Stellar is a payment system that aims to offer cheap, speedy cross-border transfers. It’s notable for aiming to provide a global payment solution for the ‘unbanked’. Continue to find out where to buy, what it is and why.
Where to buy Stellar Lumens
Read on to find out more about Stellar in 2020 or skip ahead to our step-by-step buyers guide if you’re up to speed and ready to invest in Stellar (XLM).
What is Stellar?
Launched in 2014, Stellar is a decentralised money transfer protocol that bears a passing resemblance to Ripple (XRP). Such a likeness should come as no great surprise given that both cryptocurrencies were developed by Jed McCaleb. But, while Ripple has been building relationships in the mainstream banking sector, Stellar’s Lumen currency posits a low-cost cross-border payment solution for ordinary people.
Stellar makes it possible to allow all the world’s financial systems work together across a single network. It does this by enabling you to create a digital representation of a currency (a ‘dollar token’, for instance), then set up a 1:1 relationship between that token and the regular dollar.
How does Stellar work?
The Stellar network relies on its native token, the Lumen. To restrict misuse of the Stellar ledger and keep it running efficiently, it’s necessary to have a few Lumens in your account. The minimum balance is currently 1 Lumen.
Lumens aren’t mined. Instead, 100 billion lumens were created when the Stellar network went live and a 1% inflation rate increased that number annually until the community voted to reduce the overall supply in November 2019. There are now 50 billion lumens and no more will be created.
How to buy Stellar online – step-by-step guide
Step 1. Get a suitable wallet
A wallet allows you to store your Stellar Lumens securely. It’s a good idea to have one ready before you invest – it’s a far safer way to store cryptocurrency than leaving it on the exchange. There are plenty of good options on the market, including:
- Ledger Nano X: Ledger Nano X is a hardware wallet, which means you can store your XLM (along with 30 other cryptocurrencies) offline on a super-secure wireless device.
- Atomic Wallet: A desktop wallet that’s compatible with Windows and Mac OS, Atomic is versatile and easy to use. It also facilitates atomic swaps, a simple process that allows you to ‘swap’ one cryptocurrency for another without the need for a third-party to facilitate the exchange.
Step 2. Find a Stellar exchange
There are plenty of exchanges on offer if you want to buy and sell Stellar Lumens. Each has advantages and disadvantages, so it’s a good idea to do a bit of research. To get you started, here are two of our favourite Stellar exchanges:
- Binance: Widely considered to be the best, most dependable place to buy cryprtocurrency, Binance is the world’s biggest crypto exchange. It offers a huge crypto marketplace and fees that compare favourably with its main competitors, plus a well-designed mobile app.
- Kraken: Founded in 2011, Kraken is one of the biggest and most trusted cryptocurrency exchanges around and, in 2020, is a great place to buy Lumens. It’s US-based but has links with banks in Germany and Japan. Kraken users can trade a wide variety of fiat currencies and cryptocurrencies on the platform.
Step 3. Withdraw your Stellar
In the interests of securing your XLM, it’s a good idea to move your currency out of the exchange and into your wallet as soon as possible. To withdraw your XLM to your wallet you need to generate an address then paste it in the relevant field of your exchange account.
How to trade Stellar – step-by-step guide
You needn’t worry about getting a suitable wallet if you’re only interested in trading Stellar – trading involves taking a position on a currency rather than acquiring it. This means you can potentially make a profit from XLM without the hassle and security risk of owning it.
Step 1. Find a broker
Stellar is available to trade at several crypto-friendly brokers. Plus500 and eToro are two of the most popular crypto trading platforms but it’s worth checking our listings to track down a broker that suits your needs.
Step 2. Deposit money
Most trading platforms will allow you to deposit Fiat money (USD, GBP, EUR etc.). It’s worth noting that trading platforms offer leveraged trading, which means you don’t have to put down the full value of a trade. Instead you can pay a deposit, known as a ‘margin’. This means you can potentially make bigger profits and, of course, bigger losses.
Step 3. Decide how you’d like to trade
There are two methods to trade cryptocurrencies: CFDs (contracts for difference) and Spread Betting. Both methods essentially entail speculating on the price movements of your chosen currency. If you aren’t sure which option to go for, we recommend researching the differences between spreads and CFDs.
Step 4. Start trading
If you’re a complete novice we recommend starting with a demo account and familiarising yourself with the process and the platform. Cryptocurrency trading is extremely volatile, which means you can make and lose money very quickly. Cryptocurrencies are prone to fluctuation, which makes them an intriguing prospect for traders who look to exploit volatility.
As a crypto trader you’re speculating on your currency’s price movements by taking a short (sell) or long (buy) position. If you think XLM will fall in value you should take a short position, if you think it will rise in value you should take a long position.
You may choose to incorporate leverage into your trading strategy. Leveraged trading allows you to put up a fraction of the trade’s value as a deposit or ‘margin’. This can be risky, though, so make sure you have a stop loss in place for damage limitation.
- Fast and cheap transactions
- Strong partnerships including IBM, which is already using Stellar Lumens technology to process cross-border transactions
- Stellar can also be used to launch ICOs
- Likely a better long-term prospect that a quick win
- Not as comprehensively decentralised as other cryptocurrencies