How To Buy Stellar Lumens (XLM): The Ultimate Guide

Stellar Lumens (XLM) attracted significant investor interest in 2017 due to its sudden price rise and advanced technology. Other features such as strong security, a low transaction cost, and interconvertibility also made it popular.

So, if you are eager to buy Stellar Lumens or XLM coins and diversify your cryptocurrency portfolio, you have come to the right place!

In this ultimate guide on how to buy XLM coin, we will begin with a brief overview of the Stellar network and the cryptocurrency that operates on it, Stellar Lumens.

After that, we will look at the price-volume trends in Stellar Lumens and why it suddenly gained popularity in 2017. We also will go into detail regarding why should you buy XLM coins.

But we will not just stop at that. As this is an ultimate guide, we also will tell you how to buy Stellar Lumens and on what exchanges Stellar Lumens is available.

Finally, we will let you know our independent rating for this cryptocurrency asset, so that you can compare it with other currencies in your portfolio and make your own decision.

stellar lumens exchange
Image source via https://www.stellar.org/

What is Stellar Lumens?

Stellar Lumens is a cryptocurrency founded by Jed McCaleb in 2014. Interestingly, he was also one of the co-founders of the cryptocurrency Ripple and the exchange Mt. Gox, and hence there is a lot of similarity between the two currencies.

However, as per McCaleb, Stellar has not been forked from the Ripple Blockchain network. For the uninitiated, forking is when a new cryptocurrency is spawned from an existing one by using the existing code and improving it to take the Blockchain in a new direction.

Popular examples of forking include Bitcoin being forked into Bitcoin Cash (BCash) in August 2017 to decrease transaction time, and Ethereum being forked into Ethereum Classic in August 2016 due to the DAO hack. But there is a lot of doubt in the community about BCash being a better version of the original Bitcoin

Stellar Lumens cryptocurrency consists of Lumen coins, which operate on the Stellar network. The Stellar network is an open-source, decentralized, hybrid Blockchain network that is operated by the Stellar Development Foundation, a non-profit company.

The Stellar network helps in the transfer of value across-assets mostly in the payments space. Their mission is to develop a worldwide financial network where people, banks, and payment providers enjoy fair access and economic participation.

Although their website lists features such as low-cost remittances, efficient micropayments, mobile banking, and services for the underbanked, their primary use currently is low-cost cross-border transactions for fiat currencies.   

Why Should You Buy Stellar Lumens?

Price Analysis

Stellar Lumens is number five on the ranking of all cryptocurrencies with a market capitalization of $4.6 bn USD as of October 2018.

price analysisIt had a phenomenal rise in 2017 when the price of XLM coins increased from $0.002 USD in April 2017 to $0.31 USD in Dec 2017, a rise of 150 times.

In Jan 2018, it further went to an all-time high of $0.93 USD and then cooled off to $0.24 USD in October 2018 due to the global cryptocurrency sell-off.

The overall prediction for the altcoin is for it to reach $1.63 USD by the end of 2018 (average of current predictions), which is a return on investment (ROI) of 7 times the current price.

Faster Transactions

After looking at the price trend, let us look at the technology. XLM can be considered to be a faster, cheaper, and more scalable version of Bitcoin.

It enables real-time transactions, which can be completed within three to five seconds at a negligible cost of $0.01 USD. It is mainly used for doing cross-border, cross-currency transactions in fiat currencies with minimal costs.

Valuable Partnerships

The Stellar network also has partnerships with major companies such as IBM, Stripe, Deloitte, and ICICI Bank. They also have partnered with 30 banks to provide payment services to 60% of South Pacific islands.

This method of forming valuable partnerships is similar to what McCaleb followed at Ripple. While Ripple is targeted at financial institutions, Stellar has more retail use for end customers.

Advanced Consensus Algorithm

Another significant advantage of Stellar Lumens is its consensus algorithm known as the Stellar Consensus Protocol that beats Bitcoin’s ‘proof-of-work’ algorithm on both speed and scalability.

The image below by Stronghold will give you an idea of the strength of the Stellar Consensus Protocol as compared with those of Bitcoin and Ethereum.

protocol comparisonThe Stellar Consensus Protocol uses a Federated Byzantine Agreement at its core that enables a selected group of trusted nodes to approve a transaction rather than all the nodes in the network as in the case of Bitcoin.

This increases the speed and the number of transactions that can be performed on the network.

How to Buy Stellar Lumens?

Stellar Lumens is not as popular as Bitcoin or Ethereum, and many exchanges may not allow you to purchase it directly using a fiat currency such as the US dollar or the Euro. So you first need to purchase a commonly used cryptocurrency such as Bitcoin or Ethereum from an exchange.

Below we have listed the main steps to follow in order to buy Stellar Lumens. However, if you are more of a visual type, we recommend this great step-by-step video on YouTube.

Step 1: Purchase Bitcoin or Ethereum

Firstly, you need to buy some Bitcoin (BTC) or Ethereum (ETH). It can be done by creating an account with either Coinbase or Changelly. ETH is preferable as it allows for a faster transaction and lower transaction fee.

Step 2: Send ETH to Binance

In the next step, you transfer the ETH purchased in Step 1 to your account at the Binance exchange. There are other exchanges that also can be used for buying Lumens (XLM) such as Kraken, HitBTC, Bittrex, and Poloniex.

This is a two-step process and involves getting your ETH wallet address from your Binance account and sending your ETH from Coinbase to your account at Binance.

Get ETH Address from Binance Account

Log into your Binance account and click on ‘Funds’ at the top of the screen. Then click on ‘Deposits’ in the drop-down menu and select ‘Ethereum’ in the drop-down box.

This will give you a long alphanumeric address which is your ETH wallet address with Binance.

Coinbase ETH to Binance Exchange

Click on ‘Accounts’ at the top of the Coinbase screen, select Ethereum among currencies, and then click on ‘Send.’ Plug in your copied address from previous step here and click ‘Send.’

The coins will be transferred to your Binance account under 15 minutes.  

Step 3: Buy XLM Using ETH at Binance

Once you receive your ETH coins in your Binance account, you are ready to buy XLM.

Click on ‘Exchange’ at the top of the Binance screen and then select ‘Basic’ from the drop-down menu.

Then move over to the right-hand side of the screen, and click on ‘ETH.’ Then search for ‘XLM’ and select ‘XLM/ETH’ trading pair.

Go ahead and enter the amount of XLM you want to buy and click on ‘Buy XLM.’ Finally, you have bought XLM.

Whew! That was a lot, but it is not over yet.

Step 4: Move XLM to a Secure Wallet

If you do not want to trade and keep XLM for investment purposes, we suggest moving it to a digital wallet for security reasons. There are many wallets available in the market that support Stellar Lumens.

Where Can I Buy Stellar Lumens?

Although Stellar Lumens has become the fifth-largest cryptocurrency in terms of market cap, many exchanges still do not facilitate trading in XLM. In the example above, we have chosen the Binance exchange, but there are other Stellar Lumens exchanges available listed below.

Binance

As mentioned earlier, Binance is the most popular exchange, and most of the Stellar Lumens trading happens here. It offers support for 100 coins, has low trading fees (0.01% of the transaction), and offers advanced security through two-factor authentication.

However, it does not allow purchases in fiat currencies and lacks good customer support.

Kraken

Kraken is the oldest cryptocurrency exchange established in 2011. It allows purchases using fiat currency, and deposits can be made using SWIFT or SEPA (EU).

However, credit and debit cards are not allowed. It also needs address verification for bank deposits but needs only basic information for cryptocurrency deposits.

It also offers excellent security and live chat support but has a higher fee for USD transactions (0.02-0.26% of the transaction) and supports fewer coins.

HitBTC

HitBTC is another exchange located in Estonia that offers support for Stellar Lumens. It offers a large number of payment methods, support for more than 200 cryptocurrencies, but was hacked in 2015.

Bittrex

Bittrex is based in the US, has a high trading volume, and offers good security. But it does not allow fiat deposits and has a high withdrawal fee (0.25%).

Poloniex

Poloniex is also based in the US, offers support for a large number of coins, and charges only a minimal Blockchain transaction fee for withdrawal. However, it does not offer fiat deposits and was hacked in 2014.

Conclusion

In summary, Stellar Lumens enables cross-border, cross-currency fiat transactions at a minimal fee, which makes it especially relevant for making remittance transactions for developing countries.

Stellar Lumens has formed great partnerships with the likes of IBM and Deloitte and has a positive outlook due to fast transaction speeds and scalability courtesy of the company’s superior Stellar consensus protocol. Due to these reasons, we give it a recommended rating of 4 out of 5.

XLM seems like a good investment provided there are no security lapses in the future. Therefore, we have also mentioned the steps to buy Stellar Lumens and the exchanges on which it can be bought.

So based on this ultimate guide, would you consider buying Stellar Lumens? If yes, which exchange would you be using for the same? Are you considering storing it in a digital wallet? Let us know in the comments below.

Comments