See how the Stellar network works, and what you can use Lumens for.
Stellar lets anyone send, receive or trade any kind of currency, whether fiat or crypto, with anyone else in the world almost immediately and at practically no cost.
Lumens (XLM) is the name of the cryptocurrency token, while Stellar is the name of the network as a whole, and it’s a cryptocurrency with a difference.
Find out where to buy, how it all works and what you can use Lumens for.
Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
Buy Stellar (XLM) on Binance
Trade an extensive range of reputable coins on this world-renowned exchange, popular for its high liquidity and multi-language support.
US residents: As of September 2019, US-based users can only trade USD on the American dollar onramp of Binance, Binance.US.
UK residents: In addition to normal crypto trading services, Binance offers margin lending. As this is a regulated activity which they are not authorised to offer in the UK, we advise you not to use this service. If you're interested in margin trading, see authorised providers.
Popular, high-volume and highly liquid
Offers trading or direct purchases with fiat currency
Advanced trading features, leverage and futures trading available
Alternatively, you can trade on the Stellar Decentralized Exchange. StellarTerm is a gateway into this, allowing buyers to access the Stellar Decentralized Exchange to trade with various sellers. Purchasing options vary depending on what listings are available at the time.
STR was the original notation, but this was later changed to XLM.
Not all exchanges have updated their listings, so you might still see it referred to as STR.
Both are exactly the same coin.
Wallets that support Lumens
The primary Stellar wallet is Centaurus, and it is available for Android and iOS. It was specifically designed for Stellar and integrates well with it.
Stellar is essentially a matchmaker for currencies and facilitates worldwide transfers and exchanges in any fiat currency and cryptocurrency.
It’s much like Ripple. The main differences are more of a focus on simplicity and scalability as well as on functionality to help move money in remote areas at lower costs.
There are three different ways you can do this.
Direct exchange. You can make direct currency exchanges. For example, if one person wants to trade USD for INR and another person wants to trade INR for USD, it can match them and automatically carry out the exchange for the requested amounts.
Exchange via XLM. Stellar can use XLM as an intermediary currency where the amounts don’t add up or there isn’t a direct exchange available. It simultaneously looks for buy and sell offers for XLM and the needed currencies. Once it finds a good offer, it then handles the exchange.
Chain of conversions. If no other options are available, Stellar will try to handle any currency by finding a chain of conversions, such as INR to BTC to EUR to USD.
The Stellar network is simultaneously doing all of the above at the same time. When you make a transfer, it will aim to provide the best possible rates every time.
If you simply want to send or receive money rather than make an exchange, it can do that by directly connecting individual entities.
The different parts of Stellar
When using the Stellar network, you’ll typically use the ledger and anchors.
The ledger. This is a central ledger of every account on the network and the currencies it holds. This information is needed to make transfers around the network.
The anchors. These are trusted entities on the network that hold the currencies being transferred. An anchor might be anything from a bank to a person in a remote village who takes the money online and then hands the recipient the cash.
Why buy XLM?
Lumens is the network token, which you can use it to do the following:
Charge a very minor operation fee. A fee of 0.00001 XLM (almost nothing) is charged to senders for each operation in a transaction. This is purely intended to discourage DDoS attacks, which occur when people flood the network with meaningless transactions.
Act as an “entry pass” of sorts. You need to hold at least 20 XLM to use the Stellar network.
Exchange currencies where needed. If necessary, XLM can act as a universal unit of exchange for transferring currencies.
One of the notable features is the ability to freeze transfers. For example, you can freeze a transfer if you’ve mistakenly entered the wrong wallet address. This is unlike the irreversible transfers of most other cryptocurrencies.
Once transfers are frozen, the funds are unable to be used by the recipient.
All transactions on the network are public by default, but transactions can be made private and confidential through the use of third-party plugins.
And like other blockchain systems, the Stellar network is a decentralised application run on computers all around the world. This makes it almost entirely failsafe.
If the nonprofit Stellar organisation disappeared, its network would keep going.
What to consider when buying Lumens
Updated: 10 Jul 2020 10:22:06 UTC
The initial supply of Lumens was set at around 100 billion XLM, of which around 18 billion are in circulation.
It’s worth considering that Stellar has built inflation into its system, in the form of members getting gifted small amounts of free XLM over time. A fraction of the Lumens collected with each operation goes towards this inflation, along with other XLM released into circulation.
It’s also worth remembering that Stellar is a nonprofit organisation aimed at creating a more inclusive world economy for everyone. A high price for Lumens might undermine that goal, prevent people from listing their XLM on the ledger to facilitate exchanges and drive up the average cost of transfers, so there’s a real incentive to keep prices in check.
However, Stellar has also formed partnerships with companies like IBM and specifically aims to offer low cost, easy business money transfers. It looks like many organisations are aiming to use Stellar for their money transfer needs and wider use is likely to see prices climb over time.
Buying Lumens also gives users the means to more easily interact with a range of fiat currencies. Forex enthusiasts, frequent travellers or anyone else who can benefit from cheap, quick and easy access to a variety of fiat currencies might get their money’s worth from buying Lumens even if the price doesn’t increase.
If you’re considering what the price of Lumens will do going forwards, you might want to compare the features of Stellar and its close counterpart Ripple. The price increase in Lumens from 28-30 November 2017 saw a corresponding downswing in Ripple at the same time, suggesting that the value of these might be closely tied.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
Andrew Munro is the cryptocurrency editor at Finder. He was initially writing about insurance, when he accidentally fell in love with digital currency and distributed ledger technology (aka “the blockchain”). Andrew has a Bachelor of Arts from the University of New South Wales, and has written guides about everything from industrial pigments to cosmetic surgery.
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