some options to consider. If you plan to continuously trade your Stellar, it’s going to be more convenient, but less secure, to keep your XLM on your favorite exchange. As long as you aren't trading too much, exchanges such as Binance provide a decent level of security for your holdings.

Once you are ready to stop your day trading strategy, you can always send your XLM over to a mobile wallet such as Jaxx. These platforms are the easiest to operate and use. In most instances, you can download your wallet app and begin using it in under ten minutes. Best of all, you always have access to your XLM if you need it.

If you want a safer approach to XLM storage, you should consider utilizing Stronghold. Stronghold is the distributed exchange for the Stellar network. There is even a desktop client to support your storage needs.

If you seek to make a major investment in XLM or if you are planning on HODLing this crypto for long periods of time, a hardware wallet is the best option. Hardware wallets keep your crypto stored offline in “cold storage.” This strategy makes it impossible for online threats to access your holdings. The Ledger Nano S or the more advanced Ledger Nano X both support Stellar Lumens (XLM).


Given the sheer level of expertise Stellar possess and their unique approach to the market, it’s no surprise that XLM is one of the most popular cryptocurrencies in the world today. You can expect this popularity to rise as more people enter the blockchain sector. For now, you can illuminate your crypto investment strategy at any of the exchanges listed in this guide.

David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including