What Is It, History and How to Buy

Stellar is a decentralized computer network that operates using blockchain technology. On the Stellar network, you can trade its form of currency, which is called lumens (XLM). This cryptocurrency is required to complete transactions on the Stellar network. Stellar and XLM were created in 2015, with the basic idea behind Stellar being to create a cryptocurrency that can reduce transaction costs and serve as a bridge between fiat, digital or other currencies. Cryptocurrencies can be confusing and rather volatile, so it may be a good idea to work with a financial advisor before investing.

What Is Stellar (XLM)?

Stellar is an open-source, peer-to-peer digital currency network that emerged in 2015. The network was founded by current chief architect Jed McCaleb, former lawyer Joyce Kim, who has since left Stellar and current chief scientist David Mazières. The idea behind the network is to make it easier and faster for people to send different types of currencies around the world. It can also provide banking services and liquidity for people who can’t access traditional banking services.

Stellar’s cryptocurrency tokens are called lumens, or XLM for short. While Stellar and XLM coexist in the same system, they are technically two different things. Stellar is the foundation of the blockchain network, whereas lumens are traded on the network. According to Stellar’s website, there are currently 50 billion lumens in circulation. Stellar will not produce any more lumens, so you cannot mine them.

Here’s how Stellar works: Let’s say someone is looking to transfer $50,000, but doesn’t have access to a bank capable of completing the transaction. This person could instead transfer the equivalent of $50,000 in lumens. The recipient could then trade those lumens for $50,000, or an equivalent amount of a different currency. In the end, clearing times are reduced and no banks need to be involved on either end of the transaction.

How to Buy Stellar Lumens

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You need lumens to use the Stellar platform. You can buy lumens, but not Stellar itself. Luckily, buying lumens is fairly simple at a variety of cryptocurrency trading platforms and brokerages. CoinBase and Kraken are two of the most popular networks for buying lumens with U.S. dollars. Binance, Bittrex, Bitfinex, Upbit, Coincheck, Huobi, NovaDAX and GMO Coin are also options.

LOBSTR is the native Stellar crypto wallet, where you can buy lumens directly in network. Currently, lumens are worth less than a dollar each, and you can’t buy fractional shares as of time of writing. Stellar is different from many other cryptocurrencies in that it’s more of a utility to facilitate trades than an asset in and of itself, like Bitcoin.

When it comes to storing lumens, it’s recommended that you use a hardware wallet or a digital wallet. While these are the best and safest ways to store your cryptocurrency, be careful not to forget your access codes or passwords. This could result in the permanent loss of your cryptocurrency.

Stellar (XLM) History

The Stellar network launched in 2015 under its founders, Jed McCaleb, David Mazières and Joyce Kim. McCaleb was formerly the founder of Mt. Gox, and he was also a co-founder of Ripple. The Stellar Development Foundation, which is a nonprofit, was created alongside Patrick Collison, the CEO and co-founder of Stripe, as well as a $3 million investment from Stripe. Stellar gained nearly 3 million users by the end of its first year.

In 2019, Stellar burned about half of its outstanding lumens, which induced a price jump. This caused some controversy, as cryptocurrency manipulation is often a risky move. However, the price soon leveled out and Stellar revealed that it would not produce any more lumens in an effort to stabilize its market.

Stellar lumens are some of the best performing cryptocurrency “altcoins” on the market today. Lumens are exchangeable all over the world and remain a popular cryptocurrency representation of other currencies. The platform’s source code calls GitHub home. It remains a decentralized blockchain system, as is the case for most cryptocurrencies.

Stellar (XLM) Price History

Like most cryptocurrencies, Stellar XLM has seen major price spikes and valleys. According to CoinGecko, the lowest price a lumen ever reached was in March 2015, when they were worth $0.00047612 each. Stellar’s highest price came on Jan. 3, 2018, when a single lumen was worth about $0.87.

Although prices bottomed out a bit following that time, they have climbed back strongly in 2020 and 2021. Based on information from CoinDesk, the current market capitalization of XLM is around $40 billion.

Should I Trade or Sell Stellar Lumens?

When it comes to cryptocurrency, it’s important to be knowledgeable about the risks you face. As they are new, cryptocurrencies can be volatile, and it’s possible to lose money if you choose to invest. Stellar notes that while lumens will always have value within its own network, their value relative to other currencies may change. In short, that affects the real world value of lumens for normal people.

That said, Stellar lumens could be a more stable cryptocurrency investment, simply due to the fact that they are more of a medium of exchange than a cryptocurrency token that’s meant to be held as an asset. While these types of cryptocurrencies, like Bitcoin or Dogecoin, are extremely popular, they can be harder to trust.

Bottom Line

Stellar is a blockchain-centric cryptocurrency platform on which you can buy, sell and trade lumens, Stellar’s form of cryptocurrency. Lumens are an easy-to-use and transferrable cryptocurrency that provide fast access to liquidity. Lumens represent a certain amount of another currency, making it simple to quickly transfer, say, U.S. dollars to someone who might not have access to banking services in a traditional way.

Tips for Investing in Cryptocurrency

• Investing is hard enough on its own, but adding in cryptocurrency makes things even more difficult. A local financial advisor can help you sort things out, though, and finding one doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in just five minutes. Get started now.

• While Stellar can help you with more specific cryptocurrency transactions, there are other options you may want to look into, such as Bitcoin. Check out our guide on how to invest in Bitcoin to learn more.

Photo credit: ©iStock.com/monsitj, ©iStock.com/metamorworks, ©iStock.com/Igor Kutyaev

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